10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal year ended December 31, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13884

COOPER CAMERON CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 1333 West Loop South	76-0451843 (I.R.S. Employer Identification No.)
Suite 1700 Houston, Texas (Address of principal executive offices)	77027 (Zip Code)

Registrant’s telephone number, including area code (713) 513-3300

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 Per Share	New York Stock Exchange
Junior Participating Preferred Stock Purchase Rights Par Value $0.01 Per Share	New York Stock Exchange

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

     The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of registrant as of June 30, 2005, our most recently completed second fiscal quarter, was approximately $2,929,537,991. For the purposes of the determination of the above statement amount only, all directors and executive officers of the registrant are presumed to be affiliates. The number of shares of Common Stock, par value $.01 per share, outstanding as of February 16, 2006, was 115,953,934.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of registrant’s Annual Report to Stockholders for the year ended December 31, 2005 are incorporated by reference into Parts I and II. Portions of the registrant’s 2006 Proxy Statement for the Annual Meeting of Stockholders to be held May 5, 2006 are incorporated by reference into Part III.

TABLE OF CONTENTS

ITEM	PAGE
Part I
1. Business		3
Markets and Products		4
Market Issues		7
Geographic Breakdown of Revenues		8
New Product Development		8
Competition		9
Manufacturing		9
Backlog		10
Patents, Trademarks and Other Intellectual Property		10
Employees		10
Executive Officers of Registrant		11
Glossary of Terms		11
1A. Risk Factors		12
1B. Unresolved Staff Comments		12
2. Properties		12
3. Legal Proceedings		13
4. Submission of Matters to a Vote of Security Holders		14
Part II
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		15
6. Selected Financial Data		15
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
7A. Quantitative and Qualitative Disclosures about Market Risk		15
8. Financial Statements and Supplementary Data		15
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		16
9A. Controls and Procedures		16
9B. Other Information		16
Part III
10. Directors and Executive Officers of the Registrant		16
11. Executive Compensation		17
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		17
13. Certain Relationships and Related Transactions		17
14. Principal Accountant Fees and Services		17
Part IV
15. Exhibits and Financial Statement Schedules		18
Signatures		23
Fourth and Fifth Amendments to Retirement Savings Plan
Amendment to NuFlo Technologies, Inc. 401(k) Plan
First Amendment to 2005 Equity Incentive Plan
Amendment to Change in Control Agreement
Form of Executive Severance Program
Ninth Amendment to Individual Account Retirement Plan
Form of Restricted Stock Agreement for Restricted Stock Units
Deferred Compensation Plan for Non-Employee Directors
Form of Stock Option Agreement
Portions of the 2005 Annual Report
Subsidiaries of Registrant
Consent of Independent Registered Public Accounting Firm
Certifications
Certifications
Certifications of CEO and CFO Pursuant to Section 906

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PART I

ITEM 1. BUSINESS

     Cooper Cameron Corporation (“Cooper Cameron” or the “Company”) is a leading international manufacturer of oil and gas pressure control and separation equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications and provides oil and gas separation, metering and flow measurement equipment.. Cooper Cameron is also a manufacturer of centrifugal air compressors, integral and separable gas compressors and turbochargers. See “Glossary of Terms” at the end of Item 1 for definitions of certain terms used in this section. Any reference to Cooper Cameron Corporation, its divisions or business units within this paragraph or elsewhere within this Form 10-K as being a leader, leading provider, leading manufacturer, or having a leading position is based on the amount of equipment installed worldwide and available industry data.

     Cooper Cameron’s origin dates back to the mid-1800s with the manufacture of steam engines that provided power for plants and textile or rolling mills. By 1900, with the discovery of oil and gas, Cooper Cameron’s predecessors moved into the production of internal combustion engines and gas compressors. Product offerings were added by the Company’s predecessors through various acquisitions, in particular the acquisitions of The Bessemer Gas Engine Company (gas engines and compressors); Pennsylvania Pump and Compressor (reciprocating air and gas compressors); Ajax Iron Works (compressors); Superior (engines and compressors); Joy Petroleum Equipment Group (valves, couplings and wellheads); Joy Industrial Compressor Group (compressors); and Cameron Iron Works (blowout preventers, ball valves, control equipment and McEvoy-Willis wellhead equipment and choke valves).

     Cooper Cameron, a Delaware corporation, was incorporated on November 10, 1994. The Company operated as a wholly-owned subsidiary of Cooper Industries, Inc. until June 30, 1995, the effective date of the completion of an exchange offer with Cooper Industries’ stockholders resulting in the Company becoming a separate stand-alone company. The common stock of Cooper Cameron trades on the New York Stock Exchange under the symbol “CAM”. The Company’s Internet address is www.coopercameron.com. General information about Cooper Cameron, including its Corporate Governance Principles, charters for the committees of the Company’s board of directors, Standards of Conduct, and Codes of Ethics for Senior Officers and Directors, can be found in the Ethics and Governance section of the Company’s website. The Company makes available, free of charge, on its website the annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after the Company electronically files or furnishes them to the Securities and Exchange Commission (the “SEC”).

     Since its inception, the Company has completed several acquisitions, including the assets of Ingram Cactus Company and the interests in the Ingram Cactus joint ventures in Venezuela and Malaysia, Orbit Valve International Inc., Stewart and Stevenson’s Petroleum Equipment segment, Nutron Industries, Petreco International Inc., and the PCC Flow Technologies segment of Precision Castparts Corp. (“PCC”).

     In May 2005, the Company acquired NuFlo Technologies, Inc. (“NuFlo”), a Houston-based supplier of metering and related flow measurement equipment, for approximately $121.3 million in cash and assumed debt. NuFlo produces and distributes measurement and control instrumentation for the oil and gas industry, and has manufacturing facilities in the United States, Canada and the United Kingdom. The financial results of NuFlo are reported in the Cooper Cameron Valves (“CCV”) segment.

     On September 1, 2005, the Company announced it had agreed to acquire substantially all of the On/Off value business unit of the Flow Control segment of Dresser, Inc. On November 30, 2005, the Company completed the acquisition of all of these businesses other than a portion of the business which was acquired on January 10, 2006. The total acquisition cost for these businesses was approximately $217.5 million in cash and assumed debt. The businesses acquired serve customers in the worldwide oil and gas production, pipeline and process markets and will be integrated primarily into the CCV segment. Their product offerings include ball valves, check valves, actuators, gate valves and plug valves. Product brands include Grove, TK and Wheatley, among others. The businesses acquired have facilities in Italy, Canada, Germany, the Netherlands, the United Kingdom, Brazil and the United States.

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Business Segments

Markets and Products

     The Company’s operations are organized into three separate business segments — Cameron, CCV and Cooper Compression. For additional business segment information for each of the three years in the period ended December 31, 2005, see Note 14 of the Notes to Consolidated Financial Statements, which Notes are incorporated herein by reference (“Notes to Consolidated Financial Statements”).

     Cameron Division

     Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Its products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations.

     Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, oil and gas separation equipment, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s products are marketed under the brand names Cameron^®, W-K-M^®, McEvoy^® and Willis^®. Additionally, Cameron manufactures elastomers, which are used in pressure and flow control equipment and other petroleum industry applications, as well as in the petroleum, petrochemical, rubber molding and plastics industries.

     Cameron is one of the leading global suppliers of integrated drilling systems for land, offshore, platform and subsea applications. Drilling equipment designed and manufactured by Cameron includes ram and annular blowout preventers (BOPs), drilling risers, drilling valves, choke and kill manifolds, surface and subsea BOP control systems, multiplexed electro-hydraulic (MUX) control systems, and diverter systems. Cameron also provides services under CAMCHEC™, an inspection system that allows drilling contractors to inspect drilling riser on their rigs offline, saving time and money on maintenance and unnecessary transportation.

     During 2005, Cameron upgraded several drilling aftermarket locations with new machine tools, including Berwick, Louisiana; Oklahoma City, Oklahoma; Macea, Brazil and Vera Cruz, Mexico. The Rock Springs, Wyoming facility will also be upgraded and expanded to address the growing natural gas market in the Northern Rockies.

     Cameron is also a global market leader in supplying surface equipment, including wellheads, Christmas trees and chokes used on land or installed on offshore platforms. During 2005, Cameron provided equipment to new developments in Azerbaijan, Sakhalin Island, Russia and North Africa. Cameron continued to deliver new surface technology, including Cameron’s premier land and platform wellhead system, the SSMC model, and Cameron’s Conductor Sharing Wellheads, which allow multiple completions in a single well slot, to its traditional U.K. North Sea customers. Cameron also supplied wellhead systems in Qatar, Abu Dhabi, Saudi Arabia, Indonesia, Australia and New Zealand.

     The 2004 acquisition by the Company of certain assets and businesses of PCC brought with it PCC Sterom, now Sterom S.A. Sterom’s plant in Romania manufactures wellheads and valves providing Cameron with significant incremental competitively priced surface product manufacturing capacity.

     Cameron continues to be a leader in providing subsea wellheads, Christmas trees, manifolds and production controls, as well as complete production systems to the subsea industry. Cameron’s Subsea Systems organization, created in 2005, has global responsibility for research and development, engineering, sales, manufacturing, installation and aftermarket support for subsea products and systems, and provides customers with integrated solutions to subsea field development requirements under engineering, procurement and construction contracts.

     Cameron completed a total of 100 subsea trees during 2005. Capacity expansions in Leeds, England, Taubate, Brazil and Berwick, Louisiana provide support for future increases in completions of subsea trees and associated manifolds, production controls and other equipment.

     As petroleum exploration activities have increasingly focused on subsea locations, Cameron has directed much of its new product development efforts toward this market. Cameron’s patented SpoolTree™ horizontal subsea production system, which was introduced in 1993, is used in oil and gas fields with subsea completions that require frequent retrieval of downhole equipment. With the SpoolTree system, well completion and workover activities can be performed without a workover riser or removal of the Christmas

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tree and under conventional blowout preventer control, thereby reducing the time, equipment and expense needed to perform such activities. Cameron advanced its tradition of innovation with the introduction in 2004 of an all-electric, direct current powered subsea production system, CameronDC™, which is designed to offer greater reliability and provide substantial cost savings to customers.

     Cameron’s Flow Control group was formed to focus resources on the choke product line with the goal of enhancing Cameron’s performance in this product line. Flow Control manufactures Cameron and Willis brand chokes and Cameron brand actuators for the surface and subsea production and drilling markets as well as drilling choke control panels and surface wellhead safety systems. The Company’s primary choke manufacturing operations are located in Longford, Ireland, and its primary surface gate valve actuator manufacturing operations are located at the Flow Control plant in Houston, Texas.

     In 2005, Flow Control sold its first electric surface actuator, which offers operators an actuation package which reduces the costs and maintenance problems associated with hydraulic power units and hydraulic tubing runs. Also during 2005, Flow Control introduced a new three-inch underbalanced drilling choke, the DR30, in response to drilling customers’ increasing demand for higher-capacity chokes for use in underbalanced drilling applications.

     With the Company’s acquisition of Petreco, Cameron assumed a leading position in the surface oil and gas separation business and gained an opportunity to develop a subsea processing business. Petreco’s products include electrostatic desalters and dehydrators, hydrocyclones, desanders, floatation equipment, processing equipment, gas processing equipment and electrochlorinators. These products are marketed under the brand names Petreco®, Vortoil®, Krebs®, Unicel®, Wemco®, Metrol™, KCC™, Depurator® and BFCC™.

     Cameron’s worldwide aftermarket service program, CAMSERV™, provides replacement parts for equipment through a comprehensive global network. In recent years, Cameron has continued to enhance its aftermarket presence worldwide with new facilities in Brazil, Mexico, Angola, Newfoundland, and Onne Port, Nigeria.

     Cameron’s research center, located in Houston, Texas, has ten specially designed test bays to test and evaluate Cameron’s products under realistic conditions. These include environmental test chambers to simulate extreme pressures and temperatures, high-strength fixtures for the application of multi-million pound tensile and bending loads, high-pressure gas compressors and test enclosures, a hyperbaric chamber to simulate the external pressures of deepwater environments, and two circulation loops for erosion and flow testing.

     Cameron primarily markets its products directly to end-users through a worldwide network of sales and marketing employees, supported by agents in some international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     Cameron’s primary customers include oil and gas majors, national oil companies, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers.

     Cooper Cameron Valves Division

     CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. Equipment used in these environments is generally required to meet demanding standards, including API 6D and the American Society of Mechanical Engineers (ASME).

     CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block & bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and services. These products are marketed under the brand names Cameron®, W-K-M®, Orbit®, Demco®, Foster®, NAVCO®, Nutron®, Thornhill Craver™ and TruSeal®. During the first quarter of 2000, CCV expanded its field service capabilities with the acquisition of Valve Sales Inc., a Houston-based valve repair and manufacturing company. Nutron, a Canadian valve manufacturer, was acquired in December 2002 in order to further expand CCV’s product offerings, particularly in Canada.

     With the Company’s acquisition of certain businesses and assets of PCC in 2004, CCV acquired a wider range of product offerings, including the double-block and bleed TwinSeal™ line, the TBV™ high-end ball valves intended for use in cryogenic and other severe service applications, and the Techno™ check valves. The business lines acquired include General Valve, AOP Industries,

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TBV Techno and the former PCC Ball Valve Italy, which brings to CCV, a leader in welded ball valves, a wide range of take-apart bolted body ball valves.

     NuFlo, acquired in 2005, designs, manufactures and distributes measurement and control instrumentation for the global oil and gas and process control industries.

     The acquisition of the On/Off valve business unit of the Flow Control segment of Dresser, Inc. was essentially completed in late 2005, with a closing on one facility occurring in January 2006. Notable product brands acquired in this transaction included GroveÒ, EntechÒ, International Valves Ltd. (U.K.), WheatleyÒ, LedeenÒ, TexsteamÒ plug valves, Ring-OÒ, Tom WheatleyÔ, TKValveÒ and Control SealÔ. This acquisition, along with others during the past couple of years, gives CCV a premier market position with an expanded international customer base.

     CCV markets its equipment and services through a worldwide network of combined sales and marketing employees, distributors and agents in selected international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees. New brand offering from the Dresser acquisition include Texstream plug valves and Wheatley check valves. The acquisition also added the Valgro (Canada) and International Valves Ltd. (U.K.) operations, thereby improving the channels to market.

     CCV’s primary customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies.

     Cooper Compression Division

     Cooper Compression was created in 2002 through the combination of Cooper Energy Services (CES) and Cooper Turbocompressor (CTC). The business is divided into Reciprocating Technology, which encompasses the products and services historically provided by CES, and Centrifugal Technology, which encompasses the air and gas compression markets traditionally served by CTC.

     Cooper Compression is a provider of reciprocating and centrifugal compression equipment and aftermarket parts and services. Reciprocating compression equipment (Reciprocating Technology) is used throughout the energy industry by gas transmission companies, compression leasing companies, oil and gas producers and independent power producers. Integrally geared centrifugal compressors (Centrifugal Technology) are used by customers around the world in a variety of industries, including air separation, petrochemical and chemical. Cooper Compression’s products include aftermarket parts and services, integral reciprocating engine-compressors, reciprocating separable compressors, turbochargers, integrally geared centrifugal compressors, compressor systems and controls. Its aftermarket services include spare parts, technical services, repairs, overhauls and upgrades.

     Cooper Compression’s products and services are marketed under the Ajax®, Superior®, Cooper-Bessemer®, Penn™, Enterprise™, Texcentric®, Compression Specialties™, Turbine Specialties™ (reciprocating products) and Turbo Air®, Genuine Joy® (aftermarket parts only), DryPak™, TA™ and MSG® (centrifugal products) brand names. Cooper Compression provides global support for its products and maintains sales and/or service offices in key international locations.

Reciprocating Technology

     Cooper Compression provides Ajax integral engine-compressors (140 to 880 horsepower), which combine the engine and compressor on a single drive shaft, and are used for gas re-injection and storage, as well as on smaller gathering and transmission lines. In addition, a 1,800 RPM separable compressor, featuring low vibration and couple-free design features, was significantly upgraded during 2004 to enhance its efficiency and was launched in 2005 in the compressed natural gas market. These compressors (100 to 280 horsepower) are also sold in gas gathering, drilling and compressed natural gas markets.

     Superior reciprocating compressors (100 to 9,000 horsepower) are used primarily for natural gas applications, including production, storage, withdrawal, processing and transmission, as well as petrochemical processing. These high-speed separable compressor units can be matched with either natural gas engine drivers or electric motors and provide a cost advantage over competitive equipment in the same power range. Cooper Compression markets a compressor cylinder line that provides customers better operating flexibility under the “RAM” trade name. Additionally, a new line of compressor frames was developed and launched in 2005.

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     There is an installed base of Cooper-Bessemer, Penn, Enterprise, Superior, Ajax and Joy engines and compressors (up to 30,000 horsepower) for which Cooper Compression provides replacement parts and service on a worldwide basis. During 2004, an expansion to the Company’s industry-leading turbocharger capabilities was completed, providing expanded services and faster product deliverability. Cooper Compression’s channel to market utilizes a distributor network in North America for new reciprocating compressors and direct selling for most international customers to provide maximum exposure for the Company’s products.

     Cooper Compression’s primary customers in reciprocating technology include gas transmission companies, compression leasing companies, oil and gas producers and processors and independent power producers.

Centrifugal Technology

     Cooper Compression also manufactures and supplies integrally geared centrifugal compressors and aftermarket services to customers worldwide. Centrifugal air compressors, used primarily in manufacturing processes (plant air), are sold under the trade name of Turbo Air, with specific models including the TA-2000, TAC-2000, TA-2020, TA-3000, TA-6000, and TA-9000. Engineered compressors are used in the process air and gas industries and are identified by the trade name MSG.

     The process and plant air centrifugal compressors deliver oil-free compressed air and other gases to the customer, thus preventing oil contamination of the finished products. Worldwide customers increasingly prefer oil-free air for quality, safety, operational and environmental reasons.

     Cooper Compression provides installation and maintenance service, parts, repairs, overhauls and upgrades to its worldwide customers for plant air and process gas compressors. It also provides aftermarket service and repairs on all equipment it produces through a worldwide network of distributors, service centers and field service technicians utilizing an extensive inventory of parts.

     Cooper Compression’s customers in centrifugal technology are petrochemical and refining companies, natural gas processing companies, durable goods manufacturers, utilities, air separation and chemical companies.

Market Issues

     Cooper Cameron is one of the leaders in the global market for the supply of petroleum production equipment. Cooper Cameron believes that it is well-positioned to serve these markets. Plant and service center facilities around the world in major oil- and gas-producing regions provide a broad market coverage.

     The global market continues to be a source of growth for Cooper Cameron. The desire to expand oil and gas resources and transmission capacity in developed and developing countries, for both economic and political reasons, continues to be a major factor affecting market demand. Additionally, establishment of industrial infrastructure in the developing countries will necessitate the growth of basic industries that require plant air and process compression equipment. Production and service facilities in North and South America, Europe, the Far and Middle East and West Africa provide the Company with the ability to serve the global marketplace.

     In each of Cooper Cameron’s business segments, a large population of installed engines, compression equipment and oil and gas production equipment exists in the worldwide market. The long-lived nature of the equipment provides a relatively stable repair parts and service business. However, with respect to Cooper Compression, approximately 35% of that segment’s revenues come from the sale of replacement parts for equipment that the Company no longer manufactures. Many of these units have been in service for long periods of time and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally. Notwithstanding this, significant product development and service attention is directed toward this legacy population in order to keep them in service. Retrofits targeted to emissions reduction, efficiency improvement and safety remain areas of focus.

     In recent years, the Company’s Cameron Division has been expanding into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and, in some cases, the application of new technology. These projects accounted for nearly 7% of revenues in 2005.

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     In 2005, Cameron and Petreco formed a joint technology development team to pursue market opportunities in the subsea processing area. The group is focused on leveraging Cameron’s proven capabilities in subsea equipment design and Petreco’s well-established processing and separation technology for seabed applications.

Geographic Breakdown of Revenues

     Revenues for the years ended December 31, 2005 and 2004 were generated from shipments to the following regions of the world (dollars in thousands):

					Increase
Region	2005		2004		(Decrease)
North America	$	1,145,881	$	859,126	$	286,755
South America		141,845		89,726		52,119
Asia, including Middle East		486,767		390,374		56,393
Africa		348,206		438,060		(89,854	)
Europe		359,417		292,775		66,642
Other		35,731		22,784		12,947
	$	2,517,847	$	2,092,845	$	425,002

New Product Development

     Cameron introduced several drilling products during the last several years. These products include the 3.5 million-pound load capacity LoadKing™ riser system, used for drilling in up to 10,000-foot water depths; a lightweight and lower-cost locking mechanism for subsea BOPs; a new generation of variable-bore ram packers; a Freestanding Drilling Riser, and an Environmental Safe Guard system.

     Other Cameron-developed products include the patented SpoolTreeÔ subsea production system; the CAMTROL system that includes all of Cameron’s controls capabilities of production, drilling and workover; and the CameronDC subsea production system, which is the world’s first all-electric direct current-powered subsea production system, designed for increased reliability and improved performance in deepwater applications.

     During 2005, Cameron introduced a new subsea controls system that combines the traditional subsea control module and the subsea accumulator module in a single package, allowing for more efficient operation of the subsea tree and manifold valves. Additionally, a new state-of-the-art subsea test chamber in Cameron’s controls engineering facility in Celle, Germany facilitates testing of the Company’s control systems.

     Also in 2005, Cameron launched its updated CAMTROL subsea control module, which includes new electronics, lower power demand, a DC power option and fiber optic communications to further increase reliability and enable extended offset developments and high-bandwidth intelligent completions.

     During 2005, Flow Control introduced a new three-inch underbalanced drilling choke, the DR30, in response to drilling customers’ increasing demand for higher-capacity chokes for use in underbalanced drilling applications.

     CCV-developed products include a range of 2” to 16” ball valves capable of performing at pressures of 10,000 psi and in water depths of 10,000 feet, and an actuator named ActraCam™ that operates its all-welded Cameron ball valve.

     Cooper Compression’s product range was expanded through the addition of compressor frames (TAC-2000, TA-2020, TA-3000, TA-6000 and TA-9000) and the addition of trademarked accessories such as Dry Pak heat of compression dryers and Turboblend, a

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hydro-cracked turbomachinery lubricating oil. Cooper Compression’s Engineered Compressor product line was redefined and the MSG Renaissance program was introduced to update the MSG product line.

     Cooper Compression has focused product development resources to further expand its high-efficiency plant air compressor line and to provide engineered compressors matched to the requirements of its customers. The latter is being achieved by advances in aerodynamic and rotor dynamic analytical design capability and the addition of centrifugal gas applications.

     Two new offerings were introduced in 2005 in the reciprocating product line. The AXIS™ reciprocating compressor is an all-new barrel-frame design targeted at the natural gas lease fleet markets. The new C-Force™ compressor was created through the addition of new tandem cylinders to a small Superior reciprocating frame, providing an offering ideally suited to compressed natural gas applications.

     Another new development by Cooper Compression for aftermarket applications is a magnetic, springless poppet valve for use in reciprocating compressors. The new Magneta™ valve is designed to replace springs – one of the leading failure components in reciprocating compressors – with a magnet and will be field tested and offered commercially in 2006.

Competition

     Cooper Cameron competes in all areas of its operations with a number of other companies, some of which have financial and other resources comparable to or greater than those of Cooper Cameron.

     Cooper Cameron has a leading position in the petroleum production equipment markets, particularly with respect to its high-pressure products. In these markets, Cooper Cameron competes principally with Aker Kvaerner, Balon Corporation, Circor International, Inc., Daniel Flow Measurement Division of Emerson Process Management, Dril-Quip, Inc., FlowServ Corp., FMC Technologies, Inc., GE Oil & Gas Group, Hanover Compressor Company, Hydril Company, Masterflo (a division of Steam-Flo Industries Ltd.), NATCO Group, Inc., National Oilwell Varco Inc., PBV-USA, Inc. (a Zy-Tech Global Industries company), Petrovalve (a Flotek Industries, Inc. company), Pibiviese, T3 Energy Services Inc., Tyco International Ltd., Valve Automation division of Emerson Process Management, Vetco International, Ltd., Wood Group and Worldwide Oilfield Machinery, Inc.

     The principal competitive factors in the petroleum production equipment markets are technology, quality, service and price. Cooper Cameron believes several factors give it a strong competitive position in these markets. Most significant are Cooper Cameron’s broad product offering, its worldwide presence and reputation, its service and repair capabilities, its expertise in high-pressure technology and its experience in alliance and partnership arrangements with customers and other suppliers.

     Cooper Cameron also has a strong position in the compression equipment markets. In these markets, Cooper Cameron competes principally with the Ariel Corporation, Atlas-Copco AB, CECO (a Compressor Engineering Corporation company), Demag, Dresser Rand Company, FS-Elloitt Company, LLC, Endyn Energy Dynamics, Hoerbiger Group, IR Air Solutions, TCS and Universal Compression. The principal competitive factors in the compression equipment markets are engineering and design capabilities, product performance, reliability and quality, service and price. Cooper Cameron has a competent engineering staff and skilled technical and service representatives.

Manufacturing

     Cooper Cameron has manufacturing facilities worldwide that conduct a broad variety of processes, including machining, fabrication, assembly and testing, using a variety of forged and cast alloyed steels and stainless steel as the primary raw materials. In recent years, Cooper Cameron has rationalized plants and products, closed various manufacturing facilities, moved product lines to achieve economies of scale, and upgraded other facilities. This is an ongoing process as the Company seeks ways to improve delivery performance and reduce costs. Cooper Cameron maintains advanced manufacturing, quality assurance and testing equipment geared to the specific products that it manufactures and uses process automation in its manufacturing operations. Manufacturing facilities typically utilize computer-aided, numeric-controlled tools and manufacturing techniques that concentrate the equipment necessary to produce similar products in one area of the plant in a configuration commonly known as a manufacturing cell. One operator in a manufacturing cell can monitor and operate several machines, as well as assemble and test products made by such machines, thereby improving operating efficiency and product quality.

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     Cooper Cameron’s test capabilities are critical to its overall processes. The Company has the capability to test most equipment at rated operating conditions, measuring all operating parameters, efficiency and emissions. All process compressors for air separation and all plant air compressors are given a mechanical and aerodynamic test in a dedicated test center prior to shipment.

     All of Cooper Cameron’s Asian, European and Latin American manufacturing plants are ISO certified and API licensed and most of the U.S. plants are ISO certified. ISO is an internationally recognized verification system for quality management.

Backlog

     Cooper Cameron’s backlog was approximately $2.156 billion at December 31, 2005, (approximately 85% of which is expected to be shipped during 2006) as compared to $1.000 billion at December 31, 2004, and $946.6 million at December 31, 2003. Backlog consists of customer orders for which a purchase order has been received, satisfactory credit or financing arrangements exist and delivery is scheduled.

Patents, Trademarks and Other Intellectual Property

     As part of its ongoing research, development and manufacturing activities, Cooper Cameron has a policy of seeking patents when appropriate on inventions involving new products and product improvements. Cooper Cameron owns 295 unexpired United States patents and 522 unexpired foreign patents. During 2005, 17 new U.S. and 28 new foreign patent applications were filed.

     Although in the aggregate these patents are of considerable importance to the manufacturing of many of its products, Cooper Cameron does not consider any single patent or group of patents to be material to its business as a whole.

     Trademarks are also of considerable importance to the marketing of Cooper Cameron’s products. Cooper Cameron considers the following trade names to be material to its business as a whole: Cameron, Cooper-Bessemer, Ajax, Willis and W-K-M. Other important trademarks used by Cooper Cameron include AOP®, BFCC, C-B Turbocharger™, CAMCHEC™, CameronDC™, Demco, Depurator, DryPak, Dynacentric™, Dynaseal™, Enterprise, Foster, Genuine Joy, H & H™, KCC, Krebs, McEvoy, Metrol, MSG, NAVCO®, Nickles Industrial, Nutron®, Orbit, Penn, Petreco, POW-R-SEAL™, Quad 2000™, SAF-T-SEAL™, SpoolTree, Superior, TA, TBV, Techno, Texcentric, Thornhill Craver, TruSeal, Turbine Specialties (Reciprocating Products), Turbo Air, TwinSeal, Unicel, VANTAGE™, Vortoil and Wemco.

     During 2005, the Company acquired NuFlo and certain businesses included within the Flow Control segment of Dresser, Inc. These acquisitions included the trademarks Barton, Control Seal™, Entech®, Grove®, International Valves Ltd. (U.K.), Ledeen®, NuFlo Technologies, Inc., Ring-O®, TK Valve®, Texstream®, Tom Wheatley™, Wheatley® and others.

     Cooper Cameron has the right to use the trademark Joy on aftermarket parts until November 2027. Cooper Cameron has registered its trademarks in the countries where such registration is deemed important.

     Cooper Cameron also relies on trade secret protection for its confidential and proprietary information. Cooper Cameron routinely enters into confidentiality agreements with its employees, partners and suppliers. There can be no assurance, however, that others will not independently obtain similar information or otherwise gain access to Cooper Cameron’s trade secrets.

Employees

     As of December 31, 2005, Cooper Cameron had approximately 12,200 employees, of which approximately 2,849 were represented by labor unions. Nearly 1,100 of these employees are covered by contracts expiring in 2006, nearly one-half of which relate to employees in Italy that were added through the late 2005 acquisition of certain businesses included within the Flow Control segment of Dresser, Inc. Approximately 285 employees at a Cooper Compression plant in Buffalo, New York and a Cameron facility in Brookshire, Texas, who are members of the International Association of Machinists and Aerospace Workers Union, have contracts expiring in the summer of 2006. Other contracts expiring in 2006 cover approximately 1,200 Cameron and CCV employees in Brazil, Italy, Venezuela and Romania.

     On July 1, 2005, a new two-year agreement was reached with the Shipbuilding and Marine Engineering Employees Union covering approximately 132 employees at the Company’s operations in Singapore, and a new one-year agreement was reached on December 1, 2005 with MISF covering approximately 100 office employees at the Company’s U.K. facility in Leeds. A new 3-1/2

10

year agreement was signed effective January 1, 2006, with the AMICUS labor union in Leeds, which covers an additional 334 hourly employees.

Executive Officers of the Registrant

Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Sheldon R. Erikson (64)	President and Chief Executive Officer since January 1995 and Chairman of the Board of Directors since May 1996. Chairman of the Board from 1988 to April 1995 and President and Chief Executive Officer from 1987 to April 1995 of The Western Company of North America.
Franklin Myers (53)	Senior Vice President of Finance and Chief Financial Officer since January 2003. Senior Vice President from July 2001 to January 2003, Senior Vice President and President of the Cooper Energy Services division from August 1998 to July 2001 and Senior Vice President, General Counsel and Secretary from April 1995 to July 1999.
John D. Carne (57)	Senior Vice President since February 16, 2006. Vice President from May 2003 to February 2006. President, Cooper Cameron Valves since April 2002. Director of Operations, Eastern Hemisphere, Cameron Division from 1999 to March 2002. Plant Manager, Leeds, England, Cameron Division from 1996 to 1999. Director of Operations, U.K. & Norway, Cooper Energy Services (U.K.) Ltd. from 1988 to 1996.
Jack B. Moore (52)	Senior Vice President since July 2005. Vice President from May 2003 to July 2005. President, Cameron Division since July 2002. Vice President and General Manager, Cameron Western Hemisphere from July 1999 to July 2002. Vice President Western Hemisphere Operations, Vice President Eastern Hemisphere, Vice President Latin American Operations, Director Human Resources, Director Market Research and Director Materials of Baker Hughes Incorporated from 1976 to July 1999.
William C. Lemmer (61)	Vice President, General Counsel and Secretary since July 1999. Vice President, General Counsel and Secretary of Oryx Energy Company from 1994 to March 1999.
Robert J. Rajeski (60)	Vice President since July 2000. President, Cooper Compression since October 2002. President, Cooper Turbocompressor division from July 1999 to October 2002 and President, Cooper Energy Services division from July 2001 to October 2002. Vice President and General Manager of Ingersoll-Dresser Pump Co., Engineered Pump division from 1994 to July 1999.
Jane C. Schmitt (54)	Vice President, Human Resources since May 1999. Vice President, Compensation and Benefits from 1996 to 1999, and Director, Compensation and Benefits from 1995 to 1996.
Charles M. Sledge (40)	Vice President and Corporate Controller since July 2001. Senior Vice President, Finance and Treasurer from 1999 to June 2001, and Vice President, Controller from 1996 to 1999, of Stage Stores, Inc., a chain of family apparel stores. Stage Stores, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in June 2000 and successfully emerged from bankruptcy protection in August 2001.
Dalton L. Thomas (56)	Vice President, Operations Support, since February 2004. President, Cameron division from July 1998 to 2001. Vice President, Eastern Hemisphere for Cameron division from 1995 to July 1998.

Glossary of Terms

Actuator. A hydraulic or electric motor used to open or close valves.

Blowout Preventer. A hydraulically operated system of safety valves installed at the wellhead during drilling and completion operations for the purpose of preventing an increase of high-pressure formation fluids — oil, gas or water — in the wellbore from turning into a “blowout” of the well.

Choke. A type of valve used to control the rate and pressure of the flow of production from a well or through flowlines.

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Christmas tree. An assembly of valves, pipes and fittings used to control the flow of oil and gas from a well.

Compressor. A device used to create a pressure differential in order to move or compress a vapor or a gas.

Centrifugal compressor. A compressor with an impeller or rotor, a rotor shaft and a casing which discharges gases under pressure by centrifugal force.

Integral reciprocating engine-compressor. A compressor in which the crankshaft is shared by the engine and compressor, each having its own piston rods driven by the shared crankshaft.

Integrally geared centrifugal compressor. A compressor in which the motor is geared so that the compressor runs at higher rpms than the motor itself to gain efficiency.

Reciprocating compressor. A compressor in which the compression effect is produced by the reciprocating motion of pistons and plungers operating in cylinders.

Controls. A device which allows the remote triggering of an actuator to open or close a valve.

Elastomer. A rubberized pressure control sealing element used in drilling and wellhead applications.

Riser. Pipe used to connect the wellbore of offshore wells to drilling or production equipment on the surface, and through which drilling fluids or hydrocarbons travel.

Valve. A device used to control the rate of flow in a line, to open or shut off a line completely, or to serve as an automatic or semi-automatic safety device.

Wellhead. The equipment installed at the surface of a wellbore to maintain control of a well and including equipment such as the casing head, tubing head and Christmas tree.

ITEM 1A. RISK FACTORS

     The information set forth under the caption “Factors That May Affect Financial Condition and Future Results” on pages 35 to 37 in the 2005 Annual Report to Stockholders is incorporated herein by reference.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     There were no unresolved comments from the SEC staff at the time of filing of this Form 10-K.

ITEM 2. PROPERTIES

     The Company currently operates manufacturing plants ranging in size from approximately 11,000 square feet to approximately 1,350,000 square feet. The Company also owns and leases warehouses, distribution centers, aftermarket and storage facilities and sales offices. The Company leases its corporate headquarters office space and space for the Cameron and CCV division headquarters in Houston, Texas.

     The Company manufactures, markets and sells its products and provides services throughout the world, operating facilities in numerous countries. At December 31, 2005, the significant facilities used by Cooper Cameron throughout the world for manufacturing, distribution, aftermarket services, machining, storage and warehousing contained an aggregate of approximately 9,808,535 square feet of space, of which approximately 6,989,699 square feet (71%) was owned and 2,818,836 (29%) was leased. Of this total, approximately 4,955,715 square feet of space (51%) is located in the United States and Canada, 467,817 square feet of space (5%) is located in Mexico and South America, and 4,385,003 square feet of space (45%) is located in Europe, Africa and Asia. The table below shows the number of significant operating manufacturing, warehouse and distribution and aftermarket facilities by business segment and geographic area. Cameron and CCV share space in certain facilities and, thus, are being reported together.

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					Asia/Pacific
	Western		Eastern		and		West
	Hemisphere		Hemisphere		Middle East		Africa		Total
Cameron and CCV		77		30		13		6		126
Cooper Compression		19		2		1		0		22

     Cooper Cameron believes its facilities are suitable for their present and intended purposes and are adequate for the Company’s current and anticipated level of operations.

ITEM 3. LEGAL PROCEEDINGS

     The Company is subject to a number of contingencies which include environmental matters, litigation and tax contingencies.

  Environmental Matters

     The Company’s worldwide operations are subject to domestic and international regulations with regard to air, soil and water quality as well as other environmental matters. The Company, through its environmental management system and active third party audit program, believes it is in substantial compliance with these regulations.

     The Company has been identified as a potentially responsible party (“PRP”) with respect to four sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) or similar state laws. The Company’s involvement at two of the sites has been resolved with de minimis payment. A third is believed to also be at a de minimis level. The fourth site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas. Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations. At December 31, 2005, the Company’s consolidated balance sheet included a liability of $8.8 million for environmental matters.

  Legal Matters

     As discussed in Environmental Matters above, the Company is engaged in site cleanup at a former manufacturing site in Houston, Texas. In 2001, the Company discovered that contaminated underground water at this site had migrated to an adjacent residential area. Pursuant to applicable state regulations, the Company notified the affected homeowners. The Company has entered into 21 written agreements with residents over the past four years that obligated the Company to either reimburse sellers in the area for the estimated decline in value due to a potential buyer’s concerns that related to the contamination or, in the case of some of these agreements, to purchase the property after an agreed marketing period. Four of these agreements have had no claim made under them as yet. To date, the Company has one property it has purchased that remains unsold, with an appraised value of $1.8 million. In addition, the Company has settled six other property claims by homeowners. The Company has had expenses and losses of approximately $7.6 million since 2002 related to the various agreements with homeowners. The Company has filed for reimbursement under an insurance policy purchased specifically for this exposure but has not recognized any potential reimbursement in its consolidated financial statements. The Company entered into these agreements for the purpose of mitigating the potential impact of the disclosure of the environmental issue. It was the Company’s intention to stabilize property values in the affected area to avoid or mitigate future claims. The Company believes it has been successful in these efforts as the number and magnitude of claims have declined over time and, while the Company has continued to negotiate with homeowners on a case by case basis, the Company no longer offers these agreements in advance of sale. There are approximately 150 homes in the affected area with an estimated aggregate appraised value of $150.0 million. The homeowners that have settled with the Company have no further claims on these properties. An unknown number of these properties have sold with no Company support, but with disclosure of the contamination and, therefore, likely have no further claims. The Company’s financial statements reflect a liability for its estimated exposure under the outstanding agreements with homeowners. The Company has not reflected a liability in its financial statements for any other potential damages, if any, related to this matter since the Company is no longer entering into property protection agreements with homeowners in advance of sale, the Company has not received any additional significant claims other than the lawsuits discussed below and the Company’s remediation efforts are resulting in a lower level of contamination than when originally disclosed to the homeowners. Additionally, the Company is unable to predict future market values of homes in the affected areas and how potential buyers of such homes may view the underground contamination in making a purchase decision.

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     The Company is a named defendant in two lawsuits regarding this contamination. In Valice v. Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed June 21, 2002), the plaintiffs claim that the contaminated underground water has reduced property values and threatens the health of the area residents. The case is filed as a class action. The complaint filed seeks an analysis of the contamination, reclamation and recovery of actual damages for the loss of property value. The Company is of the opinion that there is no health risk to area residents and that the lawsuit essentially reflects concerns over possible declines in property value. Counsel for each of the Company, its insurer and the Valice plaintiffs are currently negotiating a possible settlement alternative under which homeowners in the affected area would be indemnified for a loss of property value, if any, due to the contamination upon any sale within a limited timeframe. However, there are still significant unresolved issues related to a settlement of this matter including the methodology of quantifying and allocating damages, attorneys’ fees for plaintiffs’ attorneys, agreement on a settlement by all interested parties, a fairness opinion rendered by the Court and the ability of the plaintiffs to obtain approval of the members of the putative class. Absent a settlement with the plaintiffs, the Company does not believe a class would be certified and thus the Company believes it has no liability to the putative class at this point in time. Therefore, the Company has not recorded a liability for this possible settlement in its financial statements.

     In Kramer v. Cameron Iron Works, Inc., Cooper Industries, Inc., Cooper Cameron Corporation, and Tzunming Hsu and Shan Shan Hsu (190th Judicial District, Harris County, filed May 29, 2003), the plaintiff purchased one of the homes in the area and alleges a failure by the defendants to disclose the presence of contamination and seeks to recover unspecified monetary damages.

     The Company believes any potential exposure from existing agreements and any settlement of the class action, or, based on its review of the facts and law, any potential exposure from these, or similar, suits will not have a material adverse effect on its financial condition or liquidity.

     The Company had been named as a defendant in a suit brought by a purchaser of an option to purchase a parcel of the same former manufacturing site, Silber/I-10 Venture Ltd., f/k/a Rocksprings Ltd. v. Falcon Interests Realty Corp., Cooper Industries Inc. and Cooper Cameron Corporation (212th Judicial District Court, Galveston County, filed August 15, 2002) that alleged fraud and breach of contract regarding the environmental condition of the parcel under option. The parties have settled this matter and the case has been dismissed.

     The Company has been named as a defendant in a number of multi-defendant, multi-plaintiff tort lawsuits since 1995, 215 of which have been closed and 236 of which remained open as of December 31, 2005. Of the 215 cases closed, 57 have been by a settlement at a cost of approximately $22,207 per case. The Company made no settlement payments in the remaining 158 cases. At December 31, 2005, the Company’s consolidated balance sheet included a liability of $3.5 million for the 236 cases which remain open, which includes legal costs.

     The Company believes, based on its review of the facts and law, that the potential exposure from the remaining suits will not have a material adverse effect on its financial condition or liquidity.

  Tax Contingencies

     The Company has operations in over 35 countries. As a result, the Company is subject to various tax filing requirements in these countries. The Company prepares its tax filings in a manner which it believes is consistent with such filing requirements. However, some of the tax laws and regulations which the Company is subject to are subject to interpretation and/or judgment. Although the Company believes that the tax liability for periods ending on or before the balance sheet date have been adequately provided for in the financial statements, to the extent that a taxing authority believes that the Company has not prepared its tax filings in accordance with the authority’s interpretation of the tax laws/regulations, the Company could be exposed to additional taxes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during the fourth quarter of 2005.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     The common stock of Cooper Cameron, par value $.01 per share (together with the associated Rights to Purchase Series A Junior Participating Preferred Stock), is traded on the New York Stock Exchange (“NYSE”) under the symbol CAM. No dividends were paid during 2005 or 2004.

     The following table indicates the range of trading prices on the NYSE for January 3, 2005 through December 30, 2005 and for January 2, 2004 through December 31, 2004 (revised to reflect the 2-for-1 stock split effective December 15, 2005).

	Price Range ($)
	High		Low		Last
2005
First Quarter	$	29.805	$	25.52	$	28.605
Second Quarter		31.99		26.76		31.025
Third Quarter		37.695		30.86		36.965
Fourth Quarter		43.10		32.21		41.40

	Price Range ($)
	High		Low		Last
2004
First Quarter	$	24.745	$	20.025	$	22.025
Second Quarter		25.405		21.465		24.35
Third Quarter		27.65		23.48		27.42
Fourth Quarter		28.37		23.62		26.905

     As of February 16, 2006, the approximate number of stockholders of record of Cooper Cameron common stock was 1,305.

     Information concerning securities authorized for issuance under equity compensation plans is included in Note 9 of the Notes to Consolidated Financial Statements, which notes are incorporated herein by reference in Part II, Item 8 hereof.

ITEM 6. SELECTED FINANCIAL DATA

     The information set forth under the caption “Selected Consolidated Historical Financial Data of Cooper Cameron Corporation” on page 70 in the 2005 Annual Report to Stockholders is incorporated by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The information set forth under the caption “Management’s Discussion and Analysis of Results of Operations and Financial Condition of Cooper Cameron Corporation” on pages 25-38 in the 2005 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information for this item is set forth in the section entitled “Market Risk Information” on pages 37-38 in the 2005 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of the Company and the independent registered public accounting firm’s reports set forth on pages 40-69 in the 2005 Annual Report to Stockholders are incorporated herein by reference:

     Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting.

15

     Report of Independent Registered Public Accounting Firm.

     Consolidated Results of Operations for each of the three years in the period ended December 31, 2005.

     Consolidated Balance Sheets as of December 31, 2005 and 2004.

     Consolidated Cash Flows for each of the three years in the period ended December 31, 2005.

     Consolidated Changes in Stockholders’ Equity for each of the three years in the period ended December 31, 2005.

     Notes to Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     In accordance with Exchange Act Rules 13a-15 and 15d-15, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Disclosure Committee and the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2005 to ensure that information required to be disclosed by the Company that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

     Other than the acquisition of substantially all of the businesses included within the Flow Control segment of Dresser, Inc. and the inclusion of their results of operations since the acquisition date and their year-end financial position in the Company’s consolidated financial statements as of and for the year ended December 31, 2005, there has been no change in the Company’s internal controls over financial reporting that occurred during the three months ended December 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

     The information set forth under the captions “Management’s Report on Internal Control Over Financial Reporting” and “Assessment of Internal Control Over Financial Reporting” on page 39 of the 2005 Annual Report to Stockholders and the “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting” included on page 40 of the 2005 Annual Report to Stockholders is incorporated herein by reference.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding Section 16(a) compliance, the Audit Committee, the Company’s Code of Business Ethics and Ethics for Directors, shareholder nominating procedures and background of the directors appearing under the captions “Section 16(a) Beneficial Ownership Reporting Compliance”, “Information Concerning the Board of Directors”, and “Security Ownership of Management” in the Company’s Proxy Statement for the 2006 Annual Meeting of Stockholders is incorporated herein by reference.

16

     The Registrant has adopted a code of ethics that applies to all employees, including its principal executive officer, principal financial officer, principal accounting officer and its Board of Directors. A copy of the code of ethics is available on the Registrant’s Internet website at www.coopercameron.com and is available in print to any shareholder free of charge upon request. The Registrant intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions, by posting such information on its website at the address set forth above.

     The information under the heading “Executive Officers of the Registrant” in Part I, Item 1 of this Form 10-K is incorporated by reference in this section.

ITEM 11. EXECUTIVE COMPENSATION

     The information concerning Executive Compensation required by Item 11 shall be included in the Proxy Statement to be filed relating to our 2006 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information concerning Security Ownership of Certain Beneficial Owners and Management required by Item 12 shall be included in our Proxy Statement to be filed relating to the 2006 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information concerning Certain Relationships and Related Transactions required by Item 13 shall be included in our Proxy Statement to be filed relating to the 2006 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information concerning Principal Accountant Fees and Services required by Item 14 shall be included in the Proxy Statement to be filed relating to our 2006 Annual Meeting of Stockholders and is incorporated herein by reference.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Report:

(1)	Financial Statements:
	All financial statements of the Registrant as set forth under Part II, Item 8 of this Annual Report on Form 10-K.
(2)	Financial Statement Schedules:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Cooper Cameron Corporation

We have audited the consolidated financial statements of Cooper Cameron Corporation (the “Company”) as of December 31, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, and have issued our report thereon dated February 24, 2006 (incorporated by reference in this Form 10-K). Our audits also included the financial statement schedule included in Item 15(a)(2) of this Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Houston, Texas
February 24, 2006

Schedule II – Valuation and Qualifying Accounts
(dollars in thousands)

			Additions
	Balance at		Charged to		Charged to									Balance at
	beginning of		costs and		other									end
	period		expenses		accounts			Deductions (b)			Translation			of period
YEAR ENDED DECEMBER 31, 2005:
Allowance for doubtful accounts	$	4,513	$	1,583	$	4,556	(a)	$	(874	)	$	(3	)	$	9,775
Allowance for obsolete and excess inventory	$	47,778	$	21,971	$	33,997	(a)	$	(32,158	)	$	(1,115	)	$	70,473
YEAR ENDED DECEMBER 31, 2004:
Allowance for doubtful accounts	$	1,823	$	3,313	$	145		$	(781	)	$	13		$	4,513
Allowance for obsolete and excess inventory	$	37,317	$	18,659	$	2,500		$	(10,019	)	$	(679	)	$	47,778
YEAR ENDED DECEMBER 31, 2003:
Allowance for doubtful accounts	$	2,170	$	15	$	—		$	(388	)	$	26		$	1,823
Allowance for obsolete and excess inventory	$	35,355	$	8,506	$	—		$	(6,784	)	$	240		$	37,317

(a)	Primarily represents acquisition date balances of newly acquired entities or purchase price allocation adjustments from entities acquired in the prior year.
(b)	Write-offs of uncollectible receivables or obsolete inventory.

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(3) Exhibits:

3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705), and incorporated herein by reference.
10.1	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.2	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820), and incorporated herein by reference.
10.3	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082), and incorporated herein by reference.
10.4	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082), and incorporated herein by reference.
10.5	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.6	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective May 1, 2003, filed as Exhibit 10.8 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	First through Third Amendments to the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.9 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.8*	Fourth and Fifth Amendments to the Cooper Cameron Corporation Retirement Savings Plan.
10.9	Merger of the Petreco International, Inc. 401(k) Profit Sharing Plan with and into the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.

19

(3) Exhibits:

10.10	Merger of the Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees with and into the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.11 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.11*	Amendment to the NuFlo Technologies, Inc. 401(K) Plan and Merger of the NuFlo Technologies, Inc. 401(K) Plan with and into the Cooper Cameron Corporation Retirement Savings Plan.
10.12	Cooper Cameron Corporation 2005 Equity Incentive Plan, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 5, 2005.
10.13*	First Amendment to the Cooper Cameron Corporation 2005 Equity Incentive Plan,
10.14	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.15	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.17	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.18	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.19	Amendment to the Employment Agreement between Cooper Cameron Corporation and Sheldon R. Erikson, dated August 24, 2004, filed as Exhibit 10.48 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.20	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.21	Amendment to the Employment Agreement between Cooper Cameron Corporation and Franklin Myers, dated August 16, 2004, filed as Exhibit 10.47 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.22	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.23*	Amendment to the Change in Control Agreements, effective May 31, 2005, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski.
10.24	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.

20

(3) Exhibits:

10.25	Amendment to the Employment Agreement between Cooper Cameron Corporation and Charles M. Sledge, dated December 21, 2004, filed as Exhibit 10.46 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore, filed as Exhibit 10.27 to the Annual Report on Form 10-K for 2003 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2005 Proxy Statement for the Annual Meeting of Stockholders held on May 5, 2005.
10.28	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.29*	Form of Executive Severance Program of Cooper Cameron Corporation, effective July 1, 2000, and reissued January 1, 2004.
10.30	Credit Agreement, dated as of October 12, 2005, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and JPMorgan Chase Bank, N.A., as agent, filed as Exhibit 10.1 to the Current Report on Form 8-K dated October 12, 2005, of Cooper Cameron Corporation, and incorporated herein by reference.
10.31	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.32	First through Eighth Amendments to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 10.36 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.33*	Ninth Amendment to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant.
10.34	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, , Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans, filed as Exhibit 10.36 to the Annual Report on Form 10-K for 2003 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36	Form of Stock Option Agreement for grants dated November 22, 2004, under the Cooper Cameron Corporation Long-Term Incentive Plan, filed as an exhibit to a Form 8-K filed on January 18, 2005, and incorporated herein by reference.
10.37	Change of Control Agreement, dated February 19, 2004, by and between Dalton Thomas and Cooper Cameron Corporation, filed as Exhibit 10.49 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.38	Form of Restricted Stock Agreement for Restricted Stock Units granted on January 1, 2005, filed as Exhibit 10.50 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.39*	Form of Restricted Stock Agreement for Restricted Stock Units granted on January 1, 2006.
10.40	Form of Stock Option Agreement for grants dated November 22, 2004, under the Cooper Cameron Corporation Long-Term Incentive Plan, filed as an exhibit to a Form 8-K filed on January 18, 2005, and incorporated herein by reference.

21

(3) Exhibits:

10.41*	Cooper Cameron Corporation Deferred Compensation Plan for Non-Employee Directors.
10.42	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.43	Sixth Amendment to the Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the annual meeting of Stockholders held on May 8, 2003.
10.44	Seventh Amendment to the Cooper Cameron Corporation Long-Term Incentive Plan, filed as Exhibit 10.44 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.45	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.46	First Amendment to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors, filed as Exhibit 10.43 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.47*	Form of Stock Option Agreement for stock options granted on November 10, 2005.
13.1*	Portions of the 2005 Annual Report to Stockholders are included as an exhibit to this report.
14.1	Code of Business Conduct and Ethics for Directors incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the annual meeting of Stockholders held on May 8, 2003.
14.2	Code of Ethics for Management Personnel, filed as Exhibit 14.2 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
14.3	Standards of Conduct, filed as Exhibit 14.3 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
21.1*	Subsidiaries of registrant.
23.1*	Consent of Independent Registered Public Accounting Firm.
31.1*	Certifications.
31.2*	Certifications.
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith

22

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COOPER CAMERON CORPORATION
Registrant
By:	/s/ Charles M. Sledge
	(Charles M. Sledge)
	Vice President and Corporate Controller
	(Principal Accounting Officer)
Date: March 6, 2006

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on this 6th day of March, 2006, by the following persons on behalf of the Registrant and in the capacities indicated.

Signature	Title
/s/ Nathan M. Avery
(Nathan M. Avery)	Director
/s/ C. Baker Cunningham
(C. Baker Cunningham)	Director
/s/ Sheldon R. Erikson	Chairman, President and Chief Executive Officer
(Sheldon R. Erikson)	(principal executive officer)
/s/ Peter J. Fluor
(Peter J. Fluor)	Director
/s/ Lamar Norsworthy (Lamar Norsworthy)	Director
/s/ Michael E. Patrick (Michael E. Patrick)	Director
/s/ David Ross III (David Ross III)	Director
/s/ Bruce W. Wilkinson (Bruce W. Wilkinson)	Director
/s/ Franklin Myers	Senior Vice President, Finance and Chief Financial Officer
(Franklin Myers)	(principal financial officer)

23

EXHIBIT INDEX

Exhibit		Sequential
Number	Description	Page Number
3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705), and incorporated herein by reference.
10.1	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.2	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820), and incorporated herein by reference.
10.3	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082), and incorporated herein by reference.
10.4	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082), and incorporated herein by reference.
10.5	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.6	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective May 1, 2003, filed as Exhibit 10.8 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	First through Third Amendments to the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.9 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.8*	Fourth and Fifth Amendments to the Cooper Cameron Corporation Retirement Savings Plan.
10.9	Merger of the Petreco International, Inc. 401(k) Profit Sharing Plan with and into the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.10	Merger of the Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees with and into the Cooper Cameron Corporation Retirement Savings Plan, filed as Exhibit 10.11 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.

24

Exhibit		Sequential
Number	Description	Page Number
10.11*	Amendment to the NuFlo Technologies, Inc. 401(K) Plan and Merger of the NuFlo Technologies, Inc. 401(K) Plan with and into the Cooper Cameron Corporation Retirement Savings Plan.
10.12	Cooper Cameron Corporation 2005 Equity Incentive Plan, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 5, 2005.
10.13*	First Amendment to the Cooper Cameron Corporation 2005 Equity Incentive Plan,
10.14	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.15	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.17	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.18	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.19	Amendment to the Employment Agreement between Cooper Cameron Corporation and Sheldon R. Erikson, dated August 24, 2004, filed as Exhibit 10.48 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.20	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.21	Amendment to the Employment Agreement between Cooper Cameron Corporation and Franklin Myers, dated August 16, 2004, filed as Exhibit 10.47 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.22	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.23*	Amendment to the Change in Control Agreements, effective May 31, 2005, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski.
10.24	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.25	Amendment to the Employment Agreement between Cooper Cameron Corporation and Charles M. Sledge, dated December 21, 2004, filed as Exhibit 10.46 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore, filed as Exhibit 10.27 to the Annual Report on Form 10-K for 2003 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2005 Proxy Statement for the Annual Meeting of Stockholders held on May 5, 2005.
10.28	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.

25

Exhibit		Sequential
Number	Description	Page Number
10.29*	Form of Executive Severance Program of Cooper Cameron Corporation, effective July 1, 2000, and reissued January 1, 2004.
10.30	Credit Agreement, dated as of October 12, 2005, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and JPMorgan Chase Bank, N.A., as agent, filed as Exhibit 10.1 to the Current Report on Form 8-K dated October 12, 2005, of Cooper Cameron Corporation, and incorporated herein by reference.
10.31	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.32	First through Eighth Amendments to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 10.36 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.33*	Ninth Amendment to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant.
10.34	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, , Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans, filed as Exhibit 10.36 to the Annual Report on Form 10-K for 2003 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36	Form of Stock Option Agreement for grants dated November 22, 2004, under the Cooper Cameron Corporation Long-Term Incentive Plan, filed as an exhibit to a Form 8-K filed on January 18, 2005, and incorporated herein by reference.
10.37	Change of Control Agreement, dated February 19, 2004, by and between Dalton Thomas and Cooper Cameron Corporation, filed as Exhibit 10.49 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.38	Form of Restricted Stock Agreement for Restricted Stock Units granted on January 1, 2005, filed as Exhibit 10.50 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.39*	Form of Restricted Stock Agreement for Restricted Stock Units granted on January 1, 2006.
10.40	Form of Stock Option Agreement for grants dated November 22, 2004, under the Cooper Cameron Corporation Long-Term Incentive Plan, filed as an exhibit to a Form 8-K filed on January 18, 2005, and incorporated herein by reference.
10.41*	Cooper Cameron Corporation Deferred Compensation Plan for Non-Employee Directors.
10.42	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.43	Sixth Amendment to the Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the annual meeting of Stockholders held on May 8, 2003.
10.44	Seventh Amendment to the Cooper Cameron Corporation Long-Term Incentive Plan, filed as Exhibit 10.44 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.45	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.46	First Amendment to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors, filed as Exhibit 10.43 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
10.47*	Form of Stock Option Agreement for stock options granted November 10, 2005.
13.1*	Portions of the 2005 Annual Report to Stockholders are included as an exhibit to this report.
14.1	Code of Business Conduct and Ethics for Directors incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the annual meeting of Stockholders held on May 8, 2003.
14.2	Code of Ethics for Management Personnel, filed as Exhibit 14.2 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
14.3	Standards of Conduct, filed as Exhibit 14.3 to the Annual Report on Form 10-K for 2004 of Cooper Cameron Corporation, and incorporated herein by reference.
21.1*	Subsidiaries of registrant.
23.1*	Consent of Independent Registered Public Accounting Firm.
31.1*	Certifications.
31.2*	Certifications.
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith

26

EX-10.8

Exhibit 10.8

FOURTH AMENDMENT TO THE
COOPER CAMERON CORPORATION
RETIREMENT SAVINGS PLAN
(As Amended and Restated Effective May 1, 2003)

     WHEREAS, COOPER CAMERON CORPORATION (the “Company”) has heretofore adopted the COOPER CAMERON CORPORATION RETIREMENT SAVINGS PLAN (the “Plan”); and

     WHEREAS, the Company desires to amend the Plan to decrease the Plan’s mandatory cash out limit;

     NOW, THEREFORE, the Plan shall be amended as follows, effective as provided below:

I. Effective as of March 28, 2005:

     1. Section 10.2(a) of the Plan shall be deleted and the following shall be substituted therefor:

“(a.1)

Distributions of $1,000 or Less. If the value of the vested interest of a Member, Inactive Member, Profit Sharing Member, or IAR Member, as the case may be, in his Basic, Supplemental, Matching, IAR, Profit Sharing, and Rollover/Transfer Accounts is $1,000 or less (or $5,000 or less in the case of a distribution after a Member’s death), distribution thereof shall be made to such a Member (or his Beneficiary, as applicable) as soon as practicable in a single sum payment.

(a.2)

Distributions of More than $1,000 But Not More Than $5,000: If the value of the vested interest of a Member, Inactive Member, Profit Sharing Member, or IAR Member, as the case may be, in his Basic, Supplemental, Matching, IAR, Profit Sharing, and Rollover/Transfer Accounts is more than $1,000 but not more than $5,000, such Member may elect to receive distribution of such Accounts as soon as practicable in a single sum payment at any time prior to attainment of age 701/2. Such election may be made without the consent of such Member’s spouse, if any. A Member’s Accounts that are described in this Section 10.2(a.2) shall not be distributed without the Member’s consent. This Section 10.2(a.2) shall be effective with respect to distributions made on or after March 28, 2005 regardless of whether the event which caused a Participant’s Accounts to become distributable occurred before or after March 28, 2005.”

     2. Section 10.2(c) of the Plan shall be deleted and the following shall be substituted therefor:

“(c) Disregard of Rollover Contributions for Valuation of Involuntary Cash Outs in Certain Cases. For purposes of application of the $5,000 threshold of Sections 10.2(a.1), 10.2(a.2), 10.2(b), 11.5(f), and 12.5, the value of a Member’s vested interest in his Separate Accounts shall be determined without regard to that portion of such accounts which is attributable to Rollover Contributions (and earnings allocable thereto) within the meaning of Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the Code. If the value of a Member’s Separate Accounts as so determined is $5,000 or less, the Member’s entire nonforfeitable account balance (including amounts attributable to such Rollover Contributions) shall be distributable pursuant to an election under Section 10.2(a.2) or distributed pursuant to Section 10.2(a.1), 11.5(f) or 12.5, as applicable.”

     3. The phrase “$5,000 or more” in Section 10.11 shall be deleted and the phrase “more than $1,000 (or more than $5,000 in the case of a deceased Member)” shall be substituted therefor.

     4. The following shall be added at the end of Section 12.5 of the Plan:

	“In the event that the total value of an amount directed to be paid pursuant to a qualified domestic relations order is not in excess of $5,000, such amount shall be paid to the recipient or recipients identified in such order in one lump sum payment as soon as practicable after such order has been determined to be a qualified domestic relations order.”
II.	Effective as of January 1, 2006:

     1. The percentage “20%” in Section 3.1 of the Plan shall be deleted and the percentage “50%” shall be substituted therefor.

     2. Section 10.2(a) of the Plan shall be deleted and the following shall be substituted therefor:

“(a.1) Distributions of $1,000 or Less. If the value of the vested interest of a Member, Inactive Member, Profit Sharing Member, or IAR Member, as the case may be, in his Basic, Supplemental, Matching, IAR, Profit Sharing, and Rollover/Transfer Accounts is $1,000 or less (or $5,000 or less in the case of a distribution after a Member’s death), distribution thereof shall be made to such a Member (or his Beneficiary, as applicable) as soon as practicable in a single sum payment.

2

(a.2) Distributions of More than $1,000 But Not More Than $5,000: If the value of the vested interest of a Member, Inactive Member, Profit Sharing Member, or IAR Member, as the case may be, in his Basic, Supplemental, Matching, IAR, Profit Sharing, and Rollover/Transfer Accounts is more than $1,000 but not more than $5,000, such Member may elect to receive distribution of such Accounts as soon as practicable in a single sum payment at any time prior to attainment of age 70¹/2; provided, however, distribution after a Member’s death may be made without consent pursuant to Section 10.2(a.1) if the value of the vested interest in his Account(s) is $5,000 or less. Such election may be made without the consent of such Member’s spouse, if any. In the event of a distribution pursuant to this Section 10.2(a.2), if the Member does not elect to have such distribution paid directly to an Eligible Retirement Plan specified by the Participant in a direct rollover in accordance with Section 10.9 or to receive the distribution directly in accordance with this Section 10.2(a.2), then the Plan Administrator will direct the Trustee to pay the distribution in a direct rollover to an individual retirement plan designated by the Plan Administrator. This Section 10.2(a.2) shall be effective with respect to distributions made on or after January 1, 2006 regardless of whether the event which caused a Participant’s Accounts to become distributable occurred before or after January 1, 2006.”

III. As amended hereby, the Plan is specifically ratified and reaffirmed.

     EXECUTED this 29^th day of December, 2005, effective for all purposes as provided above.

COOPER CAMERON CORPORATION

By: /s/ Jane Schmitt                   

Name: Jane C. Schmitt                   

Title: VP, Human Resources        

3

FIFTH AMENDMENT TO
COOPER CAMERON CORPORATION
RETIREMENT SAVINGS PLAN
(As Amended and Restated Effective May 1, 2003)

     WHEREAS, COOPER CAMERON CORPORATION (the “Company”) has heretofore adopted the COOPER CAMERON CORPORATION RETIREMENT SAVINGS PLAN (the “Plan”); and

     WHEREAS, the Company desires to amend the Plan in certain respects;

     NOW, THEREFORE, the Plan shall be amended as follows, effective as of January 1, 2006:

I. The last sentence of Section 8.1(b) of the Plan shall be deleted.

II. As amended hereby, the Plan is specifically ratified and reaffirmed.

     EXECUTED this 7^th day of February, 2006, effective for all purposes as provided above.

COOPER CAMERON CORPORATION

By: /s/ Jane Schmitt                   

Name: Jane Schmitt                   

Title: VP, Human Resources     

4

EX-10.11

Exhibit 10.11

AMENDMENT TO THE
NUFLO TECHNOLOGIES, INC. 401(k) PLAN
AND
MERGER OF THE
NUFLO TECHNOLOGIES, INC. 401(k) PLAN
WITH AND INTO THE
COOPER CAMERON CORPORATION
RETIREMENT SAVINGS PLAN

     WHEREAS, Cooper Cameron Corporation (the “Company”) sponsors the Cooper Cameron Corporation Retirement Savings Plan (the “Cooper Cameron Plan”) and the NuFlo Technologies, Inc. 401(k) Plan (the “NuFlo Plan”);

     WHEREAS, the Company wishes to amend the NuFlo Plan to reduce the NuFlo Plan’s involuntary cashout threshold to $1,000, effective as of March 28, 2005;

     WHEREAS, the Company wishes to amend the NuFlo Plan to eliminate the Fund Shares of marketable securities benefit distribution form, effective December 31, 2005; and

     WHEREAS, the Company desires that the NuFlo Plan be merged with and into the Cooper Cameron Plan, effective as of January 1, 2006;

     NOW, THEREFORE, the NuFlo Plan shall be amended and merged as follows:

I. Effective as of March 28, 2005, notwithstanding any other NuFlo Plan provision to the contrary, the NuFlo Plan shall be and hereby is amended to reduce the involuntary cashout of small accounts threshold to $1,000.

II. From and after December 31, 2005, the NuFlo Plan shall be and hereby is amended to eliminate the Fund Shares of marketable securities benefit distribution form provided for in Section 13.01 of the NuFlo Plan Basic Plan Document, and a cash benefit distribution form shall be substituted therefor.

III. Effective as of January 1, 2006, (the “Plan Merger Date”), in consideration of the foregoing and notwithstanding any provisions of the NuFlo Plan and the Cooper Cameron Plan to the contrary, the NuFlo Plan shall be merged with and into the Cooper Cameron Plan as follows:

     1. The NuFlo Plan is hereby amended, restated, and merged with and into the Cooper Cameron Plan, with the result that the provisions of the Cooper Cameron Plan, as modified herein, replace in their entirety the provisions of the NuFlo Plan. Any provisions of the Cooper Cameron Plan required to have an earlier effective date by applicable statute and/or regulation shall be effective as of the required effective date in such statute and/or regulation and shall apply, as of such required effective date, to the NuFlo Plan as if included therein.

     2. Each Participant of the NuFlo Plan as of the Plan Merger Date (“NuFlo Participant”) shall become a Member of the Cooper Cameron Plan (if such NuFlo Participant is not already a Member of the Cooper Cameron Plan as of such date) upon satisfying the eligibility requirements of Article II of the Cooper Cameron Plan.

     3. The trustee of the NuFlo Plan shall be directed to transfer the assets of the NuFlo Plan to the trustee of the Cooper Cameron Plan as soon as administratively feasible after the Plan Merger Date. All assets shall be transferred in cash, except that outstanding loans from the NuFlo Plan to NuFlo Participants shall be transferred in kind. In order to ensure an orderly transition with respect to the transferred assets of the NuFlo Plan, the Plan Administrator may, in its discretion, temporarily prohibit or restrict withdrawals, loans, execution of, change to, or revocation of a compensation deferral election, change of investment designation of plan account balances, or transfer of amounts in accounts from one investment fund to another investment fund, or other activity as the Plan Administrator deems appropriate; provided that any such temporary cessation or restriction of such activity shall be in compliance with applicable law. Amounts transferred shall initially be invested in such investment fund or funds available under the Cooper Cameron Plan as determined by the Plan Administrator in its discretion; provided, however, that as soon as administratively feasible following the Plan Merger Date, amounts attributable to accounts of NuFlo Participants who are actively participating in the Cooper Cameron Plan as of the Plan Merger Date shall be invested in accordance with the respective investment designations of each such NuFlo Participant as in effect on the date such investment is made. Such transferred amounts shall remain invested in such fund or funds until the NuFlo Participants make new investment designations with respect to such amounts in accordance with the provisions of the Cooper Cameron Plan as in effect on the date of such investment designations.

     4. Amounts credited to NuFlo Participants’ accounts under the NuFlo Plan shall be credited to corresponding accounts under the Cooper Cameron Plan as follows:

(i)	Amounts, if any, credited to a NuFlo Participant’s “Deferral Contributions” subaccount or his “Qualified Nonelective Contributions” subaccount under his “Account” under the NuFlo Plan shall be credited to such participant’s “Basic Account” under the Cooper Cameron Plan;
(ii)	Amounts, if any, credited to a NuFlo Participant’s “Matching Employer Contributions” subaccount or his “Qualified Matching Employer Contributions” subaccount under his “Account” under the NuFlo Plan shall be credited to such participant’s “Matching Account” under the Cooper Cameron Plan;
(iii)	Amounts, if any, credited to a NuFlo Participant’s “Rollover Contributions” subaccount under his “Account” under the NuFlo Plan shall be credited to such participant’s “Rollover/Transfer Account” under the Cooper Cameron Plan; and

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(iv) Amounts, if any, credited to a NuFlo Participant’s “Nonelective Employer Contributions” subaccount under his “Account” under the NuFlo Plan shall be credited to a new “Nonelective Account” to be created under the Cooper Cameron Plan on behalf of such participant.

Subaccounts shall be created under the respective Cooper Cameron Plan accounts for the transferred amounts and earnings thereon (the “Grandfathered Subaccounts”) in order to preserve optional forms of benefit and rights in accordance with Paragraph III.9 below.

     5. For purposes of determining the Vesting Service under the Cooper Cameron Plan of a NuFlo Participant, (i) for the period prior to January 1, 2006, such NuFlo Participant shall be credited with Vesting Service on the date he becomes a Member of the Cooper Cameron Plan with all Years of Service, if any, credited to him for vesting purposes under the NuFlo Plan as of December 31, 2005, and (ii) for the period beginning on January 1, 2006, and thereafter, such NuFlo Participant shall receive credit for Vesting Service in accordance with the provisions of the Cooper Cameron Plan during such period (provided such NuFlo Participant was an Employee during such period).

     6. For purposes of determining the Participation Service under the Cooper Cameron Plan of a NuFlo Participant who is a Part Time Employee or a Temporary Employee, a NuFlo Participant will be credited with (i) the number of one-year periods of eligibility service with which he was credited under the terms of the NuFlo Plan and (ii) for any fractional year of service credited to him under the NuFlo Plan as of the Plan Merger Date, each NuFlo Participant shall be credited with the greater of (a) 45 Hours of Service for participation purposes under the Cooper Cameron Plan for each week or partial week of such fractional year of service and (b) the number of Hours of Service he would otherwise be credited for such period in accordance with Section 2.1(c) of the Cooper Cameron Plan.

     7. The vesting schedule set forth in Section 1.15(b) of the NuFlo Plan Adoption Agreement shall continue to apply with respect to each NuFlo Participant’s Nonelective Account under the Cooper Cameron Plan provided that such NuFlo Participant has three or more Years of Vesting Service under the NuFlo Plan as of the Plan Merger Date. In the case of a NuFlo Participant who does not have three or more Years of Vesting Service under the NuFlo Plan as of the Plan Merger Date, then, as of the Plan Merger Date, such participant shall have a Vested Interest in his Nonelective Account under the Cooper Cameron Plan equal to the Vested portion of such participant’s Nonelective Employer Contributions subaccount under the NuFlo Plan immediately prior to the Plan Merger Date, and thereafter his Vested Interest shall increase (but never decrease, except in the case of a loss of Vesting Service pursuant to Section 7.7 of the Cooper Cameron Plan) in accordance with the vesting schedule in Section 7.2 of the Cooper Cameron Plan based on additional years of Vesting Service (if any) earned by such participant after the Plan Merger Date.

     8. Immediately after the merger and transfer of assets described in Paragraphs III.1 and III.3 above, each NuFlo Participant who becomes or continues to be a Member of the Cooper Cameron Plan shall, in the event the Cooper Cameron Plan is then terminated, be entitled to a benefit which is equal to or greater than the benefit to which such participant would have been entitled under the NuFlo Plan and, if applicable, the Cooper Cameron Plan immediately prior to

- 3 -

such transfer if the NuFlo Plan and, if applicable, the Cooper Cameron Plan had then been terminated. The provisions of the preceding sentence shall be construed under applicable federal regulations pursuant to section 208 of the Employee Retirement Income Security Act of 1974, as amended and section 414(l) of the Internal Revenue Code of 1986, as amended (the “Code”).

     9. With respect to the Grandfathered Subaccounts of NuFlo Participants, the Cooper Cameron Plan shall preserve all optional forms of benefit and rights required to be preserved pursuant to section 411(d)(6) of the Code, and any Treasury regulations issued thereunder, as amended from time to time, including, but not limited to, the optional forms of benefit and rights described in Appendix A hereto.

     10. The loan procedures available to Members under Article IX of the Cooper Cameron Plan shall be applicable to a NuFlo Participant’s vested interest in his Separate Accounts under the Cooper Cameron Plan; provided, however, that any loan made to a NuFlo Participant under the NuFlo Plan before the Plan Merger Date shall be administered by the Plan Administrator in accordance with Article 9 of the NuFlo Plan Basic Plan Document and the loan policy adopted pursuant thereto.

     11. The beneficiary designations of each NuFlo Participant in effect under the NuFlo Plan on the Plan Merger Date shall remain in effect under the Cooper Cameron Plan unless and until such participant executes a new beneficiary designation in accordance with the provisions of the Cooper Cameron Plan; provided, however, that all Account balances in the Cooper Cameron Plan from and after the Plan Merger Date (including amounts transferred from the NuFlo Plan) shall be subject to any beneficiary designation executed by a NuFlo Participant who was also a Member of the Cooper Cameron Plan prior to the Plan Merger Date, regardless of whether such beneficiary designation was executed before the Plan Merger Date, unless and until such time as such NuFlo Participant executes a new beneficiary designation form under the Cooper Cameron Plan; and provided further, however, that if the preceding proviso applies to a NuFlo Participant, any beneficiary designation executed by such Participant under the NuFlo Plan prior to the Plan Merger Date shall become null and void as of the Plan Merger Date.

     12. To the extent any forfeitures of Matching Employer Contributions or Nonelective Employer Contributions under the NuFlo Plan exist as of the Plan Merger Date, such forfeitures may be applied to offset Employer contribution obligations for NuFlo Participants under the Cooper Cameron Plan.

     13. Each capitalized term used in this instrument shall have the meaning ascribed to such term under the NuFlo Plan or the Cooper Cameron Plan, as applicable, unless otherwise defined herein.

     14. Except to the extent required under applicable law, the benefits and rights of any NuFlo Participant who terminates employment prior to the Plan Merger Date shall be governed by the terms and provisions of the NuFlo Plan as in effect on the date of such termination of employment.

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     15. As to affected individuals, the Cooper Cameron Plan is hereby amended to reflect and incorporate the provisions of this instrument. Any provision of the NuFlo Plan or the Cooper Cameron Plan that is inconsistent with any provision of this instrument shall be considered to be and hereby is amended by this instrument.

     EXECUTED this 21^st day of December, 2005, effective for all purposes as provided above.

COOPER CAMERON CORPORATION

By: /s/ Jane Schmitt                   

Name: Jane Schmitt                   

Title: VP, Human Resources        

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APPENDIX A
to
MERGER OF THE
NUFLO TECHNOLOGIES, INC.
401(k) PLAN
WITH AND INTO THE
COOPER CAMERON CORPORATION
RETIREMENT SAVINGS PLAN

This Appendix A shall apply to the Grandfathered Subaccounts of NuFlo Participants in lieu of certain otherwise applicable provisions of the Cooper Cameron Plan. To the extent the provisions of this Appendix A conflict with other provisions of the Cooper Cameron Plan, this Appendix A shall control with respect to the Grandfathered Subaccounts of NuFlo Participants.

     1. Rollover and Transfer Account Withdrawals. In addition to the withdrawal rights contained in Article VIII of the Cooper Cameron Plan, NuFlo Participants may withdraw all or any part of their Grandfathered Subaccounts (to the extent vested) under their Rollover/Transfer Accounts under the Cooper Cameron Plan at any time.

A - 1

EX-10.13

Exhibit 10.13

FIRST AMENDMENT TO
COOPER CAMERON CORPORATION
2005 EQUITY INCENTIVE PLAN

     WHEREAS, COOPER CAMERON CORPORATION (the “Company”) has heretofore adopted the 2005 EQUITY INCENTIVE PLAN (the EQIP Plan); and

     WHEREAS, the Company desires to amend the 2005 Equity Incentive Plan in certain respects;

     NOW, THEREFORE, the 2005 Equity Incentive Plan shall be amended as follows, effective as of February 15, 2006:

1. Section 7.4 of the 2005 Equity Incentive Plan be and hereby is amended by adding, in the seventh line thereof following the word “employer,” the following words:

“(so long as the cumulative total of any such grants does not exceed five percent (5%) of the total number of shares subject to the Plan)”

2. As amended hereby, the Plan is specifically ratified and affirmed.

APPROVED:
 

/s/ William C. Lemmer  

William C. Lemmer
Vice President, General Counsel
    and Secretary

Date: February 15, 2006

EX-10.23

[Cooper Cameron Letterhead] Exhibit 10.23

May 31, 2005

Jane C. Schmitt
Vice President, Human Resources
1333 West Loop South, Suite 1700
Houston, Texas 77027

Dear Jane:

     The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of two-hundred twenty-two thousand, nine-hundred thirty-seven dollars and zero cents ($222,937.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:

1.

Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:

a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).

Ms. Jane C. Schmitt
May 31, 2005
Page Two

2. Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.

           If you agree to amend your Agreement, please execute and return this letter to the General Counsel.

Very truly yours,

/s/ Sheldon R. Erikson

Sheldon R. Erikson

Chairman, President and CEO

ACCEPTED AND AGREED:

/s/ Jane Schmitt

Jane Schmitt

Date: May 31, 2005

[Cooper Cameron Letterhead]

May 31, 2005

Scott Amann
Vice President, Investor Relations
1333 West Loop South, Suite 1800
Houston, Texas 77027

Dear Scott:

     The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of eighty-six thousand, two-hundred eleven dollars and zero cents ($86,211.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:

1.

Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:

a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).

Scott Amann
May 31, 2005
Page Two

2. Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.

           If you agree to amend your Agreement, please execute and return this letter to the General Counsel.

Very truly yours,

/s/ Sheldon R. Erikson

Sheldon R. Erikson

Chairman, President and CEO

ACCEPTED AND AGREED:

/s/ Scott Amann

Scott Amann

Date: May 31, 2005

[Cooper Cameron Letterhead]

May 31, 2005

William C. Lemmer
Vice President, General Counsel and Secretary
1333 West Loop South, Suite 1700
Houston, Texas 77027

Dear Bill:

     The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of two-hundred seventy-one thousand, five-hundred ninety-two dollars and zero cents ($271,592.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:

1.

Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:

a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).

William C. Lemmer
May 31, 2005
Page Two

2. Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.

           If you agree to amend your Agreement, please execute and return this letter to the General Counsel.

Very truly yours,

/s/ Sheldon R. Erikson

Sheldon R. Erikson

Chairman, President and CEO

ACCEPTED AND AGREED:

/s/ William C. Lemmer

William C. Lemmer

Date: May 31, 2005

[Cooper Cameron Letterhead]

May 31, 2005

Robert Rajeski
President, Cooper Compression
6500 Bingle Road
Houston, Texas 77092

Dear Bob:

     The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of eighty-one thousand, eight-hundred forty-two dollars and zero cents ($81,842.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:

1.

Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:

a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).

Robert Rajeski
May 31, 2005
Page Two

2. Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.

           If you agree to amend your Agreement, please execute and return this letter to the General Counsel.

Very truly yours,

/s/ Sheldon R. Erikson

Sheldon R. Erikson

Chairman, President and CEO

ACCEPTED AND AGREED:

/s/ Robert Rajeski

Robert Rajeski

Date: June 1, 2005

EX-10.29

Exhibit 10.29

POLICY BULLETIN

SUBJECT: EXECUTIVE SEVERANCE PROGRAM Effective July 1, 2000
Reissued: January 1, 2004

I. PURPOSE

To establish a severance program for senior level executives of the Company that recognizes (i) the relatively more difficult employment transition that occurs upon the termination of employment of higher paid individuals; and (ii) that senior level executive employees, to a greater extent than other salaried employees, serve at the pleasure of the company and are decidedly “at will” — meaning that the Company may terminate the employment relationship at any time for any reason without liability to the employee.

II. SCOPE

This policy applies to corporate officers, division presidents, management level direct reports to division presidents and such other employees, as may be designated by the Chief Executive Officer of Cooper Cameron Corporation.

III. SEPARATION ALLOWANCE BENEFITS

Following the termination of employment by the Company for reasons other than cause, the covered executive will receive Separation Allowance Benefits in the form of salary continuation for a period of twelve (12) months following termination of employment by the Company for reasons other than cause.

Payment of the Separation Allowance Benefits is contingent upon signing a full and complete waiver and release in a form acceptable to the Company. (Please see attached waiver and release.) If the covered executive elects not to sign the waiver and release, the Basic Benefits under the Cooper Cameron Separation Allowance Plan for Salaried Employees will apply.

IV. BENEFITS CONTINUATION

The following benefits will be continued during the twelve (12) month Severance Period:

• Healthcare Coverage

• Dental Coverage

• Vision Coverage

Eligibility for the continuance of any of these benefits ends when the covered executive becomes eligible for such benefit under a benefit plan offered or sponsored by another employer, except to the extent that the terms of the respective plans offer conversion or portability. No additional vacation shall be earned during the severance period.

Participation in other benefits ends on the last day of active employment:

• Pension Plan

• CC-Save

• Basic and Supplemental Life Insurance

• Basic and Voluntary AD&D

• Business Travel Accident Insurance

• Short Term Disability

• Long Term Disability

Information regarding conversion privileges or portability of the Supplemental Life Insurance will be communicated at the time of separation. Eligibility for distributions under any Cooper Cameron sponsored retirement plan shall be pursuant to and made in accordance with the provisions of the specific plan. The separation payment and the payment for unused vacation are not considered pensionable earnings under the terms of any Cooper Cameron Corporation pension or retirement plan.

MICP

Participation in MICP will be prorated through the last day of employment and determined on the basis of the goals and objectives established for the applicable plan year. No further bonus entitlements will be earned during the severance period.

Long-Term Incentive Plan

The terms of the Company’s Long-Term Incentive Plan and the specific provisions of the option agreement shall govern stock options granted to the covered executive. As provided in such documents, all vesting of stock options ceases as of the last day of employment. The length of time to exercise any vested option is defined in the individual stock option agreement.

Non-Compete/No Solicitation Agreement

As part of the waiver and release, the covered executive will be committing not to engage in any competition with the company following termination and will not, directly or indirectly, participate in the solicitation or recruitment of any Company employees. All company property, documents and computer records, and any related materials that the covered executive may possess must be returned immediately.

Other Provisions

In addition to salary and benefit continuations as provided above, outplacement services will be made available.

If the division in which the executive is employed is sold, merged or consolidated with another entity or business, any executive who continues employment or is offered continued employment with a new owner of a former Cooper Cameron operation in the same or reasonably comparable position, will not be considered terminated within the meaning of this policy.

V. OTHER SEVERANCE RIGHTS

To the extent any covered executive under this policy is entitled to receive benefits for severance pursuant to statutory or regulatory requirements or an employment contract or arrangement, the benefits hereunder, which are not intended to duplicate such benefits, shall be reduced automatically to avoid any such duplication. The determination of the reduction is the responsibility of the Plans Administration Committee whose decision will be final and binding on both the Company and the covered executive.

VI. RESPONSIBILITIES

The general administration of the executive severance program is the responsibility of the Plans Administration Committee, which has final and binding authority to administer the plan in accordance with its stated terms. The corporate vice-president responsible for human resources shall have overall responsibility to effectuate the terms and conditions of this policy and for the day-to-day administration of this policy. These responsibilities may be delegated to other person or persons including division personnel where appropriate.

WAIVER AND RELEASE AND
ACCEPTANCE OF ADDITIONAL SEPARATION ALLOWANCE BENEFITS

In consideration of Cooper Cameron Corporation’s (the “Company’s”) agreement to provide me with enhanced severance benefits under its Executive Severance Program — 2003 (the “Plan”), I hereby waive and release COOPER CAMERON CORPORATION, its past, present, and future owners, parents, subsidiaries, and affiliates, and their respective past, present, and future directors, shareholders, officers, employees, agents, insurance carriers, administrators, legal representatives and all benefit plans sponsored by any of them (except for benefits under the Program and any pension plan), past or present (individually and collectively, the “Released Parties”), from liability for any and all claims, damages, actions, rights, demands and causes of action of any kind related to my employment or the termination of my employment by the Company, whether known or unknown, arising under any federal, state or local fair employment or discrimination laws, including but not limited to, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, the Family Medical Leave Act, the Americans With Disabilities Act, the Worker Adjustment and Retraining Notification Act, and any applicable state’s or locality’s fair employment statutes, any other local, state or federal wage and hour law. I further waive and release any claims or demands arising under any other federal, state or local law, including but not limited to, common law claims relating to breach of contract, wrongful or constructive discharge, violation of public policy, and common law tort. This Waiver and Release (also referred to as this “agreement”) excludes any claims for medical or income replacement benefits for work-related injuries currently pending or permitted by law and further excludes any pension or unemployment compensation benefits to which I may be otherwise entitled. This agreement does not apply to any rights or claims that may arise after its effective date. I acknowledge that this agreement is not intended to indicate that such claims exist or that, if they do exist, they are meritorious. Rather, it is simply an agreement that, in return for the enhanced severance benefits as stated in the Plan, any and all potential claims of this nature that I may have against any of the Released Parties, regardless of whether they actually exist, regardless of whether they are known or unknown to me at this time, are expressly settled, compromised, and waived.

By signing this agreement, I am bound by it. Anyone who succeeds to my rights and responsibilities, such as heirs or the executor of my estate, is also bound by this agreement. This release also applies to any claims brought by any person or agency or class action under which I may have a right or benefit. I represent and warrant that no other person or entity has any interest in or been assigned any interest in claims or causes of action, if any, I may have against any of the Released Parties and which I am now releasing in their entirety.

I agree and acknowledge that the only benefits associated with the termination of my employment with the Company and any of its affiliates to which I am entitled are the benefits stated in the Plan and that I am not entitled to any additional benefits under any other policy, plan or agreement of the Company or any Released Party in connection with my termination, including but not limited to any employment or severance agreement between me and any Released Party and benefits, or any other severance, retention, bonus or incentive plan of the Company or any of its affiliates, shareholders or predecessors (except for benefits under the Plan and any Company pension plan). I further acknowledge that I have received reimbursement for all reimbursable business expenses I incurred on behalf of the Company or any of its affiliates.

I have signed this agreement voluntarily and without coercion or duress. I understand the final and binding effect of this agreement and agree to each of its terms. I acknowledge that the only promises made to me to sign this agreement are those stated in the Plan and that no other understanding concerning the subject matter of this agreement, whether oral or written, exists. I have been advised to consult with an attorney prior to executing this agreement and I have been given at least twenty-one (21) days to consider this agreement before signing. If I sign this Agreement, I understand that I have seven (7) days after the date I sign to revoke, in writing, this agreement. Such revocation must be delivered to my Human Resources Representative. This agreement will not become effective or enforceable until this seven (7) day period has

expired. I further acknowledge that I have carefully read the Plan and this agreement, understand their terms, and I am voluntarily accepting the Company’s offer of enhanced benefits under that Plan. I understand that the enhanced severance benefits provided under the Plan are valuable consideration to which I would not otherwise be entitled, but are solely in return for the waiver of rights and claims stated in this agreement.

I further agree that the entitlement to enhanced Separation Allowance Benefits is contingent on my not becoming engaged in any employment or other enterprise that involves being in competition with the Company in any of the markets or product lines with which I was involved while employed by the Company and will not, directly or indirectly, participate in the solicitation or recruitment of any Company employees.

Based upon the signing of this agreement, I further agree not to commence any lawsuit against any Released Party for matters covered by this agreement, nor to participate in any such action other than as required by law (except as necessary to protect my rights under this agreement). I represent that, as of the effective date of this agreement, I have not brought or joined any lawsuit or filed any charge or claim against any Released Party in any court or before any government agency. Should any provision of this agreement be declared invalid by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect

Signed by:

Printed Employee Name:

Dated:

Company Representative:

Dated:

EX-10.33

Exhibit 10.33

NINTH AMENDMENT TO THE
INDIVIDUAL ACCOUNT RETIREMENT PLAN
FOR
BARGAINING UNIT EMPLOYEES
AT THE COOPER CAMERON CORPORATION
BUFFALO, NEW YORK PLANT

     WHEREAS, COOPER CAMERON CORPORATION (the “Company”) has heretofore adopted the INDIVIDUAL ACCOUNT RETIREMENT PLAN FOR BARGAINING UNIT EMPLOYEES AT THE COOPER CAMERON CORPORATION BUFFALO, NEW YORK PLANT (the “Plan”) for the benefit of its eligible employees; and

     WHEREAS, the Company desires to amend the Plan to modify the Plan’s mandatory cashout provisions and to update the Plan’s break-in-service rules under the final regulations under section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”);

     NOW, THEREFORE, the Plan is hereby amended as follows:

I. Effective as of March 28, 2005:

     1. Section 9.04 of the Plan shall be deleted and the following shall be substituted therefor:

     “9.04 Lump Sum Cash-Out. Notwithstanding the foregoing provisions of this Article IX, with respect to any benefit payable pursuant to Article V (retirement), Article VI (death), Article VII (disability) or Article VIII (other termination of employment): (a) if the amount of the Member’s Vested Interest in his Account Balance is not in excess of $1,000 (or not in excess of $5,000 with respect to a benefit payable after a Member’s death) such benefit shall be paid to such Member or Beneficiary, as the case may be, in one lump sum in lieu of any other benefit payment form herein provided; and (b) except in the case of a benefit payable after a Member’s death, if the amount of the Member’s Vested Interest in his Account Balance exceeds $1,000 but does not exceed $5,000, the Member may elect to receive the Vested Interest in his Account Balance in one lump sum in lieu of any other benefit payment form herein provided and such election may be made without the consent of the Member’s spouse, if any. No distribution may be made under this paragraph after the annuity commencement date when the accrued benefit (derived from both employer and employee contributions, excluding deductible employee contributions) is in excess of $5,000 unless the Member and his eligible spouse (or where the Member has died, the Eligible Surviving Spouse) consent in writing to such distribution. An accrued benefit is immediately distributable if any part of the benefit may be distributed to the Member before the later of normal retirement or age 62. This does not apply after the death of the Member. For purposes hereunder, present value shall be determined by using an interest rate not greater than the

interest rate which would be used (as of the date of distribution) by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on plan termination. For purposes of application of the $5,000 threshold of this Section and Sections 16.04 and 17.07 (but not the $1,000 threshold of this Section), the value of a Member’s Vested Interest in his Account Balance shall be determined without regard to that portion of his Account Balance that is attributable to Rollover Contributions (and earnings allocable thereto) within the meaning of Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the Code. If the value of a Member’s Vested Interest in his Account Balance as so determined is $5,000 or less, the Member’s entire nonforfeitable Account Balance (including amounts attributable to such Rollover Contributions) may be distributed pursuant to this Section 9.04 and Section 17.07. This Section 9.04 shall be effective with respect to distributions made on or after March 28, 2005 regardless of whether the event that caused a Member’s Account to become distributable occurred before or after March 28, 2005.”

2. The following shall be added to Section 16.04 of the Plan:

“In the event that the total value of an amount directed to be paid pursuant to a qualified domestic relations order is not in excess of $5,000 (determined as provided in Section 9.04), such amount shall be paid to the recipient or recipients identified in such order in one lump sum payment as soon as practicable after such order has been determined to be a qualified domestic relations order.”

     3. The first paragraph of Section 17.07 of the Plan shall be deleted and the following shall be substituted therefor:

     “17.07 Distribution of Tax Deferred Savings Contributions. Subject to the limitations set forth in this Section 17.07, each Member shall be entitled to receive the entire interest of his Account attributable to his Tax Deferred Savings Contributions in a single sum upon the termination of such Member’s employment with the Employer and the Controlled Entities; provided, however, that if such interest when added to any other Vested Interest of the Member under the Plan exceeds $1,000 (or $5,000 in the case of a distribution after a Member’s death), such interest may not be distributed to such Member prior to Normal Retirement Age without his consent and if such interest when added to any other Vested Interest of the Member under the Plan exceeds $5,000 (disregarding any Rollover contributions and earnings allocable thereto, in accordance with Section 9.04), the consent of his spouse shall also be required. Notwithstanding the foregoing, any such distribution of Tax Deferred Savings Contributions shall be made in the following manner unless the Member elects otherwise:”

     4. A new paragraph (3) shall be added to Section 17.07 as follows:

          “(3)Vested Amounts Not Exceeding $5,000. Section 9.04 shall also apply to the distribution of a Member’s interest in his Account attributable to his Tax Deferred Savings Contributions.”

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II. Effective as of January 1, 2006:

     1. The first sentence of Section 8.03 shall be deleted and the following shall be substituted therefor:

“At the time a Member terminates employment with the Company and its Controlled Entities prior to attaining Retirement Age for any reason other than Total and Permanent Disability or death, a “Forfeitable Event” occurs which is either (i) distribution of the non-forfeitable portion of the Member’s Account or (ii) with respect to a Member who has made no Tax Deferred Savings Contributions to the Plan, five (5) consecutive One-Year Breaks-In-Service.”

     2. Section 9.04 of the Plan shall be deleted and the following shall be substituted therefor:

“9.04 Lump Sum Cash-Out. Notwithstanding the foregoing provisions of this Article IX, with respect to any benefit payable pursuant to Article V (retirement), Article VI (death), Article VII (disability) or Article VIII (other termination of employment):

(a) If the amount of the Member’s Vested Interest in his Account Balance is not in excess of $1,000 (or not in excess of $5,000 with respect to a benefit payable after a Member’s death), such benefit shall be paid to such Member or Beneficiary, as the case may be, in one lump sum in lieu of any other benefit payment form herein provided.

(b) Except in the case of a benefit payable after a Member’s death, if the amount of the Member’s Vested Interest in his Account Balance exceeds $1,000 but does not exceed $5,000, the Member may elect to receive the Vested Interest in his Account Balance in one lump sum in lieu of any other benefit payment form herein; provided that any such election may be made without the consent of the Member’s spouse, if any. In the event of a distribution pursuant to this Section 9.04(b), if the Member does not elect to have such distribution paid directly to an Eligible Retirement Plan specified by the Member in a direct rollover in accordance with Section 9.07 or to receive the distribution directly in accordance with this Section 9.04(b), then the Plan Administrator shall pay the distribution in a direct rollover to an individual retirement plan designated by the Plan Administrator. This Section 9.04(b) shall be effective with respect to distributions made on or after January 1, 2006 regardless of whether the event that caused a Member’s Account to become distributable occurred before or after January 1, 2006.

(c) No distribution may be made pursuant to this Section 9.04 after the annuity commencement date when the accrued benefit is in excess of $5,000 unless the Member and his eligible spouse (or where the Member has died, the Eligible Surviving Spouse) consent in writing to such distribution. An accrued benefit is

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immediately distributable if any part of the benefit may be distributed to the Member before the later of normal retirement or age 62. This does not apply after the death of the Member. For purposes hereunder, present value shall be determined by using an interest rate not greater than the interest rate which would be used (as of the date of distribution) by the Pension Benefit Guaranty Corporation for purposes of determining the present value of a lump sum distribution on plan termination. For purposes of application of the $5,000 threshold of this Section and Sections 16.04 and 17.07 (but not the $1,000 threshold of this Section), the value of a Member’s Vested Interest in his Account Balance shall be determined without regard to that portion of his Account Balance that is attributable to Rollover Contributions (and earnings allocable thereto) within the meaning of Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and 457(e)(16) of the Code. If the value of a Member’s Vested Interest in his Account Balance as so determined is $5,000 or less, the Member’s entire nonforfeitable Account Balance (including amounts attributable to such Rollover Contributions) may be distributed pursuant to this Section 9.04 and Section 17.07.”

     3. Section 15.01(b) of the Plan shall be deleted and the following shall be substituted therefor:

     “(b) A Member who has made no Tax Deferred Savings Contributions to the Plan, and who terminates employment and subsequently recommences participation in the Plan, shall be reinstated with the years of Vesting Service with which he was credited prior to his termination of employment, if (i) the number of his consecutive One-Year Breaks-In-Service is less than five, or (ii) he had a Vested Interest at the time of such termination. A Member who has made Tax Deferred Savings Contributions to the Plan and who has not received a distribution of the nonforfeitable portion of his Account shall be reinstated with the years of Vesting Service with which he was credited prior to his termination of employment if he subsequently recommences participation in the Plan. A Member who has made Tax Deferred Savings Contributions to the Plan but who has received distribution of the nonforfeitable portion of his Account will be reinstated to the years of Vesting Service with which he was credited prior to his termination of employment if he recommences participation in the Plan and repays any distributed Company Contributions within the time permitted under Section 8.04. ”

     4. The first paragraph of Section 17.07 of the Plan shall be deleted and the following shall be substituted therefor:

     “17.07 Distribution of Tax Deferred Savings Contributions. Subject to the limitations set forth in this Section 17.07, each Member shall be entitled to receive the entire interest of his Account attributable to his Tax Deferred Savings Contributions in a single sum upon the termination of such Member’s employment with the Employer and the Controlled Entities; provided, however, that if such interest when added to any other Vested Interest of the Member under the Plan exceeds $5,000, such interest may not be distributed to such Member prior to Normal Retirement Age without his consent and if such interest when added to any other

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Vested Interest of the Member under the Plan exceeds $5,000 (disregarding any Rollover contributions and earnings allocable thereto, in accordance with Section 9.04), the consent of his spouse shall also be required. Notwithstanding the foregoing, any such distribution of Tax Deferred Savings Contributions shall be made in the following manner unless the Member elects otherwise:”

III. As amended hereby, the Plan is specifically ratified and reaffirmed.

     EXECUTED, this 29^th day of December, 2005, effective for all purposes as provided above.

COOPER CAMERON CORPORATION

By: /s/ Jane Schmitt                   

       Name: Jane Schmitt                   

       Title: VP, Human Resources        

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EX-10.39

Exhibit 10.39

COOPER CAMERON CORPORATION

Restricted Stock Unit Award Agreement
Effective Date: January 1, 2006
Target Minimum: [ ] Units
Target Maximum: [ ] Units
Below Target Could Result in Zero Units Awarded

This AWARD AGREEMENT (the “Award Agreement”) is between the employee listed on the attached Notice of Grant of Award (“Participant”) and Cooper Cameron Corporation (the “Company”), in connection with the Restricted Stock Unit Award granted to Participant by the Company (the “Award”).

This Award covers the performance period from January 1, 2006 through December 31, 2006. This Award is performance based and, as a result, the ultimate number of actual units earned under the Award and the actual value of the Award will range between 0 and 200% of the target award, based on the Company’s financial attainment under the annual Management Incentive Compensation Plan (“MICP”) as determined on the date that the Compensation Committee of the Board of Directors approves the attainments under the MICP.

     1. Effective Date and Issuance of Restricted Stock. The Company hereby grants to the Participant, on the terms and conditions set forth herein, an award of Restricted Stock Units. This Restricted Stock Unit Award is a commitment to issue one Share of Cooper Cameron common stock (“Share”) for each share of restricted stock units actually earned. If Participant completes, signs, and returns one copy of the Award Agreement to the Company in Houston, Texas, U.S.A., this Award Agreement will become effective as of January 1, 2006.

     2. Terms Subject to the Plan. This Award Agreement is expressly subject to the terms and provisions of the Company’s Equity Incentive Plan (the “Plan”), as indicated in the Notice of Grant of Award. A copy of the Plan is available upon request from the Corporate Secretary’s office. In the event there is a conflict between the terms of the Plan and this Award Agreement, the terms of the Plan shall control.

     3. Vesting Requirement. The Award shall become vested in three installments as follows: 12.5% on February 28, 2007, 12.5% on February 28, 2008 and, 75% on February 28, 2009 (each a “Vesting Date”), provided the Participant remains continuously employed by the Company or a subsidiary from the date hereof until each such Vesting Date. If this service requirement is not satisfied, the Award (or remaining unvested portion thereof) shall be immediately forfeited and no Shares (or not more Shares) will be delivered. All Restricted Stock Units as to which the vesting requirements of this Section 3 have been satisfied shall be payable in accordance with Section 5 hereof and Appendix A attached hereto.

     4.Termination of Employment.

     Notwithstanding the foregoing:

     (a) If the Participant’s employment voluntarily terminates at age 60 or older for reasons other than cause, and the Participant has at least ten years of service with the Company, any unvested Restricted Stock Units (RSU) shall continue to vest according to the terms of the RSU Award; except that if such termination occurs within one year from the effective date of the Award, the number of RSUs that will continue to vest shall be reduced to be proportionate to that portion of the year between such effective date and the date of termination. The balance of the Award shall be immediately cancelled.

     (b) If the Participant’s employment terminates by reason of the death or long-term disability (as defined in Company plans) of the Participant, the Award shall be immediately vested and payable in full as of the date of death or the date of such termination; except that if such death or termination occurs within one year from the effective date of the Award, the number of RSUs that will vest in full shall be reduced to be proportionate to that portion of the year between the effective date of the Award and the date of death or long-term disability. The balance of the Award shall be immediately cancelled.

     (c) If the Participant’s employment terminates by reason of a workforce reduction, the Award shall be immediately vested and payable in full as of the date of such termination; except that if such termination occurs within one year from the effective date of the Award, the number of RSUs that will vest in full shall be reduced to be proportionate to that portion of the year between such effective date and the date of termination. The balance of the Award shall be immediately cancelled.

     (d) If the Participant’s employment terminates for reasons other than for those addressed in the previous three subsections, no additional RSUs shall vest for the benefit of the Participant after the termination date.

     5. Change of Control.

     (a) Except as provided by Section 11.2 of the Plan, upon a “Change of Control” of the Company, the Award granted hereunder shall immediately and fully vest.

     (b) “Change of Control” for the purposes of this Award, shall mean the earliest date on which:

(i) any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s outstanding voting securities, other than through the purchase of voting securities directly from the Company through a private placement; or

(ii) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote

of at least two-thirds of the directors comprising the Incumbent Board shall from and after such election be deemed to be a member of the Incumbent Board; or

(iii) a merger or consolidation involving the Company or its stock, or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company unless, immediately following such transaction less than 50% of the then outstanding voting securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by all or substantially of the individuals and entities who were the beneficial owners of the Company’s outstanding voting securities immediately prior to such transaction (treating, for purposes of determining whether the 50% continuity test is met, any ownership of the voting securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or their ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding voting securities immediately prior to the transaction).

(iv) a tender offer or exchange offer is made and consummated by a Person other than the Company for the ownership of 20% or more of the voting securities of the Company then outstanding; or

(v) all or substantially all of the assets of the Company are sold or transferred to a Person as to which (a) the Incumbent Board does not have authority (whether by law or contract) to directly control the use or further disposition of such assets and (b) the financial results of the Company and such Person are not consolidated for financial reporting purposes.

     Anything else in this definition to the contrary notwithstanding, no Change of Control shall be deemed to have occurred by virtue of any transaction which results in the Participant, or a group of Persons which includes the Participant, acquiring more than 20% of either the combined voting power of the Company’s outstanding voting securities or the voting securities of any other corporation or entity which acquires all or substantially all of the assets of the Company, whether by way of merger, consolidation, sale of such assets or otherwise.

     6. Payment of Award. Payment of vested Restricted Stock Units shall be made within 30 days following the satisfaction of the vesting requirement under Section 3 hereof for each respective Vesting Date (or following any accelerated vesting under Section 4 hereof). The Shares which the Award entitles the Participant to receive shall be paid to the Participant, after deduction of the number of Shares the Fair Market Value, as defined in the Plan, of which equals the applicable minimum statutory withholding taxes.

     7. Restrictions on Transfer. Except as provided by the Plan, neither this Restricted Stock Unit Award nor any Restricted Stock Units covered hereby may be

sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the units as provided herein.

     8. No Voting Rights. The Restricted Stock Units granted pursuant to this Award, whether or not vested, will not confer any voting rights upon the Participant, unless and until the Award is paid in Shares.

     9. Changes in Capitalization. The Restricted Stock Units under this Award shall be subject to the provisions of the Plan relating to adjustments to corporate capitalization.

     10. Covenant Not To Compete, Solicit or Disclose Confidential Information.

     (a) The Optionee acknowledges that the Participant is in possession of and has access to confidential information, including material relating to the business, products or services of the Company and that he or she will continue to have such possession and access during employment by the Company. The Participant also acknowledges that the Company’s business, products and services are highly specialized and that it is essential that they be protected, and, accordingly, the Participant agrees that as partial consideration for the Award granted herein that should the Participant engage in any “Detrimental Activity,” as defined below, at any time during his or her employment or during a period of one year following his or her termination the Company shall be entitled to: (i) recover from the Optionee the value of any portion of the Award that has been paid; (ii) seek injunctive relief against the Participant; (iii) recover all damages, court costs, and attorneys’ fees incurred by the Company in enforcing the provisions of this Award, and (iv) set-off any such sums to which the Company is entitled hereunder against any sum which may be owed the Participant by the Company.

     (b) “Detrimental Activity” for the purposes hereof, other than with respect to involuntary termination without cause, termination in connection with or as a result of a “Change of Control” (as defined in Section 10(b) hereof), or termination following a reduction in job responsibilities, shall include: (i) rendering of services for any person or organization, or engaging directly or indirectly in any business, which is or becomes competitive with the Company; (ii) disclosing to anyone outside the Company, or using in other than the Company’s business, without prior written authorization from the Company, any confidential information including material relating to the business, products or services of the Company acquired by the Optionee during employment with the Company; (iii) soliciting, interfering, inducing, or attempting to cause any employee of the Company to leave his or her employment, whether done on Optionee’s own account or on account of any person, organization or business which is or becomes competitive with the Company, or (iv) directly or indirectly soliciting the trade or business of any customer of the Company. “Detrimental Activity” for the purposes hereof with respect to involuntary termination without cause, termination in connection with or as a result of a “Change of Control”, or termination following a reduction in job responsibilities, shall include only part (ii) of the preceding sentence.

     11. Employment. This Award Agreement is not an employment agreement. Nothing contained herein shall be construed as creating any employment relationship.

     12. Notices. All notices required or permitted under this Agreement shall be in writing and shall be delivered personally or by mailing the same by registered or certified mail postage prepaid, to the other party. Notice given by mail as below set out shall be deemed delivered at the time and on the date the same is postmarked.

     Notices to the Company should be addressed to:

Cooper Cameron Corporation
1333 West Loop South, Suite 1700
Houston, Texas 77027
Attention: Corporate Secretary
Telephone: 713-513-3322

     13. Tax Withholding. Participant agrees that as a condition to the payment of the Award hereunder, any Shares issued under this Award shall be reduced by the number of Shares of the Fair Market Value of which equals the amounts required to be withheld or paid with respect thereto under all applicable federal, state and local taxes and other laws and regulations that may be in effect as of the date of each such payment (“Tax Amounts”.)

EX-10.41

Exhibit 10.41

COOPER CAMERON CORPORATION
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS

     1. Definitions.

     (a) “Account” means the account maintained on the books of the Company pursuant to Section 4 for the Director Compensation deferred by each Participant for a Plan Year. Separate Accounts shall be maintained for each Participant for the Director Compensation deferred for each Plan Year.

     (b) “Beneficiary” means the beneficiary or beneficiaries of the Participant designated pursuant to Section 6.

     (c) “Board means the Board of Directors of the Company.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means the Compensation Committee of the Board.

     (f) “Company” means Cooper Cameron Corporation, a Delaware corporation.

     (g) “Director” means any member of the Board who is not an employee of the Company or any of its subsidiaries.

     (h) “Director Compensation” means the cash compensation to which the Participant is entitled as a retainer as a member of the Board or as the Chair of a committee of the Board.

     (i) “Effective Date” means January 1, 2006.

     (j) “Investment Funds” means the investment funds under the Savings Plan (including the Stock Fund), except as otherwise determined by the Committee.

     (k) “Investment Fund Accounts” means the sub-Accounts maintained under the Plan to which deferred compensation is credited pursuant to Section 4, to reflect equivalent investment performance of the Investment Funds.

     (l) “Participant” means a Director who elects to participate in this Plan as provided in Section 3.

     (m) “Plan” means the Cooper Cameron Corporation Deferred Compensation Plan for Non-Employee Directors as set for the herein and as amended from time to time.

     (n) “Plan Year” means the calendar year.

     (o) “Savings Plan” means the Cooper Cameron Corporation Retirement Savings Plan.

     (p) “Shares” means the shares of common stock of the Company, par value $.01 per share.

     (q) “Stock Fund” means the Cooper Cameron Stock Fund under the Savings Plan.

     2. Administration.

     (a) The Plan shall be administered by the Committee. The Committee shall have the authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide any and all questions as may arise in connection with the interpretation or application of the Plan.

     (b) The decision or action of the Committee in respect to any question arising out of or in connection with the administration, interpretation and application or the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon Participants and all other persons having or claiming any interest in the Plan.

     3. Participation.

     (a) A Director may elect to participate in the Plan by filing a written election with the Company, on such form as may be prescribed by the Committee, to defer 25%, 50%, 75% or 100% of his or her Director Compensation.

     (b) A deferral election shall become effective on the first day of the Plan Year following the date the election is made, except as provided in paragraph (c) of this Section. A deferral election for a Participant shall remain effective for each subsequent Plan Year unless the Participant files another election in which the Participant elects to cease deferring Director Compensation or to change the percentage of Director Compensation which is deferred. The new deferral election shall become effective on the first day of the Plan Year following the date the election is made.

     (c) An individual who become a Director after the Effective Date may make a deferral election within 30 days after becoming a Director. For the Plan Year in which the election is made it shall be effective only with respect to Director Compensation earned during the Plan Year after the date such election is made.

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     4. Accounts.

     (a) The Director Compensation for a Plan Year that is deferred by a Participant pursuant to a deferral election shall be credited to the Participant’s Account and shall be allocated in multiples of 25%, in accordance with the Participant’s deferral election, among the Investment Fund Accounts maintained for the Participant as if invested in the applicable Investment Fund as of the business day on which such Director Compensation would have otherwise been paid.

     (b) A Participant may transfer the balance credited to each Investment Fund Account once each calendar quarter, to one or more of the other Investment Fund Accounts, in multiples of 25%. Such transfer shall be made by filing a written election with the Company in accordance with rules prescribed by the Committee. In no event may a transfer be made that would violate the provisions of Section 16 of the Securities Exchange Act of 1934, as amended.

     (c) The balance credited to a Participant’s Investment Fund Accounts shall be adjusted from time to time to reflect the equivalent investment performance of the applicable Investment Fund.

     5. Payment of Deferred Compensation.

     (a) Election of Payment Event. Payment of the Account of a Participant for Director Compensation deferred for a Plan Year shall be made or commenced in the form elected by the Participant (pursuant to paragraph (b) of this Section) at one of the times set forth below in accordance with the Participant’s written election (on such form as prescribed by the Committee) filed with the Company prior to the beginning of such Plan Year:

     (i) The date specified by the Participant;

     (ii) In the month following the Participant’s termination of service as a Director;

     (iii) The earlier of (A) the date elected by the Participant or (B) in the month following the Participant’s termination of service as a Director; or

     (iv) The later of (A) the date elected by the Participant or (B) in the month following the Participant’s termination of service as a Director.

The written election of the time of payment of Director Compensation that is deferred pursuant to paragraph (c) of Section 3 must be filed by the Participant within 30 days after becoming a Director.

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The Participant may change the time when payment of an Account will be made or commenced by filing a written election with the Company, on such form as prescribed by the Committee; provided, however, that:

     (i) The election will not take effect for at least 12 months after the date on which it is made as required by Section 409A of the Code (i.e., the election must be made at least 12 months in advance; and

     (ii) The new payment time must be at least five years after the date it would have otherwise been made.

     (b) Form of Payment. Payment of the Participant’s Account for Director Compensation deferred for a Plan Year shall be made in cash equal to the value of the Participant’s Investment Fund Accounts as of the business day preceding the date payment is to be made, except that payments with respect to the Investment Fund Account based on the Stock Fund shall be made in cash or Shares as elected by the Participant. Payment shall be made in either a lump sum or substantially equal annual installments over a period not to exceed ten years, as elected by the Participant in writing on such form as prescribed by the Committee and filed with the Company prior to the beginning of such Plan Year. The written election of a lump sum or installments of Director Compensation that is deferred pursuant to paragraph (c) of Section 3 must be filed by the Participant within 30 days after becoming a Director.

     The Participant may change whether payment of an Account will be made in a lump sum or installments by filing a written election with the Company, on such form as prescribed by the Committee; provided, however, that:

     (i) The election will not take effect for at least 12 months after the date on which it is made as required by Section 409A of the Code (i.e., the election must be made at least 12 months in advance); and

     (ii) The new payment time will be five years after the date it would have otherwise been made.

     (c) Change in Control; Death. Notwithstanding anything contained herein to the contrary, in the event of a Change of Control (as defined in Appendix A) or the death of the Participant, regardless of an election or change in election by the Participant of the applicable payment time or form of payment:

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     (i) If such event occurs prior to the time elected by the Participant pursuant to paragraph (a) of this Section, a lump sum payment of the Participant’s Accounts shall be made to the Participant (to the Participant’s Beneficiary in the event of the Participant’s death) within 30 days following the Change of Control or the Participant’s death; and

     (ii) If such event occurs following the time elected by the Participant pursuant to paragraph (a) of this Section, a lump sum payment of the remaining portion of the Participant’s Accounts, if any, shall be made to the Participant (to the Participant’s Beneficiary in the event of the Participant’s death) within 30 days following the Change of Control or the Participant’s death.

     6. Beneficiary Designation. Each Participant shall have the right, at any time, to designate any person or persons as his beneficiary or beneficiaries to whom payment of the Participant’s Accounts shall be made in the event of the death of the Participant. Any beneficiary designation may be made or changed by a Participant by a written instrument in such form prescribed by the Committee which is filed with the Company prior to the Participant’s death. If a Participant fails to designate a beneficiary, or if all designated beneficiaries predecease the Participant, then any amounts otherwise payable to the Participant’s beneficiary shall be paid to the Participant’s estate.

     7. Amendment and Termination of Plan.

     (a) The Board may at any time amend the Plan in whole or in part, provided that no amendment shall adversely affect the rights of a Participant to receive payment of the amount credited to the Participant’s Accounts as of the date of the amendment in accordance with the terms of the Plan in effects prior to such amendment, except as may be required to comply with Section 409A of the Code and regulations and other guidance issued thereunder.

     (b) The Board may, in its sole discretion, terminate the Plan at any time; provided, however, that in such event payment shall be made in accordance with the last election made by the Participant pursuant to section 5 prior to the Plan’s termination.

     8. Miscellaneous.

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     (a) The Company’s obligation to make payments under the Plan shall be contractual only and all payments hereunder shall be made by the Company from its general assets at the time and in the manner provided for in the Plan.

     (b) Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate, or otherwise encumber, the amounts, if any, payable hereunder, to the Participant or such other person. No part of the amounts payable under the Plan shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owned by a Participant or any other person, nor be transferable by operation or law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

     (c) This Plan shall be governed by the laws of the State of Delaware, without references to principles of conflict of laws, and shall be construed accordingly.

     (d) This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. Payment under this Plan shall be made in a manner that will comply with Section 409A of the Code, including regulations or other guidance issued with respect thereto. Any provision of this Plan that would cause the payment or settlement thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

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Appendix A

     “Change of Control” means and shall be deemed to have occurred as of the date of the first to occur of the following events:

     (a) Any Person or Group acquires stock of the Company that, together with stock held by such Person or Group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. However, if any Person or Group is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same Person or Group is not considered to cause a Change in Control. An increase in the percentage of stock owned by any Person or Group as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this subsection. This subsection applies only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction;

     (b) Any Person or Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Group) ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company. However, if any Person or Group is considered to own 35% of the total voting power of the stock of the Company, the acquisition of additional stock by the same Person or Group is not considered to cause a Change in Control;

     (c) A majority of members of the Company’s Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board prior to the date of the appointment or election; or

     (d) Any Person or Group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Group) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. However, no Change in Control shall be deemed to occur under this subsection (d) as a result of a transfer to:

     (i) A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

     (ii) An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

     (iii) A Person or Group that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or

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     (iv) An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (iii) above.

     For these purposes, the term “Person” shall mean an individual, Company, association, joint stock company, business trust or other similar organization, partnership, limited liability company, joint venture, trust, unincorporated organization or government or agency, instrumentality or political subdivision thereof. The term “Group” shall have the meaning set forth in Rule13d-5 of the Securities Exchange Commission, modified to the extent necessary to comply with Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B), or any successor thereto in effect at the time a determination of whether a Change of Control has occurred is being made.

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EX-10.47

Exhibit 10.47

COOPER CAMERON CORPORATION
NON-QUALIFIED [INCENTIVE] STOCK OPTION AGREEMENT

Effective Date: [DATE]

     1. Purpose. As an additional incentive and inducement to the employee herein granted a stock option (the “Optionee”) to remain in the employment of the Company and its subsidiaries and to acquire an ownership position in the Company, thereby aligning the interests of the Optionee with those of the Company and its stockholders, the Company hereby grants to the Optionee the option to purchase from the Company at the times and upon the terms and conditions set forth on the attached Notice of Grant of Stock Options and Option Agreement (the “Agreement”). If optionee completes, signs, and returns one copy of this Agreement to the Company in Houston, Texas, U.S.A., this Agreement will become effective as of November 10, 2005.

     2. Terms Subject to the Plan. The Agreement is expressly subject to the terms and provisions of the Company’s 2005 Equity Incentive Plan (the “Plan”), a copy of which is attached hereto, and in the event there is a conflict between the terms of the Plan and the Agreement, the terms of the Plan shall control.

     3. Purchase Price. The purchase price of the Shares of the Company’s common stock subject to the Agreement shall be $[GRANT PRICE] (post-split) per Share.

     4. Vesting. The option granted pursuant to the Agreement (“Option”) may be exercised during the period beginning [DATE](one year from the date on which it was granted), and ending [DATE] (seven years from the date on which it was granted), in whole at any time or in part from time to time, but only as to the number of Shares as to which the right to exercise has vested at the time of exercise as set forth in the Agreement.

     5. Exercise of Option. The Option granted herein may be exercised, in whole or in part, from time to time by the Optionee by giving written notice to the Secretary of the Company on or prior to the date on which the Option terminates. Such notice shall identify the Option and specify the number of whole Shares that the Optionee desires to purchase. Any notice of exercise shall be in a form substantially similar to the form attached hereto. Payment of the purchase price of the Shares that the Optionee desires to purchase shall be tendered in full at the time of giving notice by (i) cash, check, or bank draft payable and acceptable to the Company (or the equivalent thereof acceptable to the Company), (ii) Shares theretofore owned and held by the Optionee for more than six months, (iii) a combination of cash and Shares theretofore owned and held by the Optionee for more than six months, or (iv) the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the exercise price. The notice shall not be

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considered to be properly given unless accompanied by all documentation deemed appropriate by the Company to reflect exercise of the Option and compliance with all applicable laws, rules and regulations. The notice shall state a requested delivery date for the Share certificate or certificates at least fifteen days after the delivery of such notice; provided, however, that if the Optionee is exercising any Option granted pursuant to this Agreement in connection with a broker’s transaction described in 5(iv) above, such notice shall state a requested date of delivery to the broker of such Share certificate or certificates which shall be no later than five business days after delivery of such notice or such greater or lesser time as may be required or permitted by law.

     6. Shares Subject to Listing and Registration. The Option granted herein shall be subject to the listing, registration or qualification of the Shares subject to such Option upon any securities exchange or under any applicable state or federal law. This Option may not be exercised in whole or in part unless such listing, registration or qualification shall have been effected or obtained free of any conditions not reasonably acceptable to the Board of Directors.

     7. Changes in the Company’s Capital Structure. The number of Shares subject to the Option and the price per Share payable upon exercise of the Option may be adjusted in an equitable manner determined by the Compensation Committee of the Board of Directors, in its sole discretion and without liability to any person, in the event of (i) a subdivision or consolidation of Shares or other capital adjustments, (ii) the payment of a stock dividend or a recapitalization, or (iii) a “corporate transaction”, as such term is defined in Treasury Regulation §1.425-1(a)(1)(ii), or any other transaction which, in the opinion of the Committee, is similar to a “corporate transaction”, as defined by such Treasury Regulations as in effect on the date hereof, including without limitation any spin-off or other distribution to the security holders of the Company of securities or property of the Company or a subsidiary thereof. No adjustment pursuant to this provision shall require the Company to issue or sell a fractional Share upon exercise of the Option, such Option to be adjusted down to the nearest full Share in the event of such adjustment.

     8. Covenant Not To Compete, Solicit or Disclose Confidential Information.

     (a) The Optionee acknowledges that the Optionee is in possession of and has access to confidential information, including material relating to the business, products or services of the Company and that he or she will continue to have such possession and access during employment by the Company. The Optionee also acknowledges that the Company’s business, products and services are highly specialized and that it is essential that they be protected, and, accordingly, the Optionee agrees that as partial consideration for the Option granted herein that should the Optionee engage in any “Detrimental Activity,” as defined below, at any time during his or her employment or during a period of one year following his or her termination the Company shall be entitled to: (i) cancel any un-exercised portion of the Option; (ii) recover from the Optionee the value of any portion of the Option that has been exercised; (iii) seek injunctive relief against the Optionee; (iv) recover all damages, court costs, and

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attorneys’ fees incurred by the Company in enforcing the provisions of this Option grant, and (v) set-off any such sums to which the Company is entitled hereunder against any sum which may be owed the Optionee by the Company.

     (b) “Detrimental Activity” for the purposes hereof, other than with respect to involuntary termination without cause, termination in connection with or as a result of a “Change of Control” (as defined in Section 10(b) hereof), or termination following a reduction in job responsibilities, shall include: (i) rendering of services for any person or organization, or engaging directly or indirectly in any business, which is or becomes competitive with the Company; (ii) disclosing to anyone outside the Company, or using in other than the Company’s business, without prior written authorization from the Company, any confidential information including material relating to the business, products or services of the Company acquired by the Optionee during employment with the Company; (iii) soliciting, interfering, inducing, or attempting to cause any employee of the Company to leave his or her employment, whether done on Optionee’s own account or on account of any person, organization or business which is or becomes competitive with the Company, or (iv) directly or indirectly soliciting the trade or business of any customer of the Company. “Detrimental Activity” for the purposes hereof with respect to involuntary termination without cause, termination in connection with or as a result of a “Change of Control”, or termination following a reduction in job responsibilities, shall include only part (ii) of the preceding sentence.

     9. Termination of Employment.

     (a) If the Optionee’s employment voluntarily terminates at age 55 or older and the Optionee has at least ten years of service with the Company, any unvested shares shall continue to vest according to the terms of the Option; except that if such termination occurs within one year from grant date, the number of shares that will continue to vest shall be reduced to be proportionate to that portion of the year between grant date and termination date. The balance of the Option shall be immediately cancelled. The Optionee shall have the right to exercise the Option at any time within the term of the Option or a three (3) year period commencing on the day next following such termination, whichever is less; and

     (b) If the Optionee’s employment terminates by reason of the death or the long-term disability (as defined in Company plans) of the Optionee, any unvested shares shall vest in full; except that if such termination occurs within one year from grant date, the number of shares that will vest in full shall be reduced to be proportionate to that portion of the year between grant date and termination date. The balance of the Option shall be immediately cancelled. The Optionee or his/her personal representatives, heirs, legatees or distributees shall have the right to exercise the Option granted hereunder at any time within the term of the Option or a three (3) year period commencing on the date of death or the date of termination due to long-term disability, whichever is less; and

     (c) If the Optionee’s employment terminates by reason of a workforce reduction, any unvested shares shall vest in full; except that if such termination occurs within one

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year from grant date, the number of shares that will vest in full shall be reduced to be proportionate to that portion of the year between grant date and termination date. The balance of the Option shall be immediately cancelled. The Optionee shall have the right to exercise the Option granted hereunder at any time within the term of the Option or a three (3) year period commencing on the day next following such termination, whichever is less; and

     (d) If the Optionee’s employment terminates voluntarily other than as provided for in Section (a) above, or as a result of involuntary termination other than for cause or as provided for in Sections (b) and (c) above, no additional Shares shall vest for the benefit of the Optionee after the termination date and the Option shall be exercisable by the Optionee, with respect to those Shares which have vested only, within a three (3) month period after such termination or the term of the Option, whichever is less, but only to the extent it was exercisable immediately prior to the date of termination; and

     (e) If the Optionee’s employment is terminated for cause, the Option shall terminate and no longer be exercisable for either the vested or the unvested Shares.

     10. Change of Control.

     (a) Except as provided by Section 11.2 of the Plan, upon a “Change of Control” of the Company, the Option granted hereunder shall immediately vest and become fully exercisable.

     (b) “Change of Control” for the purposes of this Award, shall mean the earliest date on which:

(i)	any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s outstanding voting securities, other than through the purchase of voting securities directly from the Company through a private placement; or
(ii)	individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board shall from and after such election be deemed to be a member of the Incumbent Board; or
(iii)	a merger or consolidation involving the Company or its stock, or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company unless, immediately following such transaction less than 50% of the then outstanding voting securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by all or substantially of the individuals and entities who were the beneficial owners of the Company’s

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	outstanding voting securities immediately prior to such transaction (treating, for purposes of determining whether the 50% continuity test is met, any ownership of the voting securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or their ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding voting securities immediately prior to the transaction).
(iv)	a tender offer or exchange offer is made and consummated by a Person other than the Company for the ownership of 20% or more of the voting securities of the Company then outstanding; or
(v)	all or substantially all of the assets of the Company are sold or transferred to a Person as to which (A) the Incumbent Board does not have authority (whether by law or contract) to directly control the use or further disposition of such assets and (b) the financial results of the Company and such Person are not consolidated for financial reporting purposes.

     Anything else in this definition to the contrary notwithstanding, no Change of Control shall be deemed to have occurred by virtue of any transaction which results in you, or a group of Persons which includes you, acquiring more than 20% of either the combined voting power of the Company’s outstanding voting securities or the voting securities of any other corporation or entity which acquires all or substantially all of the assets of the Company, whether by way of merger, consolidation, sale of such assets or otherwise.

     11. Employment. This Agreement is not an employment agreement. Nothing contained herein shall be construed as creating any employment relationship.

     12. Notices. All notices required or permitted under this Agreement shall be in writing and shall be delivered personally or by mailing the same by registered or certified mail postage prepaid, to the other party. Notice given by mail as below set out shall be deemed delivered at the time and on the date the same is postmarked.

     Notices to the Company should be addressed to:

Cooper Cameron Corporation
1333 West Loop South, Suite 1700
Houston, Texas 77027
Attention: Corporate Secretary
Telephone: 713-513-3322

     13. Definitions. All undefined capitalized terms used herein shall have the meanings assigned to them in the Plan.

     14. Successors and Assigns. Subject to the provisions of Paragraph 9 hereof, this Agreement shall inure to the benefit of and be binding upon the heirs,

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legatees, distributees, executors and administrators of the Optionee and the successors and assigns of the Company. This Agreement shall be interpreted, construed, and enforced in accordance with the laws of the State of Texas. In no event shall an Option granted hereunder be voluntarily or involuntarily sold, pledged, assigned or transferred by the Optionee other than: (i) by will or the laws of descent and distribution; or (ii) pursuant to the qualified domestic relations order (as defined by the Internal Revenue Code); or (iii) with respect to Awards of nonqualified stock options, by transfer by an Optionee to a member of the Optionee’s Immediate Family, or to a partnership or limited liability company whose only partners or shareholders are the Optionee and members of his Immediate Family. However, any Award transferred shall continue to be subject to all terms and conditions contained in the Award Agreement.

     15. Tax Withholding.

     (a) With respect to the cash payment under the Plan, Optionee agrees that as a condition to the exercise of the Option granted hereunder, any cash payment shall be reduced by, or shall include such additional amount required to be paid or withheld with respect thereto under all applicable federal, state and local taxes and any other law or regulation that may be in effect as of the date of each such payment (“Tax Amounts”).

     (b) With respect to issuance of Shares pursuant to the exercise of the Option granted hereunder, no issuance shall be made until appropriate arrangements have been made for the payment of any Tax Amounts that may be required to be paid or withheld with respect thereto, and such arrangements can be accomplished by:

(i)	directing the Company to retain Shares (up to the Optionee’s minimum required tax withholding rate or such other rate that will not trigger a negative accounting impact) otherwise deliverable in connection with the Award;
(ii)	payment of the Required Tax amounts to the Company; or
(iii)	if Optionee is a current employee or Director of the Company, the Optionee may satisfy the obligation for payment of the required Tax Amounts by tendering previously acquired Shares (either actually or by attestation, valued at their then “Fair Market Value” as defined by the Plan) that have been owned for a period of at least six months (or such other period necessary to avoid accounting charges against the Company’s earnings).

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EX-13.1

Exhibit 13.1

Management’s Discussion and Analysis of Results of Operations and
Financial Condition of Cooper Cameron Corporation

     The following discussion of Cooper Cameron Corporation’s (the Company or Cooper Cameron) historical results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this Annual Report. All per share amounts included in this discussion are based on diluted shares outstanding and have been revised to reflect the 2-for-1 stock split effective December 15, 2005.

Overview

     The Company’s operations are organized into three business segments — Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures, direct flows of oil and gas wells and separate oil and gas from impurities. Cameron’s products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, oil and gas separation equipment, gate valves, actuators, chokes, wellheads, drilling risers and aftermarket parts and services. Cameron’s customers include oil and gas majors, national oil companies, independent producers, engineering and construction companies, drilling contractors, oilfield rental companies and geothermal energy producers. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. CCV’s customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies. Cooper Compression provides reciprocating and centrifugal compression equipment and related aftermarket parts and services. The Company’s compression equipment is used by gas transmission companies, compression leasing companies, oil and gas producers, independent power producers and in a variety of other industries around the world.

     In addition to the historical data contained herein, this Annual Report, including the information set forth in the Company’s Management’s Discussion and Analysis and elsewhere in this report, may include forward-looking statements regarding the Company’s future revenues and earnings, equity compensation charges, cash generated from operations, costs associated with integrating the recently acquired Flow Control segment of Dresser, Inc. (the Dresser Flow Control Acquisition) and capital expenditures, as well as expectations regarding rig activity, oil and gas demand and pricing and order activity, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ materially from those described in any forward-looking statements. Any such statements are based on current expectations of the Company’s performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company’s results of operations, liquidity or financial condition. Such factors may include overall demand for, and pricing of, the Company’s products; the size and timing of orders; the Company’s ability to successfully execute large subsea projects it has been awarded; changes in the price of and demand for oil and gas in both domestic and international markets; political and social issues affecting the countries in which the Company does business (including social issues related to the integration of the Dresser Flow Control Acquisition); prices and availability of raw materials; fluctuations in currency and financial markets worldwide; and variations in global economic activity. In particular, current and projected oil and gas prices have historically affected customers’ spending levels and their related purchases of the Company’s products and services. Additionally, the Company may change its cost structure, staffing or spending levels due to changes in oil and gas price expectations and the Company’s judgment of how such changes might affect customers’ spending, which may impact the Company’s financial results. See additional factors discussed in “Factors That May Affect Financial Condition and Future Results” contained herein.

     Because the information herein is based solely on data currently available, it is subject to change as a result of, among other things, changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company’s future performance. Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

     The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to warranty obligations, bad debts, inventories, intangible assets, assets held for sale, exposure to liquidated damages, income taxes, pensions and other postretirement benefits, other employee benefit plans, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.

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Critical Accounting Policies

     The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of its consolidated financial statements. These policies and the other sections of the Company’s Management’s Discussion and Analysis of Results of Operations and Financial Condition have been reviewed with the Company’s Audit Committee of the Board of Directors.

     Revenue Recognition — The Company generally recognizes revenue once the following four criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery of the equipment has occurred or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured. For certain engineering, procurement and construction-type contracts, which typically include the Company’s subsea systems and processing equipment contracts, revenue is recognized in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1). Under SOP 81-1, the Company recognizes revenue on these contracts using a units-of-completion method. Under the units-of-completion method, revenue is recognized once the manufacturing process is complete for each piece of equipment specified in the contract with the customer, including customer inspection and acceptance, if required by the contract. Approximately 13% and 15% of the Company’s revenue for the years ended December 31, 2005 and 2004, respectively, was recognized under SOP 81-1.

     Allowance for Doubtful Accounts — The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of specific customers. Were the financial condition of a customer to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

     Inventories — The Company’s aggregate inventories are carried at cost or, if lower, net realizable value. Inventories located in the United States and Canada are carried on the last-in, first-out (LIFO) method. Inventories located outside of the United States and Canada are carried on the first-in, first-out (FIFO) method. During 2005, 2004 and 2003, the Company reduced its LIFO inventory levels. These reductions resulted in a liquidation of certain low-cost inventory layers. As a result, the Company recorded non-cash LIFO income of $4.0 million, $9.7 million and $15.9 million for the years ended December 31, 2005, 2004 and 2003, respectively. The Company provides a reserve for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. During 2005 and 2004, the Company revised its estimates of realizable value on certain of its excess inventory. The impact of these revisions was to increase the required reserve as of December 31, 2005 and 2004 by $9.9 million and $6.6 million, respectively. If future conditions cause a reduction in the Company’s current estimate of realizable value, additional provisions may be required.

     Goodwill — The Company reviews the carrying value of goodwill in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142), which requires that the Company estimate the fair value of each of its reporting units annually and compare such amounts to their respective book values to determine if an impairment of goodwill is required. For the 2005, 2004 and 2003 evaluations, the fair value was determined using discounted cash flows and other market-related valuation models. Certain estimates and judgments are required in the application of the fair value models. Based upon each of the Company’s annual evaluations, no impairment of goodwill was required. However, should the Company’s estimate of the fair value of any of its reporting units decline dramatically in future periods, an impairment of goodwill could be required.

     Product Warranty — The Company provides for the estimated cost of product warranties at the time of sale based upon historical experience, or, in some cases, when specific warranty problems are encountered. Should actual product failure rates or repair costs differ from the Company’s current estimates, revisions to the estimated warranty liability would be required. See Note 7 of the Notes to Consolidated Financial Statements for additional details surrounding the Company’s warranty accruals.

     Contingencies — The Company accrues for costs relating to litigation, including litigation defense costs, claims and other contingent matters, including tax contingencies and liquidated damage liabilities, when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to contingent liability reserves are reflected in income in the period in which different facts or information become known or circumstances change that affect our previous assumptions with respect to the likelihood or amount of loss. Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known.

     Deferred Tax Assets — The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized, considering future taxable income and ongoing prudent and feasible tax planning strategies. As of December 31, 2005, the Company had a net operating loss carryforward for U.S. tax purposes of approximately $289.0 million, which does not begin to expire until 2020. Currently, the Company believes it is more likely than not that it will generate sufficient future taxable income to fully utilize this net operating loss carryforward. Accordingly, the Company has not recorded a valuation allowance against this net operating loss carryforward. In the event the oil and gas exploration activity in the United States deteriorates over an extended period of time, the Company may determine that it would not be able to fully realize this deferred tax asset in the future. Should this occur, a valuation allowance against this deferred tax asset would be charged to income in the period such determination was made.

     Pension Accounting — The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (SFAS 87), which requires that amounts recognized in the financial statements be determined on an actuarial basis. See Note 8 of the Notes to Consolidated Financial Statements for the amounts of pension expense included in the Company’s Results of Operations and the Company’s contributions to the pension plans for the years ended December 31, 2005, 2004 and 2003, as well as the unrecognized net loss at December 31, 2005 and 2004.

     The assumptions used in calculating the pension amounts recognized in the Company’s financial statements include discount rates, interest costs, expected return on plan assets, retirement and mortality rates, inflation rates, salary growth and other factors. The Company bases the discount

26

rate assumptions on investment yields available at the measurement date on an index of long-term, AA-rated corporate bonds. The Company’s inflation assumption is based on an evaluation of external market indicators. The expected rate of return on plan assets reflects asset allocations, investment strategy and the views of various investment professionals. Retirement and mortality rates are based primarily on actual plan experience. In accordance with SFAS 87, actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While the Company believes the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the Company’s pension obligations and future expense.

     A significant reason for the increase in pension expense since 2002 is the difference between the actual and assumed rates of return on plan assets in prior years. During 2001 and 2002, the Company’s pension assets earned substantially less than the assumed rates of return in those years. In accordance with SFAS 87, the difference between the actual and assumed rate of return is being amortized over the estimated average period to retirement of the individuals in the plans. In 2003, 2004 and again in 2005, the Company lowered the assumed rate of return for the assets in these plans. The plans earned significantly more than the assumed rates of return in 2005 and 2003 and slightly less than the assumed rate of return in 2004.

     The following table illustrates the sensitivity to a change in certain assumptions used in (i) the calculation of pension expense for the year ending December 31, 2006, and (ii) the calculation of the projected benefit obligation (PBO) at December 31, 2005 for the Company’s pension plans:

	Increase (decrease)			Increase (decrease)
	in 2006 Pre-tax			in PBO at
(dollars in millions)	Pension Expense			December 31, 2005
Change in Assumption:
25 basis point decrease in discount rate	$	1.0		$	13.8
25 basis point increase in discount rate	$	(0.9	)	$	(13.8	)
25 basis point decrease in expected return on assets	$	1.0			—
25 basis point increase in expected return on assets	$	(1.0	)		—

Financial Summary

     The following table sets forth the consolidated percentage relationship to revenues of certain income statement items for the periods presented:

	Year Ended December 31,
	2005			2004			2003
Revenues		100.0	%		100.0	%		100.0	%
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)		71.3			74.5			72.3
Selling and administrative expenses		15.2			14.3			17.7
Depreciation and amortization		3.1			3.9			5.1
Non-cash write-down of technology investment		—			0.2			—
Interest income		(0.5	)		(0.2	)		(0.3	)
Interest expense		0.5			0.9			0.5
Total costs and expenses		89.6			93.6			95.3
Income before income taxes and cumulative effect of accounting change		10.4			6.4			4.7
Income tax provision		(3.6	)		(1.9	)		(1.2	)
Income before cumulative effect of accounting change		6.8			4.5			3.5
Cumulative effect of accounting change		—			—			0.7
Net income		6.8	%		4.5	%		4.2	%

Results of Operations

Consolidated Results — 2005 Compared to 2004

     The Company had net income of $171.1 million, or $1.52 per share, for the year ended December 31, 2005 compared to $94.4 million, or $0.88 per share for the year ended December 31, 2004, an increase in earnings per share of 72.7%. The results for 2004 include pre-tax charges of (i) $3.8 million related to the non-cash write-down of a technology investment, (ii) $6.8 million related to the non-cash write-off of debt issuance costs associated with retired debt and (iii) $6.1 million of severance costs, primarily related to a workforce reduction program at the Cameron division.

27 

Revenues

     Revenues for 2005 totaled $2.518 billion, an increase of 20.3% from 2004 revenues of $2.093 billion. Revenues increased in each of the Company’s segments and across all product lines, except subsea, due to increased drilling and production activity in the Company’s markets primarily resulting from high oil and gas prices. Entities acquired during 2004 and 2005 accounted for approximately $262.9 million, or 61.9%, of the growth in revenues in 2005. A discussion of revenue by segment may be found below.

Cost and Expenses

     Costs of sales (exclusive of depreciation and amortization) for 2005 totaled $1.796 billion, an increase of 15.1% from 2004’s $1.560 billion. As a percentage of revenue, cost of sales (exclusive of depreciation and amortization) for 2005 decreased to 71.3% from 74.6% in 2004. The decrease in cost of sales as a percentage of revenue is due to (i) improved pricing in the Cameron and CCV businesses, (ii) a shift towards higher-margin products (primarily surface and drilling equipment) and (iii) the application of relatively fixed overhead to a larger revenue base in Cameron and CCV. The declines were partially offset by (i) rising material costs in the Cooper Compression segment that the Company was not able to pass through to its customers, (ii) $11.2 million of higher warranty expense and provisions for excess inventory, primarily in Cameron, and (iii) a decrease of approximately $5.7 million in non-cash LIFO income recognized during 2005 in the Cooper Compression segment.

     Selling and administrative expenses for 2005 were $381.3 million, an increase of $81.2 million, or 27.0%, from $300.1 million for 2004. Businesses acquired during 2004 and 2005 contributed $32.7 million, or 40.3%, of the increase. The remaining increase in selling and administrative expense for 2005 was primarily due to (i) higher headcount resulting from increased activity levels within the segments, (ii) $2.8 million related to non-cash stock compensation expense, (iii) an increase in bonus and sales incentive accruals based on the Company’s improved financial performance for the year and (iv) a $7.2 million increase in legal and environmental costs. These increases were partially offset by a $6.1 million reduction in severance costs, primarily associated with a workforce reduction program at the Cameron division, which were recorded in 2004.

     Depreciation and amortization expense for 2005 was $78.4 million, a decrease of $4.4 million from $82.8 million for 2004. The decrease in depreciation and amortization was primarily attributable to assets becoming fully depreciated, partially offset by approximately $5.7 million of additional depreciation and amortization relating to businesses acquired during 2004 and 2005. The Company’s capital spending for the three years in the period ended December 31, 2005 has been lower than its annual depreciation and amortization expense for those same periods, which has contributed to the decline in depreciation expense for 2005.

     Interest income for 2005 was $13.1 million as compared to $4.9 million in 2004. The increase in interest income was attributable to higher excess cash balances available for investment during 2005 and higher short-term interest rates the Company has received on its invested cash balances.

     Interest expense for 2005 totaled $12.0 million compared to $17.8 million in 2004. The decrease in interest expense is primarily attributable to $6.8 million of accelerated amortization of debt issuance costs recorded in 2004 associated with the early retirement of the Company’s zero-coupon convertible debentures due 2021 (the Zero-Coupon Convertible Debentures) and $184.3 million of the Company’s 1.75% convertible debentures due 2021 (the 1.75% Convertible Debentures). Partially offsetting this decline was the full-year impact in 2005 of the $200.0 million of senior notes due 2007 (the Senior Notes), which were issued in March 2004, partially offset by lower-rate convertible debentures outstanding during the first four months of 2004.

     The income tax provision was $91.9 million in 2005 as compared to $38.5 million in 2004. The effective tax rate for 2005 was 34.9% compared to 29.0% in 2004. The increase in the effective tax rate primarily reflects a shift in income during 2005 to higher tax rate jurisdictions, primarily the U.S. and Canada.

Segment Results — 2005 Compared to 2004

     Information relating to results by segment may be found in Note 14 of the Notes to Consolidated Financial Statements.

Cameron Segment

	Year Ended December 31,				Increase
(dollars in millions)	2005		2004		$		%
Revenues	$	1,507.8	$	1,402.8	$	105.0		7.5	%
Income before income taxes	$	178.9	$	118.8	$	60.1		50.6	%

     Cameron’s revenues for 2005 totaled $1.508 billion, an increase of 7.5% from $1.403 billion in 2004. Changes in foreign currency exchange rates caused approximately 9.2% of the 2005 revenue increase. Drilling sales were up 2.4%, surface sales increased 18.8%, subsea sales declined 10.5% and sales in the oil, gas and water separation market increased 56.0%. Surface sales increased due to higher activity levels in each of the Company’s major operating regions. In addition, the full-year effect of the November 2004 acquisition of the PCC Flow Technologies segment of Precision Castparts Corp. (the “PCC Acquisition”) contributed approximately 23.8% of the increase in surface sales. Sales declined in the subsea market, primarily due to the decline in activity on several large projects offshore West Africa. The increase in the oil, gas and water separation market was also reflective of the strong overall market conditions that existed in 2005. Revenues associated with this product line, which was acquired in February 2004, also benefited from a full 12 months of activity in 2005 compared to 10 months in 2004.

28 

     Income before income taxes totaled $178.9 million for 2005, an increase of 50.6% from $118.8 million in 2004. The majority of this increase resulted from the increase in revenue and a decline in cost of sales as a percentage of revenue. Cost of sales as a percentage of revenue decreased to 72.7% in 2005 from 76.6% in 2004. This reduction was primarily due to (i) favorable pricing, (ii) a movement in mix towards higher-margin drilling and surface sales from lower-margin subsea systems sales and (iii) the application of relatively fixed overhead to a larger revenue base. Partially offsetting these factors were higher raw material and labor costs, a $2.5 million non-cash write-down of an investment and a $12.8 million increase resulting from a change in the estimated recovery value of certain slow-moving inventory and higher warranty costs on a subsea systems project.

     Selling and administrative costs in Cameron increased $30.2 million or 19.0% in 2005 as compared to 2004. The majority of the increase was due to higher headcount and related costs necessitated by the higher activity levels, higher incentive accruals resulting from the improved financial performance of the segment and the full-year effect of businesses acquired during 2004. Partially offsetting these increases was a reduction in severance costs, as 2004 included $4.1 million related to a workforce reduction program at Cameron.

     Cameron’s depreciation and amortization expense declined by $7.6 million in 2005 as an increasing number of assets became fully depreciated during the latter part of 2004 and during 2005.

CCV Segment

	Year Ended December 31,				Increase
(dollars in millions)	2005		2004		$		%
Revenues	$	625.1	$	350.1	$	275.0		78.6	%
Income before income taxes	$	101.5	$	37.8	$	63.7		168.4	%

     CCV’s revenues for 2005 totaled $625.1 million, an increase of 78.6% from $350.1 million in 2004. The acquisition of NuFlo Technologies, Inc. (the “NuFlo Acquisition”) and the Dresser Flow Control Acquisition, both occurring in 2005, accounted for approximately $96.7 million, or 35.2% of the increase. Excluding these acquisitions, sales in the distributed product line increased 54.1% during 2005 due to strong market conditions, as evidenced by higher North American rig counts. In addition, the full-year impact of the PCC Acquisition in late 2004 added approximately $37.4 million to 2005 distributed product revenues. Sales in the engineered product line were up 45.9% compared to 2004. A significant portion of the increase, totaling approximately $65.0 million, was attributable to the full-year impact in 2005 of the late 2004 PCC Acquisition.

     Income before income taxes for 2005 totaled $101.5 million, an increase of 168.4% from $37.8 million in 2004. The majority of this increase resulted from the increase in revenue and a decline in cost of sales as a percentage of revenue. Cost of sales as a percentage of revenue decreased to 67.3% in 2005 from 69.9% in 2004. This reduction was primarily due to (i) favorable pricing, (ii) a shift in mix to higher-margin distributed and NuFlo products and (iii) the application of relatively fixed overhead to a larger revenue base.

     Selling and administrative costs in CCV increased $30.5 million, or 54.9% in 2005 compared to 2004. Approximately $23.9 million of the dollar increase was attributable to businesses acquired in 2005 and 2004. The remaining increase relates to higher headcount and related costs necessitated by the higher activity level, and higher incentive accruals resulting from the improved financial performance of the segment.

     Depreciation and amortization for 2005 increased $4.6 million compared to 2004, most of which was attributable to businesses acquired during 2005 and 2004.

Cooper Compression Segment

	Year Ended December 31,				Increase
(dollars in millions)	2005		2004		$		%
Revenues	$	384.9	$	340.0	$	44.9		13.2	%
Income before income taxes	$	26.7	$	24.6	$	2.1		8.3	%

     Cooper Compression’s revenues were $384.9 million in 2005, up 13.2% from $340.0 million in 2004. The increase in revenues was attributable to an 18.6% increase in sales of air compression equipment, primarily due to higher worldwide demand for engineered units and aftermarket parts and repair services. Sales of gas compression equipment increased 7.6% compared to 2004 due to strong order demand, particularly in the Ajax product line during the first half of 2005.

     Income before income taxes was $26.7 million in 2005, up 8.3% from $24.6 million in 2004. The increase in revenue was partially offset by higher cost of sales as a percentage of revenue, which increased to 72.5% in 2005 from 71.0% in 2004. The increase in cost of sales as a percentage of revenue was primarily due to higher raw material costs, which Cooper Compression was unable to pass to its customers in the form of price increases, and a $5.7 million reduction in non-cash LIFO income.

     Selling and administrative expenses increased by $6.5 million in 2005 as compared to 2004. The increase was primarily due to the higher activity level and the cost to settle a legal matter and higher environmental costs associated with a closed facility.

     Cooper Compression’s depreciation and amortization expense in 2005 declined $1.5 million from 2004, mainly due to assets which became fully depreciated in 2005.

29 

Corporate Segment

     The Corporate segment’s loss before income taxes decreased to $44.1 million in 2005 from $48.4 million in 2004. Higher interest income totaling $8.2 million, lower interest expense of $5.8 million and the absence in 2005 of a one-time writedown in 2004 of a technology asset totaling $3.8 million more than offset higher selling and administrative expenses and other costs of $13.5 million. Selling and administrative expenses increased primarily due to (i) higher accruals for bonus programs tied to the Company’s financial performance, (ii) $2.8 million of non-cash stock compensation costs and (iii) higher legal costs related primarily to the defense of certain patents and a case related to a former manufacturing site.

Consolidated Results — 2004 Compared to 2003

     The Company had net income of $94.4 million, or $0.88 per diluted share, for the twelve months ended December 31, 2004 compared with $69.4 million, or $0.62 per diluted share in 2003 (per share amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005). The results for 2004 include pre-tax charges of (i) $3.8 million related to the non-cash write-down of a technology investment, (ii) $6.8 million related to the non-cash write-off of debt issuance costs associated with retired debt and (iii) $6.1 million of severance costs, primarily related to a workforce reduction program at the Cameron division. The results for 2003 included pre-tax charges aggregating $14.6 million related to plant closing, business realignment and other related costs (see Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges). The results for 2003 also include a $12.2 million after-tax gain resulting from the cumulative effect of adopting Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). See Note 1 of the Notes to Consolidated Financial Statements for further discussion.

Revenues

     Revenues for 2004 totaled $2.093 billion, an increase of 28.1% from 2003 revenues of $1.634 billion. Revenues increased in each of the Company’s segments. A discussion of revenue by segment may be found below.

Cost and Expenses

     Cost of sales (exclusive of depreciation and amortization) totaled $1.560 billion for 2004, an increase of 32.0% from 2003’s $1.182 billion. As a percent of revenues, cost of sales increased from 72.3% in 2003 to 74.6% in 2004. The increase in cost of sales as a percent of revenues was primarily attributable to (i) several large lower-margin drilling projects recognized in 2004, (ii) a shift in mix towards large subsea systems projects in 2004, which typically carry lower margins than the drilling and surface product lines, (iii) the impact of the 2004 acquisition of Petreco, which typically has lower margins than Cameron’s traditional surface business and (iv) lower LIFO income recognized by Cooper Compression in 2004 as compared to 2003. These increases were partially offset by the application of relatively fixed manufacturing overhead costs to a larger revenue base.

     Selling and administrative expenses for 2004 were $300.1 million, an increase of $11.5 million from $288.6 million for 2003. The increase in selling and administrative expenses resulted primarily from (i) $13.2 million resulting from the PCC and Petreco Acquisitions, (ii) $6.1 million of severance discussed below, (iii) a $13.8 million increase in incentive compensation costs and (iv) $6.0 million associated with movements in foreign currencies, partially offset by (i) the absence of the $14.6 million of charges, discussed below, which were recorded during 2003, (ii) an $8.1 million reduction in selling and administrative expenses in the Compression segment resulting from the various restructuring activities over the past two years and (iii) various other decreases.

     Included within selling and administrative expenses for 2004 were charges of $6.1 million of severance costs primarily related to a workforce reduction program at the Cameron division. Included in selling and administrative expenses for 2003 were charges of $14.6 million comprised of (i) $6.2 million for employee severance at Cameron and Cooper Compression, (ii) $1.2 million of costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4.7 million related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1.0 million related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1.5 million related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition.

     Depreciation and amortization expense for 2004 was $82.8 million, a decrease of $0.8 million from $83.6 million for 2003. The decrease in depreciation and amortization expense was primarily attributable to assets becoming fully depreciated, which lowered depreciation and amortization expense by $7.4 million, partially offset by (i) depreciation associated with capital additions, which increased depreciation expense by $2.5 million, (ii) depreciation and amortization on assets added as a result of the PCC and Petreco Acquisitions, which increased depreciation and amortization expense by approximately $2.3 million and (iii) movement in foreign currencies, which increased depreciation and amortization expense by approximately $1.9 million.

     Interest income for 2004 was $4.9 million as compared to $5.2 million in 2003. The decline in interest income was attributable to lower cash balances resulting primarily from treasury stock purchases and acquisitions.

     Interest expense for 2004 was $17.7 million, an increase of $9.6 million from $8.2 million in 2003. The increase in interest expense primarily results from (i) $6.8 million of accelerated amortization of debt issuance costs associated with the early retirement of the Company’s zero-coupon convertible debentures due 2021 (the Zero-Coupon Convertible Debentures) and $184.3 million of the Company’s 1.75% convertible debentures due 2021 (the 1.75% Convertible Debentures) and (ii) incremental interest associated with the $200.0 million of senior notes due 2007 (the Senior Notes), which were issued in March 2004.

     The $12.2 million cumulative effect of an accounting change recognized during 2003 reflects the impact of adopting SFAS 150 (see Note 1 of the Notes to Consolidated Financial Statements). There was no tax expense associated with this item as the gain is not taxable.

30 

     The income tax provision was $38.5 million in 2004 as compared to $20.4 million in 2003. The effective tax rate for 2004 was 29.0% as compared to 26.2% in 2003. The increase in the effective tax rate reflects a shift in 2004 earnings to higher tax rate jurisdictions as compared to 2003.

Segment Results — 2004 Compared to 2003

     Information relating to results by segment may be found in Note 14 of the Notes to Consolidated Financial Statements.

Cameron Segment

	Year Ended December 31,				Increase
(dollars in millions)	2004		2003		$		%
Revenues	$	1,402.8	$	1,018.5	$	384.3		37.7	%
Income before income taxes	$	118.8	$	63.4	$	55.4		87.4	%

     Cameron’s revenues for 2004 totaled $1.403 billion, an increase of 37.7% from 2003 revenues of $1.019 billion. The acquisition of Petreco during the first quarter of 2004 and movement in foreign currencies accounted for $114.5 million and $39.8 million, respectively, of the increase in Cameron’s revenues. Revenues in the drilling market increased 26.0%, revenues in the subsea market increased 53.4% and revenues in the surface market increased 7.4%. The increase in drilling revenues was primarily attributable to two large project deliveries in the Asia Pacific/Middle East Region and one large project delivery in the Gulf of Mexico. The increase in subsea revenues was primarily attributable to the completion of units associated with the large subsea orders awarded during 2003 and 2002, primarily related to projects located offshore Africa and Eastern Canada. The increase in surface revenues was primarily the result of increased activity levels in the U.S., Canada and Latin America, as well as movements in foreign currencies.

     Income before income taxes totaled $118.8 million for 2005, up 87.4% from $63.4 million in 2004. The majority of the increase was due to the increase in revenues partially offset by an increase in cost of sales as a percentage of revenues to 76.6% in 2004 from 74.5% in 2003. The increase in cost of sales as a percentage of revenues was attributable to (i) the delivery of lower-margin large project work in the drilling product line, (ii) lower margins in the subsea product line primarily resulting from increased deliveries of lower-margin third-party supplied equipment, (iii) increased subsea systems project revenues, which typically carry a higher cost of sales percentage relationship to revenues as compared to Cameron’s traditional surface business and (iv) the impact of including sales from the 2004 acquisition of Petreco, which typically carry a higher cost of sales to revenue relationship compared to Cameron’s traditional surface business. These increases were partially offset by the application of relatively fixed manufacturing overhead costs to a larger revenue base.

     Selling and administrative expenses for Cameron for 2004 increased by $13.8 million, or 9.6%, as compared to 2003. The increase in selling and administrative expenses resulted primarily from the PCC and Petreco Acquisitions and $5.0 million associated with movements in foreign currencies.

     Depreciation and amortization expense remained relatively flat in 2004 compared to 2003.

CCV Segment

	Year Ended December 31,				Increase
(dollars in millions)	2004		2003		$		%
Revenues	$	350.1	$	307.1	$	43.0		14.0	%
Income before income taxes	$	37.8	$	33.7	$	4.1		12.2	%

     CCV’s revenues for 2004 totaled $350.1 million, an increase of 14.0% from 2003 revenues of $307.1 million. The increase in revenues was attributable to a 7.0% increase in the distributed products line, primarily as a result of increased activity levels in the U.S. and Canada as well as movements in foreign currencies. Sales in the engineered products line increased 23.7%, primarily reflecting increased pipeline ball valve shipments, both domestically and internationally, principally to the Far East.

     Income before income taxes totaled $37.8 million, up 12.2% from $33.7 million for 2003. Cost of sales as a percentage of revenues increased to 69.9% in 2004 from 69.4% in 2003. The increase was primarily due to higher manufacturing costs as a result of raw material price increases and higher commission costs on international sales of engineered products.

     Selling and administrative expenses for 2004 for CCV increased $7.9 million, or 16.6%, as compared to 2003. The increase in selling and administrative expenses resulted primarily from (i) $1.1 million relating to the PCC Acquisition, (ii) $1.4 million of severance during 2004, (iii) $1.0 million associated with movements in foreign currencies and (iv) higher incentive compensation and workers compensation costs.

     Depreciation and amortization expense declined by $0.5 million in 2004 compared to 2003 due primarily to the impact of assets becoming fully depreciated during 2004.

Cooper Compression Segment

	Year Ended December 31,				Increase
(dollars in millions)	2004		2003		$		%
Revenues	$	340.0	$	308.8	$	31.2		10.1	%
Income before income taxes	$	24.6	$	10.3	$	14.3		138.8	%

31 

     Cooper Compression’s revenues for 2004 totaled $340.0 million, an increase of 10.1% from 2003 revenues of $308.8 million. The increase in revenues was attributable to a 26.2% increase in sales in the air compression market, primarily as a result of increased demand from international markets, principally the Far East. Sales in the gas compression market increased 2.0%, primarily reflecting increased aftermarket shipments partially offset by weakness in new unit shipments as a result of a slow-down in project work in the Latin American market.

     Income before income taxes was $24.6 million in 2004, up 138.8% from $10.3 million in 2003. Cost of sales as a percentage of revenues increased to 71.0% in 2004 from 67.8% in 2003 for the Compression segment. The increase in cost of sales is primarily due to (i) a reduction in the amount of non-cash LIFO income recorded, which accounted for 2.3 percentage points of the increase in the relationship between cost of sales and revenues and (ii) increased warranty costs attributable to higher sales of engineered air compression units, which accounted for 0.8 percentage points of the increase.

     Selling and administrative expenses for 2004 for Cooper Compression were down $14.6 million, or 20.4%, as compared to 2003. The decrease in selling and administrative expense resulted primarily from (i) an $8.1 million reduction in costs during 2004 resulting from various restructuring activities over the past two years, (ii) the absence in 2004 of $3.1 million of severance and facility closure and restructuring costs recognized in 2003 relating to the closure of 13 facilities described above and (iii) various other cost reductions, partially offset by $0.6 million of severance costs recognized in 2004.

     Depreciation and amortization expense declined by approximately $0.3 million in 2004 due mainly to an additional charge taken in 2003 for legacy software upon the conversion by Cooper Compression to SAP.

Corporate Segment

     The loss before taxes in the Corporate segment totaled $48.4 million in 2004, up from $29.7 million in 2003. This increase is primarily due to (i) a $9.6 million increase in interest expense described above, (ii) a $3.8 million charge recorded in connection with the write-down of a technology asset and (iii) a $4.9 million increase in selling and administrative and other expenses due primarily to higher incentive compensation and additional costs incurred related to compliance with the Sarbanes-Oxley Act of 2002 that were partially offset by the year-over-year impact of (i) a $4.7 million charge in 2003 related to the Company’s unsuccessful efforts to acquire a certain oil service business and (ii) $1.0 million related to the Company’s international tax restructuring activities, which were begun in 2002. Depreciation and amortization expense was flat in 2004 when compared to 2003.

Orders and Backlog

     Orders were as follows (in millions):

	Year Ended December 31,
	2005		2004		Increase
Cameron	$	2,301.1	$	1,274.4	$	1,026.7
CCV		710.8		365.7		345.1
Cooper Compression		449.8		369.3		80.5
	$	3,461.7	$	2,009.4	$	1,452.3

     Orders for 2005 were $3.462 billion, an increase of 72.3% from $2.009 billion in 2004. Cameron’s orders for 2004 were $2.301 billion, an increase of 80.6% from 2004 orders of $1.274 billion. Drilling orders increased 108.9%, subsea orders increased 121.9%, surface orders increased 45.9% and orders in the oil and gas separation market increased 44.0% for the year ended December 31, 2005. The increase in drilling orders was across all geographic regions and included a $53.1 million order from a customer in the Eastern Hemisphere for a subsea drilling package as well as other large orders in this region and in the Asia Pacific/Middle East region. Additionally, strong demand in the Gulf of Mexico and higher rig counts positively impacted orders in the Western Hemisphere. Subsea orders were primarily impacted by a $364.4 million order for equipment to be used for Total’s AKPO project offshore West Africa as well as a number of other smaller orders. Surface orders were up in all regions primarily due to strong worldwide demand caused by higher commodity prices. In addition, the full-year impact of businesses acquired as part of the PCC Acquisition in late 2004 added approximately $21.9 million to the growth in surface orders during 2005. The increase in orders for oil and gas separation applications primarily reflects a $55.8 million order for equipment to be used on a floating storage vessel offshore Brazil.

     CCV’s orders for 2005 were $710.8 million, an increase of 94.4% from 2004 orders of $365.7 million. The increase in orders was attributable to a 69.4% increase in the distributed products line and a 73.5% increase in the engineered products line. The increase in distributed orders is due mainly to growth in legacy operations in the United States and Canada resulting from higher rig activity and spending levels resulting from higher commodity prices. The PCC Acquisition in late 2004 also contributed approximately $39.2 million to the increase. The increase in engineered product line orders reflects $57.0 million of additional orders resulting from the full-year impact of the PCC Acquisition in late 2004 as well as strength in both the project and day-to-day businesses, particularly in Asia and Latin America. Orders from the Dresser Flow Control Acquisition in late 2005, and the NuFlo Acquisition in May 2005, accounted for approximately $89.1 million of the increase in total orders.

     Cooper Compression’s orders for 2005 were $449.8 million, an increase of 21.8% from 2004 orders of $369.3 million. The increase was attributable to a 20.1% increase in orders for the air compression market due primarily to increased demand for engineered machines in Europe and the Middle East. Orders in the gas compression market increased 23.1% due to several large orders for Ajax units and higher demand for Superior compressors, particularly in the Far East.

32 

     Backlog was as follows (in millions):

	December 31,
	2005		2004		Increase
Cameron	$	1,503.6	$	752.9	$	750.7
CCV		469.0		122.9		346.1
Cooper Compression		183.2		124.2		59.0
	$	2,155.8	$	1,000.0	$	1,155.8

     CCV’s backlog at December 31, 2005 included $265.1 million attributable to the Dresser Flow Control Acquisition in late 2005 and the NuFlo Acquisition in May 2005.

Recent Pronouncements

     In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151, Inventory Costs (SFAS 151). SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company believes there will be no material effect on its consolidated financial position, results of operations or cash flows upon adoption of this statement.

     In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments (SFAS 123R), which requires that all share-based payments to employees, including grants of employee stock options, be recognized over their vesting periods in the income statement based on their estimated fair values. SFAS 123R is effective at the beginning of the first fiscal year beginning after June 15, 2005.

     Although the Company has not completed its analysis of the impact of SFAS 123R, the Company currently estimates that it will recognize approximately $0.10 per diluted share of equity- and option-based compensation expense for 2006, assuming the Company elects the modified prospective transition alternative. However, this estimate may increase or decrease materially once the Company completes its analysis of the impact of SFAS 123R.

Liquidity and Capital Resources

     The Company’s cash balances increased to $362.0 million at December 31, 2005 from $227.0 million at December 31, 2004, due primarily to $352.1 million of cash flow from operating activities and $192.5 million of cash flow from financing activities, partially offset by the consumption of $400.6 million of cash flow in investing activities.

     During 2005, the Company’s operating activities generated $352.1 million of cash as compared to $195.2 million in 2004. Cash flow from operations during 2005 was comprised primarily of net income of $171.1 million, adjusted for depreciation and amortization of $78.4 million, $34.0 million of tax benefit from employee stock option exercises, deferred taxes and other non-cash charges and $63.2 million of working capital decreases. The changes in working capital comprised an $80.7 million increase in accounts receivable, a $137.4 million increase in inventories, a $255.2 million increase in accounts payable and accrued liabilities and a $26.1 million decrease in other assets and liabilities, net. The increase in accounts receivable was primarily related to higher sales across all segments. The increase in inventories was primarily caused by the additional materials received to support the increased production requirements associated with the growth in Cameron and CCV’s backlog during 2005. The increase in accounts payable and accrued liabilities is primarily attributable to a $152.7 million increase in progress payments and cash advances from customers. The decrease in other assets and liabilities, net, is largely attributable to an increase in the Company’s accrual for current income taxes due, particularly in the United Kingdom and Canada.

     During 2005, the Company’s investing activities consumed $400.6 million of cash as compared to $192.3 million during 2004. The most significant components of cash flow consumed in investing activities for 2005 were the NuFlo Acquisition and the Dresser Flow Control Acquisition, which consumed $317.4 million, and the purchase of capital equipment, which consumed $77.5 million.

     During 2005, the Company’s financing activities generated $192.5 million of cash, as compared to the consumption of $70.8 million of cash in 2004. Cash flow from financing activities primarily reflects $219.0 million in proceeds from option exercises and other items, partially offset by the retirement of $14.8 million of the Company’s existing 1.75% convertible debentures due 2021 and the repurchase of 164,500 pre-split shares of the Company’s common stock at an average price of $57.11 per share.

     During the fourth quarter of 2005 and January 2006, the Company acquired certain businesses of the Flow Control segment of Dresser, Inc. for a total of approximately $217.5 million in cash, subject to final adjustment and other matters. This acquisition is the largest in the Company’s history and will require a substantial amount of integration into CCV’s operations. The Company expects to recognize approximately $55.0 million of integration costs in its income statement in 2006 related to these activities, of which approximately $36.0 million will be cash.

     On a short-term basis, the Company expects to fund expenditures for new capital requirements (estimated to total approximately $130.0 million to $150.0 million for 2006), integration costs associated with the Dresser Flow Control Acquisition and general liquidity needs from available cash balances, cash generated from current operating activities and amounts available under its $350.0 million multicurrency revolving credit facility.

     On a longer-term basis, the Company has Senior Notes outstanding at December 31, 2005 with a face value of $200.0 million. These notes are due in April 2007. In addition, at December 31, 2005, the Company has outstanding $238.0 million of 1.5% convertible debentures. Holders of these debentures could require the Company to redeem them beginning in May 2009. The Company believes, based on its current financial

33 

condition, existing backlog levels and current expectations for future market conditions, that it will be able to refinance these debt instruments prior to maturity or will be able to meet the liquidity needs upon maturity with cash generated from operating activities up to that time, existing cash balances on hand and amounts available under its $350.0 million multicurrency revolving credit facility, which expires in 2010.

     On October 12, 2005, the Company entered into a new $350.0 million five-year multicurrency revolving credit facility, expiring October 12, 2010, subject to certain extension provisions. The credit facility also allows for the issuance of letters of credit up to the full amount of the facility. The Company has the right to request an increase in the amount of the facility up to $700 million and may request three one-year extensions of the maturity date of the facility, all subject to lender approval. The facility provides for variable-rate borrowings based on the London Interbank Offered Rate (LIBOR) plus a margin (based on the Company’s then-current credit rating) or an alternate base rate. The agreement provides for certain fees and requires that the Company maintain a total debt-to-total capitalization ratio of less than 60% during the term of the agreement.

     The following summarizes the Company’s significant cash contractual obligations and other commercial commitments for the next five years as of December 31, 2005.

(in millions)	Payments Due by Period
			Less Than		1 - 3		4 - 5		After 5
Contractual Obligations	Total		1 Year		Years		Years		Years
Debt (a)	$	441.6	$	3.1	$	200.5	$	238.0	$	—
Capital lease obligations (b)		9.7		3.4		5.4		0.9		—
Operating leases		167.2		25.2		30.0		22.7		89.3
Purchase obligations (c)		479.2		462.5		16.7		—		—
Defined benefit pension plan funding		2.0		2.0		—		—		—
Total contractual cash obligations	$	1,099.7	$	496.2	$	252.6	$	261.6	$	89.3

(a)	See Note 10 of the Notes to Consolidated Financial Statements for information on redemption rights by the Company, and by holders of the Company’s debentures, that would allow for early redemption of the remaining 1.75% Convertible Debentures in 2006 and the 1.5% Convertible Debentures in 2009.
(b)	Payments shown include interest.
(c)	Represents outstanding purchase orders entered into in the ordinary course of business.

(in millions)	Amount of Commitment Expiration By Period
Other Unrecorded Commercial
Obligations and Off-Balance	Total		Less Than		1 - 3		4 - 5		After 5
Sheet Arrangements	Commitment		1 Year		Years		Years		Years
Committed lines of credit	$	350.0	$	—	$	—	$	350.0	$	—
Standby letters of credit and bank guarantees		265.6		116.2		76.6		64.9		7.9
Financial letters of credit		1.2		1.2		—		—		—
Other financial guarantees		5.0		4.6		0.3		0.1		—
Total commercial commitments	$	621.8	$	122.0	$	76.9	$	415.0	$	7.9

     The Company secures certain contractual obligations under various agreements with its customers or other parties through the issuance of letters of credit or bank guarantees. The Company has various agreements with financial institutions to issue such instruments. As of December 31, 2005, the Company had $265.6 million of letters of credit and bank guarantees outstanding in connection with the delivery, installation and performance of the Company’s products. Additional letters of credit and guarantees are outstanding at December 31, 2005 in connection with certain financial obligations of the Company. Should these facilities become unavailable to the Company, the Company’s operations and liquidity could be negatively impacted. Circumstances which could result in the withdrawal of such facilities include, but are not limited to, deteriorating financial performance of the Company, deteriorating financial condition of the financial institutions providing such facilities, overall constriction in the credit markets or rating downgrades of the Company.

     In connection with the Dresser Flow Control Acquisition, the Company is obligated to replace all outstanding standby and financial letters of credit and other bank guarantees and indemnities of the acquired businesses and Dresser, Inc. (the Dresser Guarantees) within 120 days of closing. The Dresser Guarantees amounted to $77.7 million at closing. In the event the Company is unsuccessful in replacing the Dresser Guarantees, the Company will provide a standby letter of credit to Dresser, Inc. for the full amount of the Dresser Guarantees it was unable to replace and will indemnify Dresser Inc. against any losses for any amounts paid under the Dresser Guarantees, including costs and expenses. The amount of the Dresser Guarantees has not been included in the table above.

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Factors That May Affect Financial Condition and Future Results

The acquisition of certain businesses of the Flow Control segment of Dresser, Inc. exposes the Company to integration risk.

     The acquisition of certain businesses from Dresser is the largest acquisition the Company has made and will require a substantial amount of integration into CCV’s operations. To the extent this integration takes longer than expected, costs more than expected or does not result in the operational improvement expected, the Company’s financial performance and liquidity may be negatively impacted.

The inability of the Company to deliver its backlog on time could affect the Company’s future sales and profitability and its relationships with its customers.

     At December 31, 2005, backlog reached $2.156 billion, a record level for the Company. The ability to meet customer delivery schedules for this backlog is dependent on a number of factors including, but not limited to, access to the raw materials required for production, an adequately trained and capable workforce, project engineering expertise for certain large projects, sufficient manufacturing plant capacity and appropriate planning and scheduling of manufacturing resources. Many of the contracts the Company enters into with its customers require long manufacturing lead times and contain penalty or incentive clauses relating to on-time delivery. A failure by the Company to deliver in accordance with customer expectations could subject the Company to financial penalties or loss of financial incentives and may result in damage to existing customer relationships. Additionally, the Company bases its earnings guidance to the financial markets on expectations regarding the timing of delivery of product currently in backlog. Failure to deliver backlog in accordance with expectations could negatively impact the Company’s financial performance and thus cause adverse changes in the market price of the Company’s outstanding common stock and other publicly traded financial instruments.

The Company is embarking on a significant capital expansion program.

     In 2006, the Company expects capital expenditures of approximately $130.0 to $150.0 million to upgrade its machine tools, manufacturing technologies, processes and facilities in order to improve its efficiency and address current and expected market demand for the Company’s products. To the extent this program causes disruptions in the Company’s plants, the Company’s ability to deliver existing or future backlog may be negatively impacted. In addition, if the program does not result in the expected efficiencies, future profitability may be negatively impacted.

Execution of subsea systems projects exposes the Company to risks not present in its surface business.

     This market is significantly different from the Company’s other markets since subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for approximately 7% of total revenues in 2005. During the fourth quarter of 2003, the Company experienced numerous delivery delays on its subsea systems contracts which negatively impacted 2003’s financial results. To the extent the Company experiences difficulties in meeting the technical and/or delivery requirements of the projects, the Company’s earnings or liquidity could be negatively impacted. As of December 31, 2005, the Company has a subsea systems backlog of approximately $583.6 million.

Increases in the cost of and the availability of metals used in the Company’s manufacturing processes could negatively impact the Company’s profitability.

     Beginning in the latter part of 2003 and continuing through 2005, commodity prices for items such as nickel, molybdenum and heavy metal scrap that are used to make the steel alloys required for the Company’s products increased significantly. Certain of the Company’s suppliers have passed these increases on to the Company. The Company has implemented price increases intended to offset the impact of the increase in commodity prices. However, if customers do not accept these price increases, future profitability will be negatively impacted. In addition, the Company’s vendors have informed the Company that lead times for certain raw materials are being extended. To the extent such change negatively impacts the Company’s ability to meet delivery requirements of its customers, the financial performance of the Company may suffer.

Changes in the U.S. rig count have historically impacted the Company’s orders.

     Historically, the Company’s surface and distributed valve products businesses in the U.S. market have tracked changes in the U.S. rig count. However, this correlation did not exist in 2003. The average U.S. rig count increased approximately 24% during 2003 while the Company’s U.S. surface and U.S. distributed valve orders were essentially flat. The Company believes its surface and distributed valve products businesses were negatively impacted by the lack of drilling activity in the Gulf of Mexico, fewer completions of onshore high-temperature/high-pressure wells and a lower level of infrastructure development in the U.S. Such activity typically generates higher orders for the Company as compared to onshore shallow well activity. The relationship between the Company’s orders in its surface and distributed valve products businesses and changes in the U.S. rig count returned to a more normal relationship in 2004 and 2005.

Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the Company’s sales and profitability.

     Demand for most of the Company’s products and services, and therefore its revenues, depend to a large extent upon the level of capital expenditures related to oil and gas exploration, production, development, processing and transmission. Declines, as well as anticipated declines, in oil and gas prices could negatively affect the level of these activities. Factors that contribute to the volatility of oil and gas prices include the following:

• demand for oil and gas, which is impacted by economic and political conditions and weather;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing;

• level of production from non-OPEC countries;

• policies regarding exploration and development of oil and gas reserves;

35

• the political environments of oil and gas producing regions, including the Middle East;

• the depletion rates of gas wells in North America; and

• advances in exploration and development technology.

Fluctuations in worldwide currency markets can impact the Company’s profitability.

     The Company has established multiple “Centers of Excellence” facilities for manufacturing such products as subsea trees, subsea chokes, subsea production controls and BOPs. These production facilities are located in the United Kingdom and other European and Asian countries. To the extent the Company sells these products in U.S. dollars, the Company’s profitability is eroded when the U.S. dollar weakens against the British pound, the euro and certain Asian currencies, including the Singapore dollar.

Cancellation of orders could affect the Company’s future sales and profitability.

     Cooper Cameron accepts purchase orders that may be subject to cancellation, modification or rescheduling. Changes in the economic environment and the financial condition of the oil and gas industry could result in customer requests for modification, rescheduling or cancellation of contractual orders. The Company is typically protected against financial losses related to products and services it has provided prior to any cancellation. However, if the Company’s customers cancel existing purchase orders, future profitability may be negatively impacted.

The Company’s international operations expose it to instability and changes in economic and political conditions, foreign currency fluctuations, trade and investment regulations and other risks inherent to international business.

     The risks of international business include the following:

• volatility in general economic, social and political conditions;

• differing tax rates, tariffs, exchange controls or other similar restrictions;

• changes in currency rates;

• inability to repatriate income or capital;

• compliance with, and changes in, domestic and foreign laws and regulations that impose a range of restrictions on operations, trade practices, trade partners and investment decisions. From time to time, the Company receives inquiries regarding its compliance with such laws and regulations. The Company received a voluntary request for information dated September 2, 2005 from the U.S. Securities and Exchange Commission regarding certain of the Company’s West African activities and has responded to this request. The Company believes it has complied with all applicable laws and regulations with respect to its activities in this region. Additionally, the U.S. Department of Treasury’s Office of Foreign Assets Control made an inquiry regarding U.S. involvement in a United Kingdom subsidiary’s commercial and financial activity relating to Iran in September 2004 and the U.S. Department of Commerce made an inquiry regarding sales by another United Kingdom subsidiary to Iran in February 2005. The Company responded to these two inquiries and has not received any additional requests related to these matters;

• reductions in the number or capacity of qualified personnel; and

• seizure of equipment.

     Cooper Cameron has manufacturing and service operations that are essential parts of its business in developing countries and economically and politically volatile areas in Africa, Latin America, Russia and other countries that were part of the Former Soviet Union, the Middle East, and Central and South East Asia. The Company also purchases a large portion of its raw materials and components from a relatively small number of foreign suppliers in developing countries. The ability of these suppliers to meet the Company’s demand could be adversely affected by the factors described above.

Cooper Compression’s aftermarket revenues associated with legacy equipment are declining.

     During 2005, approximately 35% of Cooper Compression’s revenues came from the sale of replacement parts for equipment that the Company no longer manufactures. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

Changes in the equity and debt markets impact pension expense and funding requirements for the Company’s defined benefit plans.

     The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions, (SFAS 87), which requires that amounts recognized in the financial statements be determined on an actuarial basis. A significant element in determining the Company’s pension income or expense in accordance with SFAS 87 is the expected return on plan assets. The assumed long-term rate of return on assets is applied to a calculated value of plan assets which results in an estimated return on plan assets that is included in current year pension income or expense. The difference between this expected return and the actual return on plan assets is deferred and amortized against future pension income or expense. Due to the weakness in the overall equity markets from 2000 through 2002, the plan assets earned a rate of return substantially less than the assumed long-term rate of return during this period. As a result, expense associated with the Company’s pension plans has increased significantly from the level recognized historically.

     Additionally, SFAS 87 requires the recognition of a minimum pension liability to the extent the assets of the plans are below the accumulated benefit obligation of the plans. In order to avoid recognizing this minimum pension liability, the Company contributed approximately $13.7 million to its pension plans during 2005, $18.2 million in 2004 and $18.7 million in 2003. If the Company’s pension assets perform poorly in the future or interest rates decrease, the Company may be required to recognize a minimum pension liability in the future or fund additional amounts to the pension plans.

36

     On November 10, 2005, the FASB added a project to its technical agenda to reconsider the present accounting for pensions and other postretirement benefits. The Board decided to address the project in two phases. The first phase is an initial improvement phase that is expected to be completed by the end of 2006. The second phase is a comprehensive reconsideration of most, if not all, aspects of the existing accounting standards and may take years to complete. As part of the first phase, the Board has tentatively decided that the funded status of defined benefit plans should be recognized in the balance sheet of the plan sponsor effective for years ending after December 15, 2006 and that existing disclosure requirements should be modified. An exposure draft of the FASB’s proposals is expected to be issued in March 2006. At December 31, 2005, the Company had a long-term prepaid pension asset recognized in its financial statements of $133.9 million determined in accordance with FAS 87. However, the net funded status of all plans at December 31, 2005 was a liability of approximately $19.0 million. If the FASB’s proposal were to be adopted in its current form, it could have a significant impact on the Company’s net assets as of December 31, 2006.

The Company is subject to environmental, health and safety laws and regulations that expose the Company to potential liability.

     The Company’s operations are subject to a variety of national and state, provisional and local laws and regulations, including laws and regulations relating to the protection of the environment. The Company is required to invest financial and managerial resources to comply with these laws and expects to continue to do so in the future. To date, the cost of complying with governmental regulation has not been material, but the fact that such laws or regulations are frequently changed makes it impossible for the Company to predict the cost or impact of such laws and regulations on the Company’s future operations. The modification of existing laws or regulations or the adoption of new laws or regulations imposing more stringent environmental restrictions could adversely affect the Company.

Environmental Remediation

     The Company has been identified as a potentially responsible party (PRP) with respect to four sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or similar state laws. The Company’s involvement at two of the sites has been resolved with de minimus payment. A third is believed to also be at a de minimus level. The fourth site is in Osborne, Pennsylvania where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring.

     The Company is also engaged in site cleanup under the Voluntary Cleanup Program of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas. Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations.

     The Company has estimated its liability for environmental exposures, and the Company’s consolidated financial statements included a liability balance of $8.8 million for these matters at December 31, 2005. Cash expenditures for the Company’s known environmental exposures are expected to be incurred over the next twenty years, depending on the site. For the known exposures, the accrual reflects the Company’s best estimate of the amount it will incur under the agreed-upon or proposed work plans. The Company’s cost estimates were determined based upon the monitoring or remediation plans set forth in these work plans and have not been reduced by possible recoveries from third parties nor are they discounted. These cost estimates are reviewed on an annual basis or more frequently if circumstances occur that indicate a review is warranted. The Company’s estimates include equipment and operating costs for remediation and long-term monitoring of the sites. The Company does not believe that the losses for the known exposures will exceed the current accruals by material amounts, but there can be no assurances to this effect.

Environmental Sustainability

     The Company has pursued environmental sustainability in a number of ways. Processes are monitored in an attempt to produce the least amount of waste. None of the Company’s facilities are rated above Small Quantity Generated status. All of the waste disposal firms used by the Company are carefully selected in an attempt to prevent any future Superfund involvements. Actions are taken in an attempt to minimize the generation of hazardous wastes and to minimize air emissions. None of the Company’s facilities are classified as sites that generate more than minimal air emissions. Recycling of process water is a common practice. Best management practices are used in an effort to prevent contamination of soil and ground water on the Company’s sites. The Company has an active health, safety and environmental audit program in place throughout the world.

Market Risk Information

     The Company is currently exposed to market risk from changes in foreign currency rates and changes in interest rates. A discussion of the Company’s market risk exposure in financial instruments follows.

Foreign Currency Exchange Rates

     A large portion of the Company’s operations consist of manufacturing and sales activities in foreign jurisdictions, principally in Europe, Canada, West Africa, the Middle East, Latin America and the Pacific Rim. As a result, the Company’s financial performance may be affected by changes in foreign currency exchange rates or weak economic conditions in these markets. Overall, the Company generally is a net receiver of Pounds Sterling and Canadian dollars and, therefore, benefits from a weaker U.S. dollar with respect to these currencies. Typically, the Company is a net payer of euros and Norwegian krone as well as other currencies such as the Singapore dollar and the Brazilian real. A weaker U.S. dollar with respect to these currencies may have an adverse effect on the Company. For each of the last three years, the Company’s gain or loss from foreign currency-denominated transactions has not been material.

37

     In order to mitigate the effect of exchange rate changes, the Company will often attempt to structure sales contracts to provide for collections from customers in the currency in which the Company incurs its manufacturing costs. In certain instances, the Company will enter into forward foreign currency exchange contracts to hedge specific large anticipated receipts in currencies for which the Company does not traditionally have fully offsetting local currency expenditures. While there were no material outstanding foreign currency forward contracts at December 31, 2004, the Company was party to a number of long-term foreign currency forward contracts at December 31, 2005. The purpose of the majority of these contracts was to hedge large anticipated non-functional currency cash flows on a major subsea contract involving the Company’s wholly-owned subsidiary in the United Kingdom. Information relating to the contracts and the fair value recorded in the Company’s Consolidated Balance Sheet at December 31, 2005 follows:

	Year of Contract Expiration
(amounts in thousands except exchange rates)	2006		2007		2008		2009		Total
Sell USD/Buy GBP:
Notional amount to sell (in U.S. dollars)	$	141.4	$	65.4	$	11.0	$	2.6	$	220.4
Average GBP to USD contract rate		1.8148		1.8091		1.8039		1.7989		1.8124
Average GBP to USD forward rate at December 31, 2005		1.7248		1.7311		1.7358		1.7383		1.7274
Fair value at December 31, 2005 in U.S. dollars									$	(10.3	)
Buy Euro/Sell GBP:
Notional amount to buy (in euros)		28.9		16.0		0.9		—		45.8
Average GBP to EUR contract rate		1.4137		1.3902		1.3693		1.3450		1.4045
Average GBP to EUR forward rate at December 31, 2005		1.4399		1.4232		1.4068		1.3854		1.4333
Fair value at December 31, 2005 in U.S. dollars									$	(1.1	)
Buy NOK/Sell GBP:
Notional amount to buy (in Norwegian krone)		37.2		20.7		0.6		—		58.5
Average GBP to NOK contract rate		11.4303		11.2999		11.2173		—		11.3817
Average GBP to NOK forward rate at December 31, 2005		11.5135		11.4447		11.3542		—		11.4874
Fair value at December 31, 2005 in U.S. dollars									$	(0.1	)

Interest Rates

     The Company is subject to interest rate risk on its long-term fixed interest rate debt and, to a lesser extent, variable interest rate borrowings. Changes in market interest rates expose the Company’s cash flows to risk with regard to its variable-rate debt. Changes in market interest rates expose the fair value of the Company’s fixed-rate debt to risk which could result in a gain or loss in the event the Company was required to refinance such debt prior to maturity at a different rate.

     The Company has performed a sensitivity analysis to determine how market rate changes might affect the fair value of its debt. This analysis is inherently limited because it represents a singular, hypothetical set of assumptions. Actual market movements may vary significantly from the assumptions. The effects of market movements may also directly or indirectly affect the Company’s assumptions and its rights and obligations not covered by the sensitivity analysis. Fair value sensitivity is not necessarily indicative of the ultimate cash flow or the earnings effect from the assumed market rate movements.

     An instantaneous one-percentage-point decrease in interest rates across all maturities and applicable yield curves would have increased the fair value of the Company’s fixed-rate debt positions by approximately $15.8 million ($8.7 million at December 31, 2004), whereas a one-percentage- point increase in interest rates would have decreased the fair value of the Company’s fixed rate debt by $14.7 million at December 31, 2005. This analysis does not reflect the effect that increasing or decreasing interest rates would have on other items, such as new borrowings, nor the impact they would have on interest expense and cash payments for interest.

     The Company manages its debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that goal. The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties in such transactions.

     In May 2004, the Company entered into interest rate swap agreements on a notional amount of $150.0 million of its senior notes due April 15, 2007 (Senior Notes) to take advantage of short-term interest rates available. Under these agreements, the Company received interest from the counterparties at a fixed rate of 2.65% and paid a variable interest rate based on the published six-month LIBOR rate less 82.5 to 86.0 basis points. On June 7, 2005, the Company terminated these interest rate swaps and paid the counterparties approximately $1.1 million, which represented the fair market value of the agreements at the time of termination and was recorded as an adjustment to the carrying value of the related debt. This amount is being amortized as an increase to interest expense over the remaining term of the debt. The company’s interest expense was increased by $0.3 million for the year ended December 31, 2005 as a result of the amortization of the termination payment.

     The fair value of the Company’s Senior Notes is principally dependent on changes in prevailing interest rates. The fair values of the 1.5% Convertible Debentures and the 1.75% Convertible Debentures are principally dependent on both prevailing interest rates and the Company’s current share price as it relates to the initial conversion prices of $34.52 and $47.55 per share, respectively (the conversion prices have been revised to reflect the 2-for-1 stock split effective December 15, 2005).

     The Company has various other long-term debt instruments of $3.7 million ($4.5 million at December 31, 2004), but believes that the impact of changes in interest rates in the near term will not be material to these instruments.

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Management’s Report on Internal Control Over Financial Reporting

     The Company maintains a system of internal controls that is designed to provide reasonable but not absolute assurance as to the reliable preparation of the consolidated financial statements. The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of errors or fraud, if any, within Cooper Cameron have been detected.

     The control environment of Cooper Cameron is the foundation for its system of internal controls over financial reporting and is embodied in the Company’s Standards of Conduct. It sets the tone of the Company’s organization and includes factors such as integrity and ethical values. The Company’s internal controls over financial reporting are supported by formal policies and procedures that are reviewed, modified and improved as changes occur in the Company’s business or as otherwise required by applicable rule-making bodies.

     The Audit Committee of the Board of Directors, which is composed solely of outside directors, meets periodically with members of management, the internal audit department and the independent registered public accountants to review and discuss internal controls over financial reporting and accounting and financial reporting matters. The independent registered public accountants and internal audit report to the Audit Committee and accordingly have full and free access to the Audit Committee at any time.

Assessment of Internal Control Over Financial Reporting

     Cooper Cameron’s management is responsible for establishing and maintaining adequate internal control (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) over financial reporting.

     Management conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included a review of the documentation surrounding the Company’s financial controls, an evaluation of the design effectiveness of these controls, testing of the operating effectiveness of these controls and a conclusion on this evaluation. Although there are inherent limitations in the effectiveness of any system of internal controls over financial reporting – including the possibility of the circumvention or overriding of controls – based on management’s evaluation, management has concluded that the Company’s internal controls over financial reporting were effective as of December 31, 2005, based on the framework established in “Internal Control – Integrated Framework”. However, because of changes in conditions, it is important to note that internal control system effectiveness may vary over time.

     In conducting management’s evaluation of the effectiveness of the Company’s internal controls over financial reporting, the operations of the Flow Control segment of Dresser, Inc. and of NuFlo Technologies, Inc., both acquired during 2005, were excluded. These businesses constituted $407.4 million and $259.5 million of total and net assets, respectively, as of December 31, 2005 and $96.7 million and $11.9 million of revenues and pre-tax income, respectively, for the year ended December 31, 2005.

     Ernst & Young LLP, an independent registered public accounting firm that has audited the Company’s financial statements as of and for the three-year period ended December 31, 2005, has issued an attestation report on management’s assessment of internal control over financial reporting, which is included herein.

Sheldon R. Erikson
Chairman of the Board,
President and Chief Executive Officer

Franklin Myers
Senior Vice President and
Chief Financial Officer

39

Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting

The Board of Directors and Stockholders of Cooper Cameron Corporation

     We have audited management’s assessment, included in the Assessment of Internal Control Over Financial Reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Cooper Cameron Corporation maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Cooper Cameron Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     As indicated in the accompanying Assessment of Internal Control Over Financial Reporting included in Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the Flow Control segment of Dresser, Inc. (the Acquired Dresser Businesses) and NuFlo Technologies, Inc. (NuFlo) which are included in the 2005 consolidated financial statements of Cooper Cameron Corporation and constituted $407.4 million and $259.5 million of total and net assets, respectively, as of December 31, 2005 and $96.7 million and $11.9 million of revenues and pre-tax income, respectively, for the year then ended. Both NuFlo and the Acquired Dresser Businesses were acquired by Cooper Cameron Corporation during 2005. Our audit of internal control over financial reporting of Cooper Cameron Corporation also did not include an evaluation of the internal control over financial reporting of NuFlo and the Acquired Dresser Businesses.

     In our opinion, management’s assessment that Cooper Cameron Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Cooper Cameron Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cooper Cameron Corporation as of December 31, 2005 and 2004, and the related statements of consolidated results of operations, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2005 and our report dated February 24, 2006 expressed an unqualified opinion thereon.

Houston, Texas
February 24, 2006

40

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Cooper Cameron Corporation

     We have audited the accompanying consolidated balance sheets of Cooper Cameron Corporation (the Company) as of December 31, 2005 and 2004, and the related statements of consolidated results of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cooper Cameron Corporation at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, based on criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2006 expressed an unqualified opinion thereon.

Houston, Texas
February 24, 2006

41

Consolidated Results of Operations

(dollars in thousands, except per share data)

	Year Ended December 31,
	2005			2004			2003
Revenues	$	2,517,847		$	2,092,845		$	1,634,346
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)		1,796,277			1,560,268			1,181,650
Selling and administrative expenses		381,267			300,124			288,569
Depreciation and amortization		78,398			82,841			83,565
Non-cash write-down of technology investment		—			3,814			—
Interest income		(13,060	)		(4,874	)		(5,198	)
Interest expense		11,953			17,753			8,157
Total costs and expenses		2,254,835			1,959,926			1,556,743
Income before income taxes and cumulative effect of accounting change		263,012			132,919			77,603
Income tax provision		(91,882	)		(38,504	)		(20,362	)
Income before cumulative effect of accounting change		171,130			94,415			57,241
Cumulative effect of accounting change		—			—			12,209
Net income	$	171,130		$	94,415		$	69,450
Basic earnings per share:1
Before cumulative effect of accounting change	$	1.55		$	0.89		$	0.53
Cumulative effect of accounting change		—			—			0.11
Net income per share	$	1.55		$	0.89		$	0.64
Diluted earnings per share:1
Before cumulative effect of accounting change	$	1.52		$	0.88		$	0.52
Cumulative effect of accounting change		—			—			0.10
Net income per share	$	1.52		$	0.88		$	0.62

¹ Prior year earnings per share amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005. See Note 13 of the Notes to Consolidated Financial Statements.

The Notes to Consolidated Financial Statements are an integral part of these statements.

42

Consolidated Balance Sheets

(dollars in thousands, except shares and per share data)

	December 31,
	2005		2004
Assets
Cash and cash equivalents	$	361,971	$	226,998
Receivables, net		574,099		424,767
Inventories, net		705,809		454,713
Other		86,177		98,846
Total current assets		1,728,056		1,205,324
Plant and equipment, at cost less accumulated depreciation		525,715		478,651
Goodwill		577,042		415,102
Other assets		267,749		257,353
Total assets	$	3,098,562	$	2,356,430
Liabilities and stockholders’ equity
Current portion of long-term debt	$	6,471	$	7,319
Accounts payable and accrued liabilities		891,519		516,872
Accrued income taxes		23,871		4,069
Total current liabilities		921,861		528,260
Long-term debt		444,435		458,355
Postretirement benefits other than pensions		40,104		42,575
Deferred income taxes		39,089		40,388
Other long-term liabilities		58,310		58,605
Total liabilities		1,503,799		1,128,183
Commitments and contingencies		—		—
Stockholders’ equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized, 115,629,117 shares issued and outstanding at December 31, 2005 (54,933,658 pre 2-for-1 split shares issued at December 31, 2004)		1,156		549
Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding		—		—
Capital in excess of par value		1,113,001		948,740
Retained earnings		443,142		272,012
Accumulated other elements of comprehensive income		37,464		94,974
Less: Treasury stock at cost, 1,795,843 pre 2-for-1 split shares at December 31, 2004		—		(88,028	)
Total stockholders’ equity		1,594,763		1,228,247
Total liabilities and stockholders’ equity	$	3,098,562	$	2,356,430

The Notes to Consolidated Financial Statements are an integral part of these statements.

43

Consolidated Cash Flows

(dollars in thousands)

	Year Ended December 31,
	2005			2004			2003
Cash flows from operating activities:
Net income	$	171,130		$	94,415		$	69,450
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		64,018			70,157			68,242
Amortization		14,380			12,684			15,323
Write-off of unamortized debt issuance costs associated with retired debt		—			6,844			—
Non-cash stock compensation expense		2,790			—			—
Non-cash write-down of investments		2,458			3,814			—
Cumulative effect of accounting change		—			—			(12,209	)
Tax benefit of employee benefit plan transactions, deferred income taxes and other		34,049			(14,704	)		(979	)
Changes in assets and liabilities, net of translation, acquisitions and non-cash items:
Receivables		(80,659	)		(44,387	)		3,212
Inventories		(137,384	)		76,207			(59,843	)
Accounts payable and accrued liabilities		255,213			(9,063	)		44,620
Other assets and liabilities, net		26,094			(736	)		(26,199	)
Net cash provided by operating activities		352,089			195,231			101,617
Cash flows from investing activities:
Capital expenditures		(77,508	)		(53,481	)		(64,665	)
Acquisitions, net of cash acquired		(328,570	)		(171,032	)		—
Purchases of short-term investments		—			—			(154,523	)
Sales of short-term investments		—			22,033			157,910
Other		5,474			10,133			9,172
Net cash used for investing activities		(400,604	)		(192,347	)		(52,106	)
Cash flows from financing activities:
Loan repayments, net		(2,243	)		(4,919	)		(496	)
Issuance of long-term senior and convertible debt		—			437,862			—
Redemption of convertible debt		(14,821	)		(443,903	)		—
Debenture issuance costs		—			(6,538	)		—
Purchase of treasury stock		(9,395	)		(95,325	)		(48,652	)
Activity under stock option plans and other		218,987			41,979			1,280
Net cash provided by (used for) financing activities		192,528			(70,844	)		(47,868	)
Effect of translation on cash		(9,040	)		2,842			16,673
Increase (decrease) in cash and cash equivalents		134,973			(65,118	)		18,316
Cash and cash equivalents, beginning of year		226,998			292,116			273,800
Cash and cash equivalents, end of year	$	361,971		$	226,998		$	292,116

The Notes to Consolidated Financial Statements are an integral part of these statements.

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Consolidated Changes in Stockholders’ Equity

(dollars in thousands)

								Accumulated
								other
			Capital in					elements of
	Common		excess of			Retained		comprehensive			Treasury
	stock		par value			earnings		income			stock			Total
Balance – December 31, 2002	$	546	$	949,188		$	108,147	$	(14,789	)	$	(1,789	)	$	1,041,303
Net income							69,450								69,450
Foreign currency translation									70,908						70,908
Minimum pension liability, net of $433 in taxes									(699	)					(699	)
Change in fair value of short-term investments, net of $56 in taxes									(91	)					(91	)
Comprehensive income															139,568
Purchase of treasury stock												(60,694	)		(60,694	)
Common stock issued under stock option and other employee benefit plans		3		4,447								7,819			12,269
Tax benefit of employee stock benefit plan transactions				4,831											4,831
Costs related to forward stock purchase agreements and other				(554	)										(554	)
Balance — December 31, 2003		549		957,912			177,597		55,329			(54,664	)		1,136,723
Net income							94,415								94,415
Foreign currency translation									40,332						40,332
Minimum pension liability, net of $352 in taxes									(568	)					(568	)
Change in fair value of short-term investments and other, net of $0 in taxes									(119	)					(119	)
Comprehensive income															134,060
Purchase of treasury stock												(95,325	)		(95,325	)
Common stock issued under stock option and other employee benefit plans				(15,817	)							61,961			46,144
Tax benefit of employee stock benefit plan transactions				6,645											6,645
Balance — December 31, 2004		549		948,740			272,012		94,974			(88,028	)		1,228,247
Net income							171,130								171,130
Foreign currency translation									(49,110	)					(49,110	)
Change in fair value of derivatives accounted for as cash flow hedges, net of $3,873 in taxes									(8,441	)					(8,441	)
Other comprehensive income recognized in current year earnings, net of $18 in taxes									41						41
Comprehensive income															113,620
Non-cash stock compensation expense				2,790											2,790
Purchase of treasury stock												(9,395	)		(9,395	)
Common stock issued under stock option and other employee benefit plans		31		124,230								97,423			221,684
Tax benefit of employee stock benefit plan transactions				37,817											37,817
Stock split		576		(576	)										—
Balance — December 31, 2005	$	1,156	$	1,113,001		$	443,142	$	37,464		$	—		$	1,594,763

The Notes to Consolidated Financial Statements are an integral part of these statements.

45

Notes to Consolidated Financial Statements

Note 1: Summary of Major Accounting Policies

     Company Operations — Cooper Cameron Corporation (the Company or Cooper Cameron) is engaged primarily in the manufacture of oil and gas pressure control and separation equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission processes used in onshore, offshore and subsea applications. Cooper Cameron also manufactures and services air and gas compressors and turbochargers.

     Principles of Consolidation — The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. Investments from 20% to 50% in affiliated companies are accounted for using the equity method. The Company’s operations are organized into three separate business segments. These segments are Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Additional information regarding each segment may be found in Note 14 of the Notes to Consolidated Financial Statements.

     Estimates in Financial Statements — The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include, but are not limited to, estimated losses on accounts receivable, estimated warranty costs, estimated realizable value on excess inventory, contingencies, estimated liabilities for liquidated damages, estimates related to pension accounting, estimated proceeds from assets held for sale and estimates related to deferred tax assets. Actual results could differ materially from these estimates.

     Revenue Recognition — The Company generally recognizes revenue once the following four criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery of the equipment has occurred or services have been rendered, (iii) the price of the equipment contracts, revenue is recognized in accordance with Statement or service is fixed and determinable and (iv) collectibility is reasonably assured. For certain engineering, procurement and construction-type contracts, which typically include the Company’s subsea systems and processing equipment contracts, revenue is recognized in accordance with Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts (SOP 81-1). Under SOP 81-1, the Company recognizes revenue on these contracts using a units-of-completion method. Under the units-of-completion method, revenue is recognized once the manufacturing process is complete for each piece of equipment specified in the contract with the customer. This would include customer inspection and acceptance, if required by the contract. Approximately 13% and 15% of the Company’s revenues for the years ended December 31, 2005 and 2004, respectively, was recognized under SOP 81-1.

     Shipping and Handling Costs — Shipping and handling costs are reflected in the caption entitled “Cost of sales (exclusive of depreciation and amortization shown separately below)” in the accompanying Consolidated Results of Operations statement.

     Cash Equivalents — For purposes of the Consolidated Cash Flows statement, the Company considers all investments purchased with original maturities of three months or less to be cash equivalents.

     Short-term Investments — Investments in available for sale marketable debt and equity securities are carried at fair value, based on quoted market prices. Differences between cost and fair value are reflected as a component of accumulated other elements of comprehensive income until such time as those differences are realized. The basis for computing realized gains or losses is the specific identification method. The realized gains on short-term investments included in the Consolidated Results of Operations were $0, $0 and $278,000 for the years ended December 31, 2005, 2004 and 2003, respectively. If the Company determines that a loss is other than temporary, such loss will be charged to earnings.

     Allowance for Doubtful Accounts — The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of specific customers.

     Inventories — Aggregate inventories are carried at cost or, if lower, net realizable value. On the basis of current costs, 42% of inventories at December 31, 2005 and 53% at December 31, 2004 are carried on the last-in, first-out (LIFO) method. The remaining inventories, which are located outside the United States and Canada, are carried on the first-in, first-out (FIFO) method. The Company provides a reserve for its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. During 2005 and 2004, the Company revised its estimates of realizable value on certain of its excess inventory. The impact of these revisions was to increase the required reserve as of December 31, 2005 and 2004 by $9,900,000 and $6,551,000, respectively. During 2005, 2004 and 2003, the Company reduced its LIFO inventory levels. These reductions resulted in a liquidation of certain low-cost inventory layers. As a result, the Company recorded non-cash LIFO income of $4,033,000, $9,684,000 and $15,932,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

     Plant and Equipment — Property, plant and equipment, both owned and under capital lease, is carried at cost. Maintenance and repairs are expensed as incurred. The cost of renewals, replacements and betterments is capitalized. The Company capitalizes software developed or obtained for internal use. Accordingly, the cost of third-party software, as well as the cost of third-party and internal personnel that are directly involved in application development activities, are capitalized during the application development phase of new software systems projects. Costs

46

during the preliminary project stage and post-implementation stage of new software systems projects, including data conversion and training costs, are expensed as incurred. Depreciation and amortization is provided over the estimated useful lives of the related assets, or in the case of assets under capital leases, over the related lease term, if less, using the straight-line method. Depreciation expense for the years ended December 31, 2005, 2004 and 2003 was $64,018,000, $70,157,000 and $68,242,000, respectively. The estimated useful lives of the major classes of property, plant and equipment are as follows:

	Estimated
	Useful Lives
Buildings and leasehold improvements	10 — 40 years
Machinery and equipment	3 — 18 years
Office furniture, software and other	3 — 10 years

     Goodwill — In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142), the Company reviews goodwill at least annually for impairment at the reporting unit level, or more frequently if indicators of impairment are present. The Company conducts its annual review by comparing the estimated fair value of each reporting unit to its respective book value. The estimated fair value for the 2005, 2004 and 2003 annual evaluations was determined using discounted cash flows and other market-related valuation models. Certain estimates and judgments are required in the application of the fair value models. Each of the annual evaluations indicated that no impairment of goodwill was required. The Company’s reporting units for SFAS 142 purposes are Cameron, Petreco, CCV, Cooper Energy Services and Cooper Turbocompressor. Petreco is included in the Cameron segment and Cooper Energy Services and Cooper Turbocompressor are combined in the Cooper Compression segment for segment reporting purposes (see Note 14 of the Notes to Consolidated Financial Statements for further discussion of the Company’s business segments).

     Intangible Assets — The Company’s intangible assets, excluding goodwill and unrecognized prior service costs related to its pension plan, represent purchased patents, trademarks, customer lists and other identifiable intangible assets. The majority of other identifiable intangible assets are amortized on a straight-line basis over the years expected to be benefited, generally ranging from 5 to 20 years. Such intangibles are tested for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable. As many areas of the Company’s business rely on patents and proprietary technology, it has followed a policy of seeking patent protection both inside and outside the United States for products and methods that appear to have commercial significance. The costs of internally developing any intangibles, as well as costs of defending such intangibles, are expensed as incurred.

     Long-Lived Assets — In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), long-lived assets, excluding goodwill and indefinite-lived intangibles, to be held and used by the Company are reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For long-lived assets to be held and used, the Company bases its evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, the Company determines whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset. Assets are classified as held for sale when the Company has a plan for disposal of such assets and those assets meet the held for sale criteria contained in SFAS 144 and are stated at estimated fair value less estimated costs to sell.

     Product Warranty — Estimated warranty expense is accrued either at the time of sale based upon historical experience or, in some cases, when specific warranty problems are encountered. Adjustments to the recorded liability are made periodically to reflect actual experience.

     Contingencies — The Company accrues for costs relating to litigation, including litigation defense costs, claims and other contingent matters, including tax contingencies and liquidated damage liabilities, when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to contingent liability reserves are reflected in income in the period in which different facts or information become known or circumstances change that affect our previous assumptions with respect to the likelihood or amount of loss. Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known.

     Income Taxes — The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Income tax expense includes U.S. and foreign income taxes, including U.S. federal taxes on undistributed earnings of foreign subsidiaries to the extent such earnings are planned to be remitted. Taxes are not provided on the translation component of comprehensive income since the effect of translation is not considered to modify the amount of the earnings that are planned to be remitted. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized considering future taxable income and ongoing prudent and feasible tax planning strategies.

47

     Environmental Remediation and Compliance — Environmental remediation and postremediation monitoring costs are accrued when such obligations become probable and reasonably estimable. Such future expenditures are not discounted to their present value.

     Pension and Postretirement Benefits Accounting — The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (SFAS 87) and its postretirement health and life insurance benefits in accordance with Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (SFAS 106), both of which require that amounts recognized in the financial statements be determined on an actuarial basis. The Company makes certain assumptions in calculating the amounts recognized in the Company’s financial statements taking into account current investment yields on high-grade corporate bonds (discount rate), external market indicators (inflation rate, expected rate of return on plan assets, health care cost trend rate and rate of compensation increase), the Company’s compensation strategy (rate of compensation increase), asset allocation strategies (expected rate of return on plan assets) and actual plan experience (expected rate of return on plan assets, retirement and mortality rates). Such assumptions are reviewed at least annually.

     Stock-Based Compensation — At December 31, 2005, the Company had four stock-based employee compensation plans, which are described in further detail in Note 9 of the Notes to Consolidated Financial Statements. Through December 31, 2005, the Company has measured compensation expense for its stock-based compensation plans using the intrinsic value method. Beginning January 1, 2006, compensation expense for the Company’s stock-based compensation plans will be measured using the fair value method required by Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments (SFAS 123R), which is described in further detail below. The following table illustrates the effect on net income and earnings per share if the Company had used the alternative fair value method required by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, to recognize stock-based employee compensation expense based on the number of shares that vest in each period.

	Year Ended December 31,
(dollars in thousands, except per share data)	2005			2004			2003
Net income, as reported	$	171,130		$	94,415		$	69,450
Add: Stock compensation expense included in net income		1,816			—			—
Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(11,913	)		(24,818	)		(23,093	)
Pro forma net income	$	161,033		$	69,597		$	46,357
Earnings per share: 1
Basic — as reported	$	1.55		$	0.89		$	0.64
Basic — pro forma	$	1.45		$	0.65		$	0.43
Diluted — as reported	$	1.52		$	0.88		$	0.62
Diluted — pro forma	$	1.41		$	0.64		$	0.42

¹ Prior year amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005.

     During the second quarter of 2004, the Company’s Board of Directors accelerated the vesting on 622,262 pre-split option shares previously granted to employees of the Company in an effort to minimize the impact of the Financial Accounting Standards Board’s Exposure Draft entitled “Share-Based Payments” (see “Recently Issued Accounting Pronouncements” below relating to the final issued standard). Although this action established a new measurement date for these options under the intrinsic value method, there was no compensation expense associated with this action since the exercise price related to the accelerated options was above the fair market value of the Company’s common stock on the day the acceleration was effective. However, approximately $10,365,000 of compensation expense under the fair value method was accelerated as a result of this action and has been reflected in the above pro forma table as additional compensation expense for the year ended December 31, 2004.

     Derivative Financial Instruments — The Company recognizes all derivative financial instruments as assets and liabilities and measures them at fair value. Under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), hedge accounting is only applied when the derivative is deemed highly effective at offsetting changes in anticipated cash flows of the hedged item or transaction. Changes in fair value of derivatives that are designated as cash flow hedges are deferred in accumulated other comprehensive income until the underlying transactions are recognized in earnings, at which time any deferred hedging gains or losses are also recorded in earnings on the same line as the hedged item. Any ineffective portion of the change in the fair value of a derivative used as a cash flow hedge is recorded in earnings as incurred. The Company may at times also use forward contracts to hedge foreign currency assets and liabilities. These contracts are not designated as hedges under SFAS 133. Therefore, the change in fair value of these contracts are recognized in earnings as they occur and offset gains or losses on the related asset or liability.

48

     Foreign Currency — For most subsidiaries and branches outside the U.S., the local currency is the functional currency. In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, the financial statements of these subsidiaries and branches are translated into U.S. dollars as follows: (i) assets and liabilities at year-end exchange rates; (ii) income, expenses and cash flows at average exchange rates; and (iii) stockholders’ equity at historical exchange rates. For those subsidiaries for which the local currency is the functional currency, the resulting translation adjustment is recorded as a component of accumulated other elements of comprehensive income in the accompanying Consolidated Balance Sheets.

     For certain other subsidiaries and branches, operations are conducted primarily in currencies other than the local currencies, which are therefore the functional currency. Non-functional currency monetary assets and liabilities are remeasured at year-end exchange rates. Revenue, expense and gain and loss accounts of these foreign subsidiaries and branches are remeasured at average exchange rates. Non-functional currency non-monetary assets and liabilities, and the related revenue, expense, gain and loss accounts are remeasured at historical rates.

     Foreign currency gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in income. The effects of foreign currency transactions were gains (losses) of $2,717,000, $(1,982,000) and $5,716,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

     Reclassifications and Revisions — Certain prior year amounts have been reclassified to conform to the current year presentation. Prior period earnings per share amounts, shares utilized in the calculation of prior period earnings per share and activity during the three-year period ended December 31, 2005 relating to employee stock options outstanding have been revised to reflect the 2-for-1 split of the Company’s common stock effective December 15, 2005.

     Cumulative Effect of Accounting Change — In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS 150), which became effective for the Company as of the beginning of the third quarter of 2003. SFAS 150 affected the Company’s accounting for its two forward purchase agreements, then outstanding, covering 1,006,500 pre-split shares of the Company’s common stock. Prior to the adoption of SFAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of SFAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12,209,000. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $37,992,000 to purchase the shares covered by these agreements. These shares were reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50,034,000. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $167,000, was recognized in the Company’s consolidated results of operations.

     Recently Issued Accounting Pronouncements — In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151, Inventory Costs (SFAS 151). SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company believes there will be no material effect on its consolidated financial position, results of operations or cash flows upon adoption of this statement.

     In December 2004, the FASB issued SFAS 123R, which requires that all share-based payments to employees, including grants of employee stock options, be recognized over their vesting periods in the income statement based on their estimated fair values. SFAS 123R is effective at the beginning of the first fiscal year beginning after June 15, 2005.

     Although the Company has not completed its analysis of the impact of SFAS 123R, the Company currently estimates that it will recognize approximately $0.10 per diluted share of equity- and option-based compensation expense for 2006 (unaudited), assuming the Company elects the modified prospective transition alternative. However, this estimate may increase or decrease materially once the Company completes its analysis of the impact of SFAS 123R.

Note 2: Plant Closing, Business Realignment and Other Related Costs

     Plant closing, business realignment and other related costs by segment during the years ended December 31, 2004 and 2003 were as follows:

	Year Ended December 31,
(dollars in thousands)	2004		2003
Amounts included in selling and administrative expenses:
Cameron	$	4,100	$	5,784
CCV		1,426		—
Cooper Compression		570		3,137
Corporate		—		5,652
Total costs	$	6,096	$	14,573

49

     During 2004, the Company’s selling and administrative expenses included $6,096,000 of severance costs, primarily related to a workforce reduction program at Cameron, which was completed as of December 31, 2004.

     During 2003, the Company’s selling and administrative expenses included plant closing, business realignment and other related costs totaling $14,573,000. This amount was comprised of (i) $6,181,000 for employee severance at Cameron and at Cooper Compression , (ii) $1,240,000 of other plant closure costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4,646,000 related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1,006,000 related to the Company’s international tax restructuring activities, which were begun in 2002 and (v) $1,500,000 related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition.

The number of employees terminated as a result of the above actions were approximately 406 and 266 in 2004 and 2003, respectively.

A summary of the impact during 2005 on various liability accounts associated with the aforementioned actions taken follows:

			Adjustments
	Balance at		to Accruals						Translation
	Beginning		Through			Cash			and			Balance at
(dollars in thousands)	of Year		Earnings			Disbursements			Other			End of Year
Severance	$	238	$	(5	)	$	(233	)	$	—		$	—
Facility closure		3,524		2,580			(2,688	)		375			3,791
Retained liabilities from sale of Rotating business		1,469		—			(307	)		(150	)		1,012
Environmental		3,537		1,010			(191	)		(606	)		3,750
Total	$	8,768	$	3,585		$	(3,419	)	$	(381	)	$	8,553

Note 3: Acquisitions

     On September 1, 2005, the Company announced it had agreed to acquire substantially all of the businesses included within the Flow Control segment of Dresser, Inc. (the Dresser Flow Control Acquisition). On November 30, 2005, the Company completed the acquisition of all of these businesses other than a portion of the business which was acquired on January 10, 2006. Total acquisition cost for the businesses, which will expand the Company’s valves product line, was approximately $217,483,000 in cash and assumed debt. The acquired operations serve customers in the worldwide oil and gas production, pipeline and process markets and have been included in the Company’s consolidated financial statements for the period subsequent to the acquisition in the CCV segment.

     A preliminary purchase price allocation for the Dresser Flow Control Acquisition resulted in goodwill of approximately $83,673,000 at December 31, 2005, less than one-half of which is currently estimated to be deductible for income tax purposes. The purchase price allocation is subject to adjustment as the Company is awaiting a significant amount of additional information relating to the fair value of Dresser’s assets and liabilities. Additionally, the Company expects to finalize a working capital settlement with Dresser during 2006. In connection with the integration of the businesses into CCV, the Company anticipates closing certain facilities, relocating other operations and involuntarily terminating or relocating employees of the acquired businesses, most of which will occur in 2006. Such costs will be accrued or expensed as incurred.

     On May 11, 2005, the Company acquired one hundred percent of the outstanding stock of NuFlo Technologies, Inc. (NuFlo), a Houston-based supplier of metering and related flow measurement equipment, for approximately $121,294,000 in cash and assumed debt, including an additional payment during the third quarter of 2005 reflecting additional working capital acquired. NuFlo’s results are included in the Company’s consolidated financial statements for the period subsequent to the acquisition date in the CCV segment. A preliminary purchase price allocation for the NuFlo acquisition resulted in the addition of approximately $75,402,000 of goodwill for the period ended December 31, 2005, most of which will not be deductible for income tax purposes. The purchase price allocation is subject to adjustment, as the Company is awaiting additional information related to the fair value of NuFlo’s assets and liabilities.

     Also, during 2005, the Company made three small product line acquisitions. Two of the acquisitions, totaling $10,118,000, were complementary to the current product offerings in the Cameron segment. One acquisition in the amount of $1,022,000, plus certain additional amounts that have been deferred for annual payout over a three-year period ending January 5, 2008, was incorporated into the CCV segment. The results of the acquired entities have been included in the Company’s consolidated financial statements for the period subsequent to the respective acquisition dates. Total goodwill recorded as a result of these acquisitions amounted to $6,648,000, the majority of which will be deductible for income tax purposes.

     On November 29, 2004, the Company acquired certain businesses of the PCC Flow Technologies segment of Precision Castparts Corp. (PCC), for approximately $79,668,000, net of cash acquired and debt assumed, subject to adjustment based upon the actual net assets of the businesses at the acquisition date. The operations acquired serve customers in the surface oil and gas production, pipeline and process markets. The results of the PCC entities acquired are included in the Company’s consolidated financial statements for the period subsequent to the acquisition date. Goodwill recorded at December 31, 2005 for the PCC acquisition totaled approximately $17,313,000, most of which will not be deductible for income tax purposes.

     On July 2, 2004, the Company acquired the assets of Unicel, Inc. (Unicel), a Louisiana-based supplier of oil separation products, for approximately $6,700,000 in cash and a note payable for $500,000. The Unicel acquisition expanded the product offering of Petreco.

50

Unicel’s results are included in the Company’s consolidated financial statements for the period subsequent to the acquisition date. Goodwill recorded from the Unicel acquisition totaled approximately $4,330,000 at December 31, 2005, most of which will be deductible for income tax purposes.

     On February 27, 2004, the Company acquired one hundred percent of the outstanding stock of Petreco International Inc. (Petreco), a Houston-based supplier of oil and gas separation products, for approximately $89,922,000, net of cash acquired and debt assumed. Petreco provides highly engineered, custom processing products to the oil and gas industry worldwide and provides the Company with additional product offerings that are complementary to its existing products. Petreco’s results are included in the Company’s consolidated financial statements for the period subsequent to the acquisition date. Total goodwill recorded as a result of the Petreco acquisition was approximately $74,325,000 at December 31, 2005, most of which will not be deductible for income tax purposes.

Note 4: Receivables

     Receivables consisted of the following:

	December 31,
(dollars in thousands)	2005			2004
Trade receivables	$	560,638		$	414,150
Other receivables		23,236			15,130
Allowance for doubtful accounts		(9,775	)		(4,513	)
Total receivables	$	574,099		$	424,767

Note 5: Inventories

     Inventories consisted of the following:

	December 31,
(dollars in thousands)	2005			2004
Raw materials	$	97,035		$	63,674
Work-in-process		214,730			119,073
Finished goods, including parts and subassemblies		498,938			346,247
Other		3,408			2,984
		814,111			531,978
Excess of current standard costs over LIFO costs		(37,829	)		(29,487	)
Allowance for obsolete and excess inventory		(70,473	)		(47,778	)
Total inventories	$	705,809		$	454,713

Note 6: Plant and Equipment, Goodwill and Other Assets

     Plant and equipment consisted of the following:

	December 31,
(dollars in thousands)	2005			2004
Land and land improvements	$	36,229		$	36,832
Buildings		220,315			219,764
Machinery and equipment		587,967			563,824
Tooling, dies, patterns, etc.		55,383			55,182
Office furniture & equipment		93,919			86,861
Capitalized software		83,221			76,903
Assets under capital leases		20,754			18,917
All other		14,555			14,830
Construction in progress		35,079			21,960
		1,147,422			1,095,073
Accumulated depreciation		(621,707	)		(616,422	)
Total plant and equipment	$	525,715		$	478,651

51

     Changes in goodwill during 2005 were as follows:

							Copper
(dollars in thousands)	Cameron			CCV			Compression		Total
Balance at December 31, 2004	$	223,558		$	129,322		$	62,222	$	415,102
Acquisitions:
Flow Control segment of Dresser, Inc.		—			83,673			—		83,673
NuFlo Technologies, Inc.		—			75,402			—		75,402
Other acquisitions		5,926			722			—		6,648
Finalization of prior year acquisition adjustments:
PCC Flow Technologies		8,465			(1,384	)		—		7,081
Unicel		(1,372	)		—			—		(1,372	)
Petreco		7,540			—			—		7,540
Translation and other		(14,185	)		(2,847	)		—		(17,032	)
Balance at December 31, 2005	$	229,932		$	284,888		$	62,222	$	577,042

     Other assets consisted of the following:

	December 31,
(dollars in thousands)	2005			2004
Long-term prepaid benefit costs of defined benefit pension plans	$	133,875		$	137,086
Deferred income taxes		53,767			61,487
Intangible assets related to pension plans		101			101
Other intangibles:
Nonamortizable		8,509			9,565
Gross amortizable		53,316			30,106
Accumulated amortization		(9,972	)		(6,833	)
Other		28,153			25,841
Total other assets	$	267,749		$	257,353

     Amortization associated with the Company’s capitalized software and other amortizable intangibles (primarily patents, trademarks, customer lists and other) recorded as of December 31, 2005 is expected to approximate $12,703,000, $12,122,000, $10,686,000, $9,507,000 and $8,530,000 for the years ending December 31, 2006, 2007, 2008, 2009 and 2010, respectively.

Note 7: Accounts Payable and Accrued Liabilities

     Accounts payable and accrued liabilities consisted of the following:

	December 31,
(dollars in thousands)	2005		2004
Trade accounts payable and accruals	$	409,385	$	252,049
Salaries, wages and related fringe benefits		128,144		89,654
Advances from customers		240,980		88,269
Payroll and other taxes		25,858		22,456
Product warranty		25,030		16,481
Fair value of derivatives		7,688		—
Deferred income taxes		6,846		13,505
Product liability		5,552		5,603
Accruals for plant closing, business realignment and other related costs		1,068		5,670
Other		40,968		23,185
Total accounts payable and accrued liabilities	$	891,519	$	516,872

52 

Activity during the year associated with the Company’s product warranty accruals was as follows (dollars in thousands):

			Warranty		Charges
Balance	Effects of		Provisions During		Against			Translation			Balance
December 31, 2004	Acquisitions		the Year		Accrual			and Other			December 31, 2005
$16,481	$	5,173	$	21,789	$	(17,977	)	$	(436	)	$	25,030

Note 8: Employee Benefit Plans

     Total net benefit plan expense associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

										Postretirement
	Pension Benefits									Benefits
(dollars in thousands)	2005			2004			2003			2005			2004			2003
Service cost	$	7,574		$	7,036		$	6,597		$	7		$	12		$	11
Interest cost		22,215			21,255			19,842			1,502			2,601			3,118
Expected return on plan assets		(28,807	)		(27,795	)		(23,440	)		—			—			—
Amortization of prior service cost		(526	)		(526	)		(467	)		(388	)		(463	)		(80	)
Amortization of losses (gains) and other		9,925			7,988			7,838			(956	)		747			—
Total net benefit plan expense	$	10,381		$	7,958		$	10,370		$	165		$	2,897		$	3,049
Net benefit plan expense:
U.S. plans	$	3,155		$	2,819		$	5,957		$	165		$	2,897		$	3,049
Foreign plans		7,226			5,139			4,413			—			—			—
Total net benefit plan expense	$	10,381		$	7,958		$	10,370		$	165		$	2,897		$	3,049

     The change in the benefit obligations associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2005			2004			2005			2004
Benefit obligation at beginning of year	$	414,569		$	359,521		$	26,672		$	42,624
Service cost		7,574			7,036			7			12
Interest cost		22,215			21,255			1,502			2,601
Plan participants’ contributions		910			549			—			—
Curtailments		—			(250	)		—			—
Actuarial losses (gains)		22,924			32,462			(998	)		(14,798	)
Exchange rate changes		(25,384	)		14,943			—			—
Benefits paid directly or from plan assets		(19,181	)		(20,947	)		(2,271	)		(3,767	)
Expenses paid from plan assets		(730	)		—			—			—
Benefit obligation at end of year	$	422,897		$	414,569		$	24,912		$	26,672
Benefit obligations at end of year:
U.S. plans	$	203,017		$	198,689		$	24,912		$	26,672
Foreign plans		219,880			215,880			—			—
Benefit obligation at end of year	$	422,897		$	414,569		$	24,912		$	26,672

     The total accumulated benefit obligation for the Company’s defined benefit pension plans was $393,149,000 and $389,762,000 at December 31, 2005 and 2004, respectively.

53 

     The change in the plan assets associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2005			2004			2005			2004
Fair value of plan assets at beginning of year	$	384,788		$	342,296		$	—		$	—
Actual return on plan assets		37,543			25,853			—			—
Actuarial gains		9,475			5,010			—			—
Company contributions		13,652			18,210			2,271			3,767
Plan participants’ contributions		910			549			—			—
Exchange rate changes		(22,798	)		13,250			—			—
Benefits paid from plan assets		(18,898	)		(20,380	)		(2,271	)		(3,767	)
Expenses paid from plan assets		(730	)		—			—			—
Fair value of plan assets at end of year	$	403,942		$	384,788		$	—		$	—
Fair value of plan assets at end of year:
U.S. plans	$	201,867		$	193,790		$	—		$	—
Foreign plans		202,075			190,998			—			—
Fair value of plan assets at end of year	$	403,942		$	384,788		$	—		$	—

     Asset investment allocations for the Company’s main defined benefit pension and postretirement benefit plans in the United States and the United Kingdom, which account for approximately 99% of total plan assets, are as follows:

							Postretirement
	Pension Benefits						Benefits
	2005			2004			2005		2004
U.S. plan:
Equity securities		65	%		62	%		—		—
Fixed income debt securities and cash		35	%		38	%		—		—
U.K. plan:
Equity securities		51	%		48	%		—		—
Fixed income debt securities and cash		49	%		52	%		—		—

     In each jurisdiction, the investment of plan assets is overseen by a plan asset committee whose members act as trustees of the plan and set investment policy. For the years ended December 31, 2005 and 2004, the investment strategy has been designed to approximate the performance of market indexes. The actual asset allocations at December 31, 2005 were weighted slightly heavier toward equity securities than the stated targeted allocations.

     During 2005, the Company made contributions totaling $13,652,000 to the assets of its various defined benefit plans. Minimum contributions for 2006 are currently expected to approximate $2,042,000, assuming no change in the current discount rate or expected investment earnings.

     The net assets (liabilities) associated with the Company’s defined benefit pension and postretirement benefit plans recognized on the balance sheet consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2005			2004			2005			2004
Plan assets less than benefit obligations at end of year	$	(18,955	)	$	(29,781	)	$	(24,912	)	$	(26,672	)
Unrecognized net loss (gain)		150,045			164,770			(12,132	)		(12,455	)
Unrecognized prior service cost		(2,988	)		(3,510	)		(3,060	)		(3,448	)
Prepaid (accrued) pension cost		128,102			131,479			(40,104	)		(42,575	)
Underfunded plan adjustments recognized:
Accrued minimum liability		(2,166	)		(2,542	)		—			—
Intangible asset		101			101			—			—
Accumulated other comprehensive income, net of tax		1,507			1,507			—			—
Net assets (liabilities) recognized on balance sheet at end of year	$	127,544		$	130,545		$	(40,104	)	$	(42,575	)

54 

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2005			2004			2005			2004
Balance sheet classification at end of year:
Assets recognized:
U.S. plans	$	74,488		$	71,021		$	—		$	—
Foreign plans		59,488			66,166			—			—
Liabilities recognized:
U.S. plans		(4,224	)		(3,893	)		(40,104	)		(42,575	)
Foreign plans		(3,715	)		(4,256	)		—			—
Accumulated other comprehensive income, net of tax:
U.S. plans		331			331			—			—
Foreign plans		1,176			1,176			—			—
Total recognized	$	127,544		$	130,545		$	(40,104	)	$	(42,575	)

     The weighted-average assumptions associated with the Company’s defined benefit pension and postretirement benefit plans were as follows:

							Postretirement
	Pension Benefits						Benefits
	2005			2004			2005			2004
Assumptions related to net benefit costs:
Domestic plans:
Discount rate		5.75	%		6.25	%		5.75	%		6.25	%
Expected return on plan assets		8.5	%		8.75	%		—			—
Rate of compensation increase		4.5	%		4.5	%		—			—
Health care cost trend rate		—			—			10.0	%		11.0	%
Measurement date		1/1/2005			1/1/2004			10/1/2004			10/1/2003
International plans:
Discount rate		5.0 - 5.5	%		5.0 - 5.5	%		—			—
Expected return on plan assets		5.0 - 6.75	%		5.5 - 7.5	%		—			—
Rate of compensation increase		2.75 - 4.0	%		2.75 - 4.0	%		—			—
Measurement date		1/1/2005			1/1/2004			—			—
Assumptions related to end of period benefit obligations:
Domestic plans:
Discount rate		5.75	%		5.75	%		5.5	%		5.75	%
Rate of compensation increase		4.5	%		4.5	%		—			—
Health care cost trend rate		—			—			9.0	%		10.0	%
Measurement date		12/31/2005			12/31/2004			10/1/2005			10/1/2004
International plans:
Discount rate		4.25 - 5.0	%		5.0 - 5.5	%		—			—
Rate of compensation increase		2.75 - 4.0	%		2.75 - 4.0	%		—			—
Measurement date		12/31/2005			12/31/2004			—			—

     The expected long-term rates of return on assets used to compute expense for the year ended December 31, 2005 were lowered from rates used in 2004 to reflect estimated future investment returns and anticipated asset allocations and investment strategies.

     The rate of compensation increase for the domestic plans is based on an age-grade scale ranging from 3.0% to 7.5% with a weighted-average rate of approximately 4.5%.

     The health care cost trend rate is assumed to decrease gradually from 9.0% to 5.0% by 2010 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

	One-percentage-	One-percentage-
(dollars in thousands)	point Increase	point Decrease
Effect on total of service and interest cost components in 2005	$     78	$     (70)
Effect on postretirement benefit obligation as of December 31, 2005	$1,419	$(1,273)

55 

     Year-end amounts applicable to the Company’s pension plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets were as follows:

	Projected Benefit						Accumulated Benefit
	Obligation in Excess						Obligation in Excess
	of Plan Assets						of Plan Assets
(dollars in thousands)	2005			2004			2005			2004
Fair value of applicable plan assets	$	202,509		$	384,788		$	4,881		$	4,750
Projected benefit obligation of applicable plans	$	(224,692	)	$	(414,569	)		—			—
Accumulated benefit obligation of applicable plans		—			—		$	(12,802	)	$	(12,898	)

     The Company sponsors the Cooper Cameron Corporation Retirement Plan (Retirement Plan) covering the majority of salaried U.S. employees and certain domestic hourly employees, as well as separate defined benefit pension plans for employees of its U.K. and German subsidiaries, and several unfunded defined benefit arrangements for various other employee groups. The U.K. defined benefit pension plan was frozen with respect to new entrants effective June 14, 1996, and the Retirement Plan was frozen with respect to most new entrants effective May 1, 2003. Additionally, with respect to the Retirement Plan, the basic credits to participant account balances decreased from 4% of compensation below the Social Security Wage Base plus 8% of compensation in excess of the Social Security Wage Base to 3% and 6%, respectively, and vesting for participants who had not completed three full years of vesting service as of May 1, 2003 changed from a three-year graded vesting with 33% vested after three years and 100% vested after five years to five-year cliff vesting.

     In addition, the Company’s domestic employees who are not covered by a bargaining unit and certain others are also eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan. Under this plan, employees’ savings deferrals are partially matched in cash and invested at the employees’ discretion. Additionally, the Company makes cash contributions for hourly employees who are not covered under collective bargaining agreements and will make contributions equal to 2% of earnings of new employees hired on or after May 1, 2003, who are not eligible for participation in the Retirement Plan, based upon the achievement of certain financial objectives by the Company. The Company’s expense under this plan for the years ended December 31, 2005, 2004 and 2003 amounted to $9,573,000, $8,026,000 and $8,050,000, respectively. In addition, the Company provides savings plans for employees under collective bargaining agreements and, in the case of certain international employees, as required by government mandate, which provide for among other things, Company matching contributions in cash based on specified formulas. Expense with respect to these various defined contribution and government mandated plans for the years ended December 31, 2005, 2004 and 2003 amounted to $15,760,000, $ 16,213,000 and $ 12,810,000, respectively.

     Benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

					Postretirement
	Pension Benefits				Benefits
(dollars in thousands)	U.S. Plans		Foreign Plans
Year ended December 31 :
2006	$	13,469	$	4,121	$	2,668
2007	$	14,388	$	4,306	$	2,618
2008	$	13,634	$	4,478	$	2,558
2009	$	16,268	$	4,653	$	2,448
2010	$	15,521	$	4,676	$	2,328
2011-2015	$	88,008	$	25,375	$	9,928

     Certain of the Company’s employees participate in various domestic employee welfare benefit plans, including medical, dental and prescriptions. Certain employees will receive retiree medical, prescription and life insurance benefits. All of the welfare benefit plans, including those providing postretirement benefits, are unfunded.

     Effective January 1, 2004, various postretirement benefit plans were consolidated to standardize the provisions across all plans and update the plan design to control rising costs, which resulted in an actuarial gain of $3,825,000 that is being amortized over ten years.

     In May 2004, the FASB issued FASB Staff Position 106-2, Accounting and Disclosure Requirements related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-2). FSP 106-2 provides accounting and reporting guidance relating to subsidies available under the Act to companies who have plans providing prescription drug benefits that are considered to be actuarially equivalent to Medicare Part D. During 2004, the Company’s actuaries concluded that the Company’s plan does provide an actuarially equivalent benefit and therefore, the Company is eligible for the applicable Federal subsidies. Accordingly, the Company recorded a reduction of $3,668,000 in its postretirement benefit obligation at December 31, 2004 and a reduction in its 2005 postretirement benefit expense of $609,000.

56 

     Note 9: Equity Compensation Plans

     Equity Award Plans

     The Company has grants outstanding under four equity compensation plans, only one of which, the 2005 Equity Incentive Plan (2005 EQIP), is currently available for grants of equity compensation awards to employees and non-employee directors. The number of shares authorized by shareholders for use under the 2005 EQIP was the number of authorized shares remaining available under the Company’s Long-term Incentive Plan, as Amended and Restated as of November 2002 (the Long-term Incentive Plan), which expired under its own terms in May 2005, and the Second Amended and Restated 1995 Stock Option Plan for Non-employee Directors (the Non-employee Director Plan), which was merged into the EQIP at the time of shareholder approval in May 2005. The fourth plan under which there remain grants outstanding is the Broad Based 2000 Incentive Plan (The Broad Based Incentive Plan), which has been terminated. The plans other than the 2005 EQIP are known as the “historical plans”. Options remain outstanding under the historical plans but no further grants will be made from those plans. Shareholder approval will be required for any future increases in the amount of shares authorized for use under the 2005 EQIP

     The following table summarizes stock option activity for each of the three years ended December 31 (all amounts have been revised to reflect the 2-for-1 stock split effective December 15,2005):

	Number of Shares
	2005 Equity			Broad Based			Long-term						Weighted-
	Incentive			Incentive			Incentive			Non-employee			Average
	Plan			Plan			Plan			Director Plan			Exercise Prices
Stock options outstanding at December 31 , 2002		—			5,602,438			10,205,730			626,940		$	22.96
Options granted		—			548,092			2,795,472			72,000		$	22.13
Options cancelled		—			(329,450	)		(604,312	)		(131,032	)	$	26.62
Options exercised		—			(195,776	)		(1,200,074	)		(12,000	)	$	15.68
Stock options outstanding at December 31 , 2003		—			5,625,304			11,196,816			555,908		$	23.16
Options granted		—			74,800			1,202,124			72,000		$	25.28
Options cancelled		—			(182,402	)		(506,042	)		(75,480	)	$	27.54
Options exercised		—			(958,992	)		(1,819,510	)		(96,060	)	$	19.10
Stock options outstanding at December 31 , 2004		—			4,558,710			10,073,388			456,368		$	23.88
Options granted		1,641,433			—			914,226			12,000		$	32.60
Options cancelled		(24,000	)		(21,196	)		(229,890	)		(60,000	)	$	30.03
Options exercised		(98,294	)		(3,432,528	)		(7,001,928	)		(132,214	)	$	23.53
Stock options outstanding at December 31 , 2005		1,519,139			1,104,986			3,755,796			276,154		$	27.49
Weighted-average exercise price of options outstanding at December 31 , 2005	$	35.75		$	22.85		$	25.55		$	26.95		$	27.49

     Information relating to selected ranges of exercise prices for outstanding and exercisable options at December 31, 2005 was as follows:

			Options Outstanding				Options Exercisable
			Weighted-
	Number		Average Years		Weighted-		Number			Weighted-
Range of Exercise	Outstanding as		Remaining on		Average		Exercisable as			Average
Prices	of 12/31/2005		Contractual Life		Exercise Price		of 12/31/2005		Exercise Price
$12.09 — $21.38		609,580		3.70	$	17.24		593,852		$	17.16
$21.47 — $21.47		1,302,768		7.87	$	21.47		508,404		$	21.47
$21.83 — $25.16		1,161,742		6.02	$	24.22		740,019		$	23.81
$25.47 — $27.56		944,346		5.15	$	27.10		490,346		$	26.71
$27.70 — $31.97		773,574		5.39	$	29.43		746,774		$	29.47
$32.35 — $36.50		370,764		2.12	$	33.94		370,764		$	33.94
$36.56 — $36.56		1,105,000		6.86	$	36.56		—			—
$36.75 — $39.47		324,940		3.83	$	38.41		298,940		$	38.38
$39.97 — $39.97		58,510		2.47	$	39.97		58,510		$	39.97
$41.21 — $41.21		4,851		5.37	$	41.21		4,851		$	41.21
$12.09 — $41.21		6,656,075		5.76	$	27.49		3,812,460		$	26.34

57 

     Options with terms of seven years are granted to officers of the Company under the 2005 EQIP with exercise prices equal to the fair value of the Company’s common stock at the date of grant and provide for vesting on the first anniversary date following the date of grant in one-third increments each year. Grants made in prior years to officers and other key employees under the Long-term and Broad Based Incentive Plans provided similar terms, except that the options terminated after ten years rather than seven. Additionally, the Company has certain options outstanding that were granted to certain key executives in lieu of salary for years prior to 2003. These options became exercisable at the end of the respective salary period and expire five years after the beginning of the salary period. The Options in Lieu of Salary Program was discontinued effective January 1, 2003.

     Under a Compensation Program for Non-Employee Directors approved by the Board of Directors in July 2005, non-employee directors are entitled to receive an initial grant of 6,000 deferred stock units from the 2005 EQIP plan upon first being elected to the Board and a grant of 4,000 deferred stock units annually thereafter (post-split basis). These units, which have no exercise price and no expiration date, vest in one-fourth increments quarterly over the following year but cannot be converted into common stock until the earlier of termination of Board service or three years, although Board members have the ability to voluntarily defer conversion for a longer period of time. Additionally, Board members receive (i) an annual cash retainer of $50,000, (ii) an annual retainer for the Chair of the Audit Committee of $15,000 and (iii) an annual retainer for other Committee Chairs of $ 10,000. These cash retainers may be voluntarily converted into deferred stock units or deferred in cash accounts with the same investment options as those available to employees under the Cooper Cameron Corporation Retirement Savings Plan. Directors are also required to maintain stock ownership in the Company equal to five times the annual retainer, a level to be attained within three years of the program’s initiation or upon first being elected to the Board. This program replaced a similar program under the Company’s Non-employee Director Plan which provided in prior years for an initial option grant of 12,000 shares upon first joining the Board of Directors and an annual option grant of 12,000 shares thereafter (post-split basis). Such options, which had exercise prices equal to the fair value of the Company’s common stock at the date of grant, became exercisable one year following the date of grant and generally expire five years following the date of grant.

     During 2005, the Company began issuing restricted stock units to key employees other than officers in place of stock options. The initial grant to employees at the beginning of the year provided for time-based vesting of one-fourth of the grant on the first and second anniversaries of the date of grant with the remaining one-half of the original award vesting on the third anniversary of the date of grant. Unvested portions of the award are cancelled in the event of termination of employment. Subsequent grants of restricted stock after June 30,2005 provided for 100% cliff vesting on the third anniversary of the date of grant. A total of 343,400 restricted stock units were granted during 2005 at a fair value of $27.69 per share, of which 329,700 remain outstanding at December 31,2005 after cancellations during the year. The fair value of restricted stock unit grants is being amortized to income on a straight-line basis over the expected vesting term of the awards. During 2005, $2,790,000 was recognized as additional compensation expense attributable to the issuance of deferred and restricted stock units.

     As of December 31, 2005, 2,336,617 shares were reserved for future grants of options, deferred stock units, restricted stock units and other awards.

     Had the Company followed the alternative fair value method of accounting for stock-based compensation, the weighted-average fair value per share of options granted during 2005,2004 and 2003 would have been $7.88, $6.57 and $7.34, respectively (revised to reflect the 2-for-1 stock split effective December 15,2005). The weighted-average fair value per share of stock purchases under the Employee Stock Purchase Plan during 2003 would have been $7.73 (post-split). The fair values were estimated using the Black-Scholes model with the following weighted-average assumptions:

				Year Ended December 31,
	2005			2004			2003
Expected life (in years)		3.0			3.5			3.4
Risk-free interest rate		4.4	%		3.1	%		2.6	%
Volatility		27.0	%		29.0	%		41.8	%
Dividend yield		0.0	%		0.0	%		0.0	%

     Further information on the impact on net income and earnings per share of using the alternative fair value method to recognize stock-based employee compensation expense may be found in Note 1 of the Notes to Consolidated Financial Statements.

Employee Stock Purchase Plan

     As a result of the issuance of SFAS 123R by the FASB (see Note 1 of the Notes to Consolidated Financial Statements) the Company discontinued the Cooper Cameron Employee Stock Purchase Plan, effective July 31,2004, the end of the 2003/2004 plan year. Additionally, the Plan expired under its existing terms on May 1, 2005. Prior to discontinuance and expiration of the Plan, employees had the ability to elect each year to have up to 10% of their annual compensation withheld to purchase the Company’s common stock at a price equal to 85% of the lower of the beginning-of-plan year or end-of-plan year market price of the stock.

     Following is the activity under the Employee Stock Purchase Plan prior to discontinuance and expiration (amounts are revised to reflect the 2-for-1 stock split effective December 15,2005):

58 

	2003 / 2004		2002 / 2003
	Plan		Plan
Shares purchased by employees		293,700		324,880
Average price per share	$	20.355	$	17.925

Note 10: Long-term Debt

     The Company’s debt obligation were as follows:

	December 31,
(dollars in thousands)	2005			2004
Senior notes, net of $805 of unamortized original issue discount and deferred loss on termination of interest rate swaps ($103 at December 31, 2004)	$	199,195		$	200,473
Convertible debentures		238,750			253,750
Other debt		3,705			4,475
Obligations under capital leases		9,256			6,976
		450,906			465,674
Current maturities		(6,471	)		(7,319	)
Long-term portion	$	444,435		$	458,355

     On October 12, 2005, the Company entered into a new $350,000,000 five-year multicurrency revolving credit facility, expiring October 12, 2010, subject to certain extension provisions. The credit facility (all of which was available at December 31, 2005) also allows for the issuance of letters of credit up to the full amount of the facility. The Company has the right to request an increase in the amount of the facility up to $700,000,000 and may request three one-year extensions of the maturity date of the facility, all subject to lender approval. The facility provides for variable-rate borrowings based on the London Interbank Offered Rate (LIBOR) plus a margin (based on the Company’s then-current credit rating) or an alternate base rate. The agreement provides for facility and utilization fees and requires that the Company maintain a total debt-to-total capitalization ratio of less than 60% during the term of the agreement. The Company was in compliance with all loan covenants as of December 31, 2005.

     On March 12, 2004, the Company issued senior notes due April 15, 2007 (the Senior Notes) in the aggregate amount of $200,000,000, with an interest rate of 2.65%, payable semi-annually on April 15 and October 15. In May 2004, the Company entered into interest rate swap agreements on a notional amount of $150,000,000 of its Senior Notes to take advantage of short-term interest rates available. Under these agreements, the Company received interest from the counterparties at a fixed rate of 2.65% and paid a variable interest rate based on the published six-month LIBOR rate less 82.5 to 86.0 basis points. On June 7, 2005, the Company terminated these interest rate swaps and paid the counterparties approximately $1,074,000, which represented the fair market value of the agreements at the time of termination and was recorded as an adjustment to the carrying value of the related debt. This amount is being amortized as an increase to interest expense over the remaining term of the debt. The company’s interest expense was increased by $327,000 for the year ended December 31, 2005 as a result of the amortization of the termination payment.

     On May 11 and June 10, 2004, the Company issued an aggregate amount of $230,000,000 and $8,000,000, respectively, of twenty-year convertible debentures due 2024 with an interest rate of 1.5% payable semi-annually on May 15 and November 15 (the 1.5% Convertible Debentures). The Company has the right to redeem the 1.5% Convertible Debentures anytime after five years at the principal amount plus accrued and unpaid interest, and the debenture holders have the right to require the Company to repurchase the debentures on the fifth, tenth and fifteenth anniversaries of the issue. The 1.5% Convertible Debentures are convertible into the Company’s common stock at a rate of 28.9714 shares per debenture, or $34.52 per share (on a post-stock split basis). The holders can convert the debentures into the Company’s common stock only under the following circumstances:

• during any quarter in which the sales price of the Company’s common stock exceeds 120% of the conversion price for at least 20 consecutive trading days in the 30 consecutive trading-day period ending on the last trading day of the immediately preceding quarter;

• during any five consecutive trading-day period immediately following any five consecutive trading-day period in which the average trading price for the debentures is less than 97% of the average conversion value of the debentures;

• upon fundamental changes in the ownership of the Company’s common stock, which would include a change of control as defined in the debenture agreement.

     The Company has elected to use the “cash pay” provision with respect to its 1.5% Convertible Debentures for any debentures tendered for conversion or designated for redemption. Under this provision, the Company will satisfy in cash its conversion obligation for 100% of the principal amount of any debentures submitted for conversion, with any remaining amount to be satisfied in shares of the Company’s common stock.

59 

     On May 16, 2001, the Company issued two series of convertible debentures with aggregate gross proceeds to the Company of $450,000,000. The first series consisted of twenty-year zero-coupon convertible debentures (the Zero-Coupon Convertible Debentures) with an aggregate principal amount at maturity of approximately $320,756,000, and was repurchased in May 2004 for $259,524,000, net of unamortized discounts of $61,200,000.

     The second series consisted of twenty-year convertible debentures in an aggregate amount of $200,000,000, with an interest rate of 1.75%, payable semi-annually on May 15 and November 15 (the 1.75% Convertible Debentures). The Company has the right to redeem the 1.75% Convertible Debentures anytime after five years at the principal amount plus accrued and unpaid interest, and the debenture holders have the right to require the Company to repurchase the debentures on the fifth, tenth and fifteenth anniversaries of the issue. The 1.75% Convertible Debentures are convertible into the Company’s common stock at a rate of 21.0316 shares per debenture, or $47.55 per share (on a post-stock split basis). In May 2004, the Company redeemed $184,250,000 of the 1.75% Convertible Debentures. During February 2005, the Company retired an additional $15,000,000 of the remaining 1.75% Convertible Debentures.

     The net proceeds from the Senior Notes and the 1.5% Convertible Debentures were used to retire the Company’s Zero-Coupon Convertible Debentures and a large portion of the 1.75% Convertible Debentures, as well as for other purposes, including share repurchases.

     In connection with the early retirement of the Zero-Coupon Convertible Debentures and the 1.75% Convertible Debentures, the Company recorded a $6,844,000 pre-tax charge to write off the unamortized debt issuance costs associated with these debentures during the second quarter of 2004. This charge has been reflected in the caption entitled “Interest Expense” in the accompanying Consolidated Results of Operations.

     In addition to the above, the Company also has other unsecured and uncommitted credit facilities available to its foreign subsidiaries to fund ongoing operating activities. Certain of these facilities also include annual facility fees.

     Other debt has a weighted-average interest rate of 2.2% at December 31, 2005 (2.0% at December 31, 2004).

     Future maturities of the Company’s debt (excluding capital leases) are approximately $3,126,000 in 2006, $200,524,000 in 2007 and $238,000,000 in 2009. Maturities in 2006 include $750,000 related to the 1.75% Convertible Debentures, which the holders have the right to require the Company to repurchase on May 18, 2006, and maturities in 2009 include $238,000,000 related to the 1.5% Convertible Debentures, which the holders have the right to require the Company to repurchase on May 15, 2009.

     Interest paid during the years ended December 31, 2005, 2004 and 2003 approximated $10,908,000, $16,619,000 and $4,143,000, respectively.

Note 11: Leases

     The Company leases certain facilities, office space, vehicles and office, data processing and other equipment under capital and operating leases. Rental expenses for the years ended December 31, 2005, 2004 and 2003 were $20,653,000, $23,157,000 and $21,226,000, respectively. Future minimum lease payments with respect to capital leases and operating leases with terms in excess of one year were as follows:

	Capital			Operating
(dollars in thousands)	Lease Payments			Lease Payments
Year ended December 31:
2006	$	3,420		$	25,218
2007		3,328			16,747
2008		2,057			13,267
2009		849			11,781
2010		11			10,887
Thereafter		—			89,322
Future minimum lease payments		9,665			167,222
Less: amount representing interest		(409	)		—
Lease obligations at December 31, 2005	$	9,256		$	167,222

Note 12: Income Taxes

     The components of income before income taxes were as follows:

	Year Ended December 31,
(dollars in thousands)	2005		2004		2003
Income before income taxes:
U.S. operations	$	90,930	$	23,814	$	21,590
Foreign operations		172,082		109,105		56,013
Income before income taxes	$	263,012	$	132,919	$	77,603

60 

     The provisions (benefits) for income taxes were as follows:

	Year Ended December 31,
(dollars in thousands)	2005		2004		2003
Current:
U.S. federal	$	32,906	$	8,831	$	4,574
U.S. state and local		5,243		1,119		1,032
Foreign		49,118		18,835		20,288
		87,267		28,785		25,894
Deferred:
U.S. federal		465		6,046		(293	)
U.S. state and local		70		909		(44	)
Foreign		4,080		2,764		(5,195	)
		4,615		9,719		(5,532	)
Income tax provision	$	91,882	$	38,504	$	20,362

     The reasons for the differences between the provision for income taxes and income taxes using the U.S. federal income tax rate were as follows:

	Year Ended December 31,
(dollars in thousands)	2005			2004			2003
U.S. federal statutory rate		35.00	%		35.00	%		35.00	%
State and local income taxes		1.36			0.85			1.26
Tax exempt income		(1.00	)		(2.13	)		(5.76	)
Foreign statutory rate differential		(6.04	)		(8.77	)		(14.84	)
Change in valuation allowance on deferred tax assets		0.06			0.21			7.08
Nondeductible expenses		1.49			1.77			2.30
Foreign income currently taxable in U.S.		1.46			2.11			1.29
All other		2.60			(0.07	)		(0.09	)
Total		34.93	%		28.97	%		26.24	%
Total income taxes paid	$	34,941		$	38,853		$	16,132

     Components of deferred tax assets (liabilities) were as follows:

	December 31,
(dollars in thousands)	2005			2004
Deferred tax liabilities:
Plant and equipment	$	(33,289	)	$	(30,544	)
Inventory		(46,208	)		(50,813	)
Pensions		(47,327	)		(38,884	)
Other		(22,752	)		(23,777	)
Total deferred tax liabilities		(149,576	)		(144,018	)
Deferred tax assets:
Postretirement benefits other than pensions		14,387			16,544
Reserves and accruals		45,135			33,154
Net operating losses and related deferred tax assets		143,739			135,095
Other		4,978			49
Total deferred tax assets		208,239			184,842
Valuation allowance		(35,531	)		(23,860	)
Net deferred tax assets	$	23,132		$	16,964

61 

     During the last three years, certain of the Company’s international operations have incurred losses that have not been tax benefited, while others utilized part of the previously reserved prior year losses. As a result of the foregoing, the valuation allowances established in prior years were increased in 2005, 2004 and 2003, respectively, by $150,000, $247,000 and $5,492,000, with a corresponding increase in the Company’s income tax expense. In addition, valuation allowances were established to offset the tax benefit of net operating losses and other deferred tax assets recorded as part of an international acquisition. Further, certain valuation allowances are recorded in the non-U.S. dollar functional currency of the operation and the U.S. dollar equivalent has been adjusted for the effect of translation. The valuation reserves were increased in 2005 by $11,521,000 for these adjustments.

     At December 31, 2005, the Company had U.S. net operating loss carryforwards of approximately $289,000,000 that will expire in 2020 - 2023 if not utilized. At December 31, 2005, the Company had net operating loss carryforwards of approximately $35,000,000 and $7,000,000 in Brazil and Germany, respectively, that had no expiration periods. The Company had net operating loss carryforwards of approximately $6,000,000 in Romania that will expire in 2007 - 2010 if not utilized and approximately $23,000,000 in Italy, most of which will expire in 2006 - 2010. The Company had a valuation allowance of $35,531,000 as of December 31, 2005 against the net operating loss and other carryforwards. Approximately $9,000,000 of this amount will be allocated to reduce goodwill upon any subsequent recognition of the related tax benefit. The Company has considered all available evidence in assessing the need for the valuation allowance, including future taxable income and ongoing prudent and feasible tax planning strategies. In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the net deferred tax asset would be charged to income in the period such determination was made.

     The tax benefit that the Company receives with respect to certain stock benefit plan transactions is credited to capital in excess of par value and does not reduce income tax expense. This benefit amounted to $37,817,000, $6,645,000 and $4,831,000 in 2005, 2004 and 2003, respectively.

     The Company considers that all unremitted earnings of its foreign subsidiaries, except certain amounts primarily earned before 2003, to essentially be permanently reinvested. An estimate of these amounts considered permanently reinvested is $473,000,000. It is not practical for the Company to compute the amount of additional U.S. tax that would be due on this amount. The Company has provided deferred income taxes on the earnings that the Company anticipates to be remitted.

Note 13: Stockholders’ Equity

Common Stock

     Under its Amended and Restated Certificate of Incorporation, the Company is authorized to issue up to 150,000,000 shares of Common stock, par value $.01 per share. Effective December 15, 2005, the Company implemented a 2-for-1 split of its common stock in the form of a stock dividend issued to all shareholders at that date. In August 2004, the Company’s Board of Directors approved the repurchase of up to 5,000,000 shares of the Company’s Common stock through the open market of structured purchases, replacing all previous share repurchase authorizations.

     Changes in the number of shares of the Company’s outstanding stock for the last three years were as follows:

	Common		Treasury			Shares
	Stock		Stock			Outstanding
Balance — December 31, 2002		54,566,054		(54,954	)		54,511,100
Purchase of treasury stock		—		(1,251,900	)		(1,251,900	)
Stock issued under stock option and other employee benefit plans		367,604		176,254			543,858
Balance — December 31, 2003		54,933,658		(1,130,600	)		53,803,058
Purchase of treasury stock		—		(1,965,800	)		(1,965,800	)
Stock issued under stock option and other employee benefit plans		—		1,300,557			1,300,557
Balance — December 31, 2004		54,933,658		(1,795,843	)		53,137,815
Purchase of treasury stock		—		(164,500	)		(164,500	)
Stock issued under stock option and other employee benefit plans		3,130,345		1,960,343			5,090,688
Effect of stock split on shares outstanding		57,565,114		—			57,565,114
Balance — December 31, 2005		115,629,117		—			115,629,117

     At December 31, 2005, 10,160,736 shares of unissued Common stock were reserved for future issuance under various employee benefit plans.

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Preferred Stock

     The Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $.01 per share. At December 31, 2005, no preferred shares were issued or outstanding. Shares of preferred stock may be issued in one or more series of classes, each of which series or class shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Company prior to issuance of any shares. Each such series or class shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issuance of such series or class of preferred stock as may be adopted by the Board of Directors prior to the issuance of any shares thereof. A total of 1,500,000 shares of Series A Junior Participating Preferred Stock has been reserved for issuance upon exercise of the Stockholder Rights described below.

Stockholder Rights Plan

     On May 23,1995, the Company’s Board of Directors declared a dividend distribution of one Right for each then-current and future outstanding share of Common stock. Each Right entitles the registered holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 per share, for an exercise price of $300. Unless earlier redeemed by the Company at a price of $.01 each, the Rights become exercisable only in certain circumstances constituting a potential change in control of the Company, described below, and will expire on October 31, 2007.

     Each share of Series A Junior Participating Preferred Stock purchased upon exercise of the Rights will be entitled to certain minimum preferential quarterly dividend payments as well as a specified minimum preferential liquidation payment in the event of a merger, consolidation or other similar transaction. Each share will also be entitled to 100 votes to be voted together with the Common stockholders and will be junior to any other series of Preferred Stock authorized or issued by the Company, unless the terms of such other series provides otherwise.

     Except as otherwise provided in the Plan, in the event any person or group of persons acquire beneficial ownership of 20% or more of the outstanding shares of Common stock, each holder of a Right, other than Rights beneficially owned by the acquiring person or group (which will have become void), will have the right to receive upon exercise of a Right that number of shares of Common stock of the Company, or, in certain instances, Common stock of the acquiring person or group, having a market value equal to two times the current exercise price of the Right.

Retained Earnings

     Delaware law, under which the Company is incorporated, provides that dividends may be declared by the Company’s Board of Directors from a current year’s earnings as well as from the total of capital in excess of par value plus the retained earnings, which amounted to approximately $1,556,143,000 at December 31, 2005.

Note 14: Business Segments

     The Company’s operations are organized into three separate business segments — Cameron, CCV and Cooper Compression.

     Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, oil and gas separation equipment, gate valves, actuators, chokes, wellheads, drilling risers and aftermarket parts and services. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. Cooper Compression provides reciprocating and centrifugal compression equipment and related aftermarket parts and services for the energy industry and for manufacturing companies and chemical process industries worldwide.

     The Company’s primary customers are major and independent oil and gas exploration and production companies, foreign national oil and gas companies, engineering and construction companies, drilling contractors, pipeline operators, refiners and other industrial and petrochemical processing companies. Cooper Compression’s customers also include manufacturers and companies in the air separation, power production and chemical process industries.

     The Company markets its equipment through a worldwide network of sales and marketing employees supported by agents and distributors in selected international locations. Due to the extremely technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     The Company expenses all research and product development and enhancement costs as incurred, or if incurred in connection with a product ordered by a customer, when the revenue associated with the product is recognized. For the years ended December 31, 2005, 2004 and 2003, the Company incurred research and product development costs, including costs incurred on projects designed to enhance or add to its existing product offerings, totaling approximately $34,394,000, $31,849,000 and $28,703,000, respectively. Cameron accounted for 80%, 84% and 85% of each respective year’s total costs.

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     Summary financial data by segment follows:

	For the Year Ended December 31, 2005
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,507,823	$	625,124	$	384,900	$	—		$	2,517,847
Depreciation and amortization	$	43,736	$	16,787	$	15,387	$	2,488		$	78,398
Interest income	$	—	$	—	$	—	$	(13,060	)	$	(13,060	)
Interest expense	$	—	$	—	$	—	$	11,953		$	11,953
Income (loss) before income taxes and cumulative effect of accounting change	$	178,939	$	101,539	$	26,675	$	(44,141	)	$	263,012
Capital expenditures	$	49,789	$	13,807	$	7,269	$	6,643		$	77,508
Total assets	$	1,575,363	$	936,443	$	280,057	$	306,699		$	3,098,562

	For the Year Ended December 31, 2004
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,402,796	$	350,095	$	339,954	$	—		$	2,092,845
Depreciation and amortization	$	51,330	$	12,197	$	16,896	$	2,418		$	82,841
Interest income	$	—	$	—	$	—	$	(4,874	)	$	(4,874	)
Interest expense	$	—	$	—	$	—	$	17,753		$	17,753
Income (loss) before income taxes and cumulative effect of accounting change	$	118,828	$	37,836	$	24,627	$	(48,372	)	$	132,919
Capital expenditures	$	28,929	$	13,717	$	6,853	$	3,982		$	53,481
Total assets	$	1,430,256	$	404,360	$	294,624	$	227,190		$	2,356,430

	For the Year Ended December 31, 2003
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,018,517	$	307,054	$	308,775	$	—		$	1,634,346
Depreciation and amortization	$	51,211	$	12,724	$	17,210	$	2,420		$	83,565
Interest income	$	—	$	—	$	—	$	(5,198	)	$	(5,198	)
Interest expense	$	—	$	—	$	—	$	8,157		$	8,157
Income (loss) before income taxes and cumulative effect of accounting change	$	63,364	$	33,694	$	10,268	$	(29,723	)	$	77,603
Capital expenditures	$	40,153	$	9,664	$	7,152	$	7,696		$	64,665
Total assets	$	1,233,172	$	320,982	$	298,020	$	288,511		$	2,140,685

     For internal management reporting, and therefore the above segment information, consolidated interest income and expense are treated as a Corporate item because short-term investments and debt, including location, type, currency, etc., are managed on a worldwide basis by the Corporate Treasury Department. In addition, income taxes are managed on a worldwide basis by the Corporate Tax Department and are therefore treated as a corporate item. Spending for the Company’s enterprise-wide software upgrade has been reflected as a Corporate capital expenditure since 2001. In connection with the initial implementation of this system in 2002, amortization expense, as well as the associated asset, is being reflected in each segment’s information above for 2005, 2004 and 2003.

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     Geographic revenue by shipping location and long-lived assets related to operations as of and for the years ended December 31 were as follows:

(dollars in thousands)	2005		2004		2003
Revenues:
United States	$	1,365,770	$	1,016,125	$	833,935
United Kingdom		326,231		444,134		288,693
Other foreign countries		825,846		632,586		511,718
Total revenues	$	2,517,847	$	2,092,845	$	1,634,346
Long-lived assets:
United States	$	655,922	$	560,088	$	468,717
United Kingdom		125,763		130,057		126,758
Other foreign countries		373,026		236,547		195,586
Total long-lived assets	$	1,154,711	$	926,692	$	791,061

Note 15: Off-Balance Sheet Risk and Guarantees, Concentrations of Credit Risk and Fair Value of Financial Instruments

Off-Balance Sheet Risk and Guarantees

     At December 31, 2005, the Company was contingently liable with respect to $265,568,000 of bank guarantees and standby letters of credit issued on its behalf by major domestic and international financial institutions in connection with the delivery, installation and performance of the Company’s products under contract with customers throughout the world. The Company was also liable to these financial institutions for financial letters of credit and other guarantees issued on its behalf totaling $6,248,000, which provide security to third parties relating to the Company’s ability to meet specified financial obligations, including payment of leases, customs duties, insurance and other matters.

     In connection with the Dresser Flow Control Acquisition, the Company is obligated to replace all outstanding standby and financial letters of credit and other bank guarantees and indemnitees of the acquired businesses and Dresser, Inc. (the Dresser Guarantees) within 120 days of closing. The Dresser Guarantees amounted to $77,673,000 at closing. In the event the Company is unsuccessful in replacing the Dresser Guarantees, the Company will provide a standby letter of credit to Dresser, Inc. for the full amount of the Dresser Guarantees it was unable to replace and will indemnify Dresser Inc. against any losses for any amounts paid under the Dresser Guarantees, including costs and expenses.

     The Company’s other off-balance sheet risks were not material at December 31, 2005.

Concentrations of Credit Risk

     Apart from its normal exposure to its customers, who are predominantly in the energy industry, the Company had no significant concentrations of credit risk at December 31, 2005. The Company typically does not require collateral for its customer trade receivables.

Fair Value of Financial Instruments

     The Company’s financial instruments consist primarily of cash and cash equivalents, trade receivables, trade payables, derivative instruments and debt instruments. The book values of cash and cash equivalents, trade receivables and trade payables and floating-rate debt instruments are considered to be representative of their respective fair values.

     At December 31, 2005, the Company was party to a number of long-term foreign currency forward contracts. The purpose of the majority of the contracts was to hedge large anticipated non-functional currency cash flows on a major subsea contract involving the Company’s wholly-owned subsidiary in the United Kingdom. Information relating to the contracts and the fair value recorded in the Company’s Consolidated Balance Sheet (determined based on quoted forward rates) at December 31, 2005 follows:

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	Year of Contract Expiration
(amounts in thousands except exchange rates)	2006		2007		2008		2009		Total
Sell USD/Buy GBP:
Notional amount to sell (in U.S. dollars)	$	141,443	$	65,406	$	10,966	$	2,621	$	220,436
Average GBP to USD contract rate		1.8148		1.8091		1.8039		1.7989		1.8124
Average GBP to USD forward rate at December 31, 2005		1.7248		1.7311		1.7358		1.7383		1.7274
Fair value at December 31, 2005 in U.S. dollars									$	(10,313	)
Buy Euro/Sell GBP:
Notional amount to buy (in euros)		28,931		15,965		899		12		45,807
Average GBP to EUR contract rate		1.4137		1.3902		1.3693		1.3450		1.4045
Average GBP to EUR forward rate at December 31, 2005		1.4399		1.4232		1.4068		1.3854		1.4333
Fair value at December 31, 2005 in U.S. dollars									$	(1,128	)
Buy NOK/Sell GBP:
Notional amount to buy (in Norwegian krone)		37,208		20,671		600		—		58,479
Average GBP to NOK contract rate		11.4303		11.2999		11.2173		—		11.3817
Average GBP to NOK forward rate at December 31, 2005		11.5135		11.4447		11.3542		—		11.4874
Fair value at December 31, 2005 in U.S. dollars									$	(82	)

     Approximately $7,688,000 of the fair value of these contracts is reflected as a current liability at December 31, 2005 based on the scheduled expiration of the foreign currency forward contracts. The remainder is included in other long-term liabilities in the Company’s Consolidated Balance Sheet at December 31, 2005. The Company has recognized a pre-tax loss in 2005 of approximately $701,000, primarily through reduced revenues, in connection with the ineffectiveness of certain of the hedges in offsetting the foreign currency impact on the related anticipated foreign currency cash flows. The Company anticipates that approximately $4,371,000 of the fair value loss on these hedges reported in accumulated other comprehensive income at December 31, 2005 will be reclassified into earnings during 2006 as additional revenues are recognized on the underlying subsea contract.

     The primary portion of the Company’s debt consists of fixed-rate senior notes and convertible debentures. Based on quoted market prices, the book value for this debt at December 31, 2005 was $67,834,000 lower than the fair value. The difference between book value and fair value on the Company’s other fixed-rate debt was not material. Additional information on the Company’s debt may be found in Note 10 of the Notes to Consolidated Financial Statements.

Note 16: Summary of Noncash Operating, Investing and Financing Activities

     The effect on net assets of noncash operating, investing and financing activities was as follows:

	Year Ended December 31,
(dollars in thousands)	2005			2004
Change in receivables from employees relating to equity issuances from stock option plan exercises	$	(1,400	)	$	(189	)
Tax benefit recognized for certain employee stock benefit plan transactions	$	37,817		$	6,645
Change in fair value of derivatives accounted for as cash flow hedges, net of tax	$	(8,441	)	$	—
Other	$	—		$	(69	)

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Note 17: Earnings Per Share

     The calculation of basic and diluted earnings per share for each period presented was as follows (prior year amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005):

	Year Ended December 31,
(amounts in thousands)	2005		2004		2003
Income before cumulative effect of accounting change	$	171,130	$	94,415	$	57,241
Cumulative effect of accounting change		—		—		12,209
Net income		171,130		94,415		69,450
Add back interest on convertible debentures, net of tax		—		—		5,248
Net income (assuming conversion of convertible debentures)	$	171,130	$	94,415	$	74,698
Average shares outstanding (basic)		110,732		106,545		108,806
Common stock equivalents		1,475		1,163		1,331
Incremental shares from assumed conversion of convertible debentures		401		—		9,464
Shares utilized in diluted earnings per share calculation		112,608		107,708		119,601

	Year Ended December 31,
	2005		2004		2003
Basic earnings per share:
Before cumulative effect of accounting change	$	1.55	$	0.89	$	0.53
Cumulative effect of accounting change		—		—		0.11
Net income per share	$	1.55	$	0.89	$	0.64

	Year Ended December 31,
	2005		2004		2003
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.52	$	0.88	$	0.52
Cumulative effect of accounting change		—		—		0.10
Net income per share	$	1.52	$	0.88	$	0.62

     Diluted shares and net income used in computing diluted earnings per common share have been calculated using the if-converted method for the Company’s Zero-Coupon Convertible Debentures and the 1.75% Convertible Debentures for the year ended December 31, 2003. For the years ended December 31, 2005 and 2004, these debentures were anti-dilutive. The Company’s 15% Convertible Debentures have been included in the calculation of diluted earnings per share for the year ended December 31, 2005, since the market price of the Company’s common stock exceeded the conversion value of the debentures at year-end. See Note 10 of the Notes to Consolidated Financial Statements for further information regarding conversion of these debentures.

Note 18: Accumulated Other Elements of Comprehensive Income

     Accumulated other elements of comprehensive income comprised the following:

	December 31,
(dollars in thousands)	2005			2004
Accumulated foreign currency translation gain	$	47,489		$	96,600
Accumulated adjustments to record minimum pension liabilities, net of tax		(1,507	)		(1,507	)
Change in fair value of derivatives accounted for as cash flow hedges, net of tax		(8,518	)		(119	)
	$	37,464		$	94,974

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Note 19: Unaudited Quarterly Operating Results

     Unaudited quarterly operating results were as follows (prior period earnings per share amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005):

	2005 (by quarter)
(dollars in thousands, except per share data)		1		2		3		4
Revenues		$	547,888	$	594,784	$	636,613	$	738,562
Revenues less cost of sales (exclusive of depreciation and amortization)		$	140,622	$	171,853	$	186,785	$	222,310
Income from liquidation of LIFO inventory layers at Cooper Compression		$	—	$	—	$	—	$	4,033
Net income		$	28,591	$	38,630	$	49,218	$	54,691
Earnings per share:
Basic		$	0.27	$	0.35	$	0.44	$	0.48
Diluted		$	0.26	$	0.35	$	0.43	$	0.47

	2004 (by quarter)
(dollars in thousands, except per share data)		1		2		3		4
Revenues		$	462,497	$	544,633	$	538,467	$	547,248
Revenues less cost of sales (exclusive of depreciation and amortization)		$	116,758	$	128,211	$	143,182	$	144,426
Plant closing, business realignment and other related costs		$	3,494	$	562	$	95	$	1,945
Income from liquidation of LIFO inventory layers, primarily at Cooper Compression		$	—	$	—	$	4,319	$	5,365
Net income		$	17,250	$	18,683	$	29,484	$	28,998
Earnings per share:
Basic		$	0.16	$	0.18	$	0.28	$	0.27
Diluted		$	0.16	$	0.17	$	0.27	$	0.27

Note 20: Contingencies

     The Company is subject to a number of contingencies which include environmental matters, litigation and tax contingencies.

Environmental Matters

     The Company’s worldwide operations are subject to domestic and international regulations with regard to air, soil and water quality as well as other environmental matters. The Company, through its environmental management system and active third party audit program, believes it is in substantial compliance with these regulations.

     The Company has been identified as a potentially responsible party (PRP) with respect to four sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or similar state laws. The Company’s involvement at two of the sites has been resolved with de minimis payment. A third is believed to also be at a de minimis level. The fourth site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas. Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations. At December 31, 2005, the Company’s consolidated balance sheet included a noncurrent liability of $8,780,000 for environmental matters.

Legal Matters

     As discussed in Environmental Matters above, the Company is engaged in site cleanup at a former manufacturing site in Houston, Texas. In 2001, the Company discovered that contaminated underground water at this site had migrated to an adjacent residential area. Pursuant to applicable state regulations, the Company notified the affected homeowners. The Company has entered into 21 written agreements with residents over the past four years that obligated the Company to either reimburse sellers in the area for the estimated decline in value due to a potential buyer’s concerns that related to the contamination or, in the case of some of these agreements, to purchase the property after an agreed marketing period. Four of these agreements have had no claims made under them as yet. To date, the Company has one property it has purchased that remains unsold, with an appraised value of $1,850,000. In addition, the Company has settled six other property claims by homeowners. The Company has had expenses and losses of approximately $7,600,000 since 2002 related to the various agreements with homeowners. The Company has filed for reimbursement under an insurance policy purchased specifically for this exposure but has not recognized any potential reimbursement in its consolidated financial statements. The Company entered into these agreements for the

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purpose of mitigating the potential impact of the disclosure of the environmental issue. It was the Company’s intention to stabilize property values in the affected area to avoid or mitigate future claims. The Company believes it has been successful in these efforts as the number and magnitude of claims have declined over time and, while the Company has continued to negotiate with homeowners on a case by case basis the Company no longer offers these agreements in advance of sale. There are approximately 150 homes in the affected area with an estimated aggregate appraised value of $150,000,000. The homeowners that have settled with the Company have no further claims on these properties. An unknown number of these properties have sold with no Company support, but with disclosure of the contamination and, therefore, likely have no further claims. The Company’s financial statements reflect a liability for its estimated exposure under the outstanding agreements with homeowners. The Company has not reflected a liability in its financial statements for any other potential damages, if any, related to this matter since the Company is no longer entering into property protection agreements with homeowners in advance of sale. The Company has not received any additional significant claims other than the lawsuits discussed below and the Company’s remediation efforts are resulting in a lower level of contamination than when originally disclosed to the homeowners. Additionally, the Company is unable to predict future market values of homes in the affected areas and how potential buyers of such homes may view the underground contamination in making a purchase decision.

     The Company is a named defendant in two lawsuits regarding this contamination. In Valice v. Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed June 21, 2002), the plaintiffs claim that the contaminated underground water has reduced property values and threatens the health of the area residents. The case is filed as a class action. The complaint filed seeks an analysis of the contamination, reclamation and recovery of actual damages for the loss of property value. The Company is of the opinion that there is no health risk to area residents and that the lawsuit essentially reflects concerns over possible declines in property value. Counsel for each of the Company, its insurer and the Valice plaintiffs are currently negotiating a possible settlement alternative under which homeowners in the affected area would be indemnified for a loss of property value, if any, due to the contamination upon any sale within a limited timeframe. However, there are still significant unresolved issues related to a settlement of this matter including the methodology of quantifying and allocating damages, attomeys' fees for plaintiffs’ attorneys, agreement on a settlement by all interested parties, a fairness opinion rendered by the Court and the ability of the plaintiffs to obtain approval of the members of the putative class. Absent a settlement with the plaintiffs, the Company does not believe a class would be certified and thus the Company believes it has no liability to the putative class at this point in time. Therefore, the Company has not recorded a liability for this possible settlement in its financial statements.

     In Kramer v. Cameron Iron Works, Inc., Cooper Industries, Inc., Cooper Cameron Corporation, and Tzunming Hsu 190th and Shan Shan Hsu Judicial District, Harris County, filed May 29, 2003), the plaintiff purchased one of the homes in the area and alleges a failure by the defendants to disclose the presence of contamination and seeks to recover unspecified monetary damages.

     The Company believes any potential exposure from existing agreements and any settlement of the class action, or, based on its review of the facts and law, any potential exposure from these, or similar, suits will not have a material adverse effect on its financial condition or liquidity.

     The Company had been named as a defendant in a suit brought by a purchaser of an option to purchase a parcel of the same former manufacturing site, Silber/I-10 Venture Ltd., f/k/a Rocksprings Ltd. v. Falcon Interests Realty Corp., Cooper Industries Inc. and Cooper Cameron Corporation (212th Judicial District Court, Galveston County, filed August 15, 2002) that alleged fraud and breach of contract regarding the environmental condition of the parcel under option. The parties have settled this matter and the case has been dismissed.

     The Company has been named as a defendant in a number of multi-defendant, multi-plaintiff tort lawsuits since 1995, 215 of which have been closed and 236 of which remained open as of December 31, 2005. Of the 215 cases closed, 57 have been by a settlement at a cost of approximately $22,207 per case. The Company made no settlement payments in the remaining 158 cases. At December 31, 2005, the Company’s consolidated balance sheet included a liability of $3,465,000 for the 236 cases which remain open, which includes legal costs.

     The Company believes, based on its review of the facts and law, that the potential exposure from the remaining suits will not have a adverse effect on its financial condition or liquidity.

Tax Contingencies

     The Company has operations in over 35 countries. As a result, the Company is subject to various tax filing requirements in these countries. The Company prepares its tax filings in a manner which it believes is consistent with such filing requirements. However, some of the tax laws and regulations which the Company is subject to are subject to interpretation and/or judgment. Although the Company believes that the tax liability for periods ending on or before the balance sheet date have been adequately provided for in the financial statements, to the extent that a taxing authority believes that the Company has not prepared its tax filings in accordance with the authority's interpretation of the tax laws/regulations, the Company could be exposed to additional taxes.

69

Selected Consolidated Historical Financial Data of Cooper Cameron Corporation

     The following table sets forth selected historical financial data for the Company for each of the five years in the period ended December 31, 2005. This information should be read in conjunction with the consolidated financial statements of the Company and notes thereto included elsewhere in this Annual Report.

	Year Ended December 31,
(dollars in thousands, except per share data)		2005			2004			2003			2002			2001
Income Statement Data:
Revenues		$	2,517,847		$	2,092,845		$	1,634,346		$	1,538,100		$	1,562,899
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)			1,796,277			1,560,268			1,181,650			1,102,504			1,081,078
Selling and administrative expenses			381,267			300,124			288,569			273,105			251,303
Depreciation and amortization			78,398			82,841			83,565			77,907			83,095
Non-cash write-down of technology investment			—			3,814			—			—			—
Interest income			(13,060	)		(4,874	)		(5,198	)		(8,542	)		(8,640	)
Interest expense			11,953			17,753			8,157			7,981			13,481
Total costs and expenses			2,254,835			1,959,926			1,556,743			1,452,955			1,420,317
Income before income taxes and cumulative effect of accounting change			263,012			132,919			77,603			85,145			142,582
Income tax provision			(91,882	)		(38,504	)		(20,362	)		(24,676	)		(44,237	)
Income before cumulative effect of accounting change			171,130			94,415			57,241			60,469			98,345
Cumulative effect of accounting change			—			—			12,209			—			—
Net income		$	171,130		$	94,415		$	69,450		$	60,469		$	98,345
Basic earnings per share:1
Before cumulative effect of accounting change		$	1.55		$	0.89		$	0.53		$	0.56		$	0.91
Cumulative effect of accounting change			—			—			0.11			—			—
Net income per share		$	1.55		$	0.89		$	0.64		$	0.56		$	0.91
Diluted earnings per share:1
Before cumulative effect of accounting change		$	1.52		$	0.88		$	0.52		$	0.55		$	0.87
Cumulative effect of accounting change			—			—			0.10			—			—
Net income per share		$	1.52		$	0.88		$	0.62		$	0.55		$	0.87
Balance Sheet Data (at the end of period):
Total assets		$	3,098,562		$	2,356,430		$	2,140,685		$	1,997,670		$	1,875,052
Stockholders’ equity		$	1,594,763		$	1,228,247		$	1,136,723		$	1,041,303		$	923,281
Long-term debt		$	444,435		$	458,355		$	204,061		$	462,942		$	459,142
Other long-term obligations		$	137,503		$	141,568		$	119,982		$	118,615		$	114,858

¹ Prior year earnings per share amounts have been revised to reflect the 2-for-1 stock split effective December 15, 2005.

70

EX-21.1

Exhibit 21.1

COOPER CAMERON CORPORATION — SUBSIDIARIES & JOINT VENTURES
(Active As of December 31, 2005)

	% Owned						State/Country of
	By			% Owned			Incorporation or
Cooper Cameron Corporation (Delaware) — Parent	Subsidiary			By CCC			Organization
1 - Cameron Algerie (1 share owned by CCPEGI)					100	%	Algeria
1 - Cameron Al Rushaid Ltd.					50	%	Saudi Arabia
1 - Cameron Argentina S.A.I.C. (122,700 shares owned by CCPEGI)	Less than 1%				100	%	Argentina
1 - Cameron Gabon, S.A. (1 share owned by Chairman)					100	%	Gabon
1 - Cameron Offshore Systems Nigeria Limited					100	%	Nigeria
1 - Cameron Services Middle East LLC (Joint Venture)					24	%	Oman
1 - Cameron Venezolana, S.A. — (51% owned by CCPEGI)					100	%	Venezuela
2 - Cameron Remanufacturas, C.A.		100	%				Venezuela
1 - Cameron Angola — Prestaçao de Serviços, Limitada — (1 share owned by CCPEGI)					100	%	Angola
1 - Compression Services Company					100	%	Ohio, USA
1 - Cooper Cameron Foreign Sales Company Ltd.					100	%	Barbados
1 - Cooper Cameron International Holding Corp. (CESI has partial interest)		8.36	%		91.64	%	Nevada, USA
2 - Cooper Cameron Holding (Cayman) Limited		100	%				Grand Cayman
3 - Cameron Australasia Pty. Ltd.		100	%				Australia
4 - Cooper Cameron Valves Australia Pty. Ltd.		100	%				Australia
3 - Cooper Cameron Campex Limited		80.1	%				Grand Cayman
4 - ShanDong Cooper Cameron Petroleum Equipment Pte Ltd (10-12-2004)		100	%				China
3 - Cooper Cameron do Brasil Ltda. (1 share owned by CC (Lux) SARL)		100	%				Brazil
4 - On/Off Manufatura e Comercio de Vavulas Ltda.		100	%				Brazil
3 - Cooper Cameron (Trinidad) Limited		100	%				Trinidad and Tobago
3 - Cooper Cameron (Gibraltar) Limited		100	%				Gibraltar
4 - Cooper Cameron Holding (Luxembourg) SARL		100	%				Luxembourg
5 - Cooper Cameron (Luxembourg) SARL		100	%				Luxembourg
6 - Cameron GmbH		100	%				Germany
6 - Cooper Cameron Valves Italy Srl.		100	%				Italy
6 - Cameron Ireland Limited		100	%				Ireland
6 - Dresser Flow Solutions Trading e Servicos LDA		55	%				Portugal
7 - Dresser Flow Solutions (Nigeria Limited)		70	%				Nigeria
6 - Cooper Cameron Netherlands B.V. (11-2004)		100	%				Netherlands
7 - CCC Euro Automation Center BV		100	%				Netherlands
7- Sterom S.A.		100	%				Romania
6- Cooper Cameron Holding (Dutch) B.V.		100	%				Netherlands
7- Cooper Cameron Canada Corporation		100	%				Canada/Nova Scotia
8 - Ed’s Wellhead Supply (2005) Ltd.		100	%				Canada/Alberta
8 - St. Clair Valve Techniques Limited		100	%				Canada/Ontario
6 - Cooper Cameron Holding (U.K.) Limited		100	%				United Kingdom
7 - Cameron France, S.A.S.		100	%				France
7 - Cooper Cameron (U.K.) Limited		100	%				United Kingdom
8 - Cooper Cameron (U.K.) Investments Limited		100	%				United Kingdom
9 - Flow Link Systems Private Ltd.		45.5	%				India
9 - Nutron Manufacturers (India) Private Limited		100	%				India
9 - Flow Control-Tati Production Sdn. Bhd.		49	%				Malaysia
9 - Nutron Flow Control International (Malaysia) Sdn. Bhd.		100	%				Malaysia
8 - Cameron Offshore Engineering Limited		100	%				United Kingdom
8 - Cooper Cameron Pensions Limited		100	%				United Kingdom
8 - Cameron Integrated Services Limited		100	%				United Kingdom
8 - International Valves Limited		100	%				United Kingdom
7 - Cooper Cameron Holding B.V.		100	%				Netherlands
8 - Cooper Energy Services B.V.		100	%				Netherlands
8 - Cameron B.V.		100	%				Netherlands
8- Cooper Cameron Holding (Norway) AS		100	%				Norway
9 - Cameron Norge AS		100	%				Norway

1

	% Owned						State/Country of
	By			% Owned			Incorporation or
Cooper Cameron Corporation (Delaware) — Parent	Subsidiary			By CCC			Organization
3 - Cooper Cameron (Singapore) Pte. Ltd.		100	%				Singapore
4 - Riyan Cameron (B) Sendirian Berhad		100	%				Brunei
1 - Cooper Cameron (Holding) Corp.					100	%	Nevada, USA
2 - Cooper — Texgas Ltd. (1 share owned by Compression Services Co.)		50	%				Colombia
2- NuFlo Technologies, Inc.		100	%				Delaware, USA
3 - Nuflo Technologies Canada Ltd.		100	%				Alberta, CA
3 - Barton Instrument Systems Limited		100	%				England & Wales
3 - NuFlo Finance and Royalty Company		100	%				Delaware, USA
3 - NuFloTechnologies Sales Company		100	%				Delaware, USA
1 - OPE, Inc.					33	%	Texas, USA
1 - OPE International, L.P.					33	%	Texas, USA
1 - Sequel Holding, Inc.					100	%	Delaware, USA
1 - Petreco International Inc. (partially owned by Sequel Holding, Inc.)		51	%		49	%	Delaware, USA
2 - Petreco-KCC Holding, Inc.		100	%				Delaware, USA
3 - Petreco-KCC Limited		100	%				United Kingdom
2 - Petreco International Limited		100	%				United Kingdom
3 - KCC Group Limited		100	%				United Kingdom
4 - Petreco International (Middle East) Limited		100	%				United Kingdom
4 - KCC Process Equipment Limited		100	%				United Kingdom
5 - RJB Engineering (UK) Limited		100	%				United Kingdom
4 - KCC Resources (Jersey) Limited		100	%				Jersey
2 - Petreco Canada Inc.		100	%				Canada/Alberta
1 - Cooper Cameron Corporation Nigeria Limited					60	%	Nigeria
1 - Cooper Cameron S.R.L.					100	%	Italy
1 - Cooper Energy Services de Venezuela, S.A.					100	%	Venezuela
1 - Cooper Energy Services International, Inc. (CESI)					100	%	Ohio, USA
2 - Canada Tiefbohrgeräte und Maschinenfabrik GmbH (1 share owned by CCPEGI)		100	%				Austria
1 - Cooper Cameron de Mexico S.A. de C.V. (1 share owned by CCPEGI)					100	%	Mexico
1 - Cooper Cameron Petroleum Equipment Group, Inc. (CCPEGI)					100	%	Delaware, USA
1 - Cooper Turbocompressor, Inc.					100	%	Delaware, USA
1 - Wellhead Services, Inc.					100	%	Nevada, USA
2 - Cooper Cameron (Malaysia) Sdn Bhd**		49	%				Malaysia
3 - Cooper Cameron Valves Singapore Pte. Ltd.		100	%				Singapore
4 - Cooper Cameron Corporation Sdn Bhd		70	%				Malaysia
4 - PCC Bumi Flow Technologies Sdn. Bhd.		49	%				Malaysia

**	Local Malaysian law requires that a majority of stock be owned by local residents.
Attorney/agents hold 51% of stock on CCC’s behalf.

2

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements on Forms S-3, S-3/A and S-8 of Cooper Cameron Corporation of our reports dated February 24, 2006, with respect to the consolidated financial statements and schedule of Cooper Cameron Corporation, Cooper Cameron Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Cooper Cameron Corporation, incorporated by reference or included in this Annual Report on Form 10-K for the year ended December 31, 2005.

Registration
Statement No.	Purpose
No. 333-26923 No. 33-95004 No. 333-53545 No. 333-37850 No. 333-106224	Form S-8 Registration Statements pertaining to the Amended and Restated Cooper Cameron Corporation Long-Term Incentive Plan
No. 33-95002	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Retirement Savings Plan
No. 333-57991	Form S-8 Registration Statement pertaining to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant
No. 333-51705	Form S-3 Registration Statement pertaining to the Cooper Cameron Corporation shelf registration of debt securities
No. 333-79787	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors
No. 333-46638 No. 333-82082 No. 333-61820 No. 333-104755	Form S-8 Registration Statements pertaining to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan
No. 333-96565	Form S-3 and S-3/A Registration Statements pertaining to the Cooper Cameron Corporation shelf registration of up to $500 million of securities
No. 333-106225	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan and 2003 Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan
No. 333-116667	Form S-3 and S-3/A Registration Statements pertaining to the Cooper Cameron Corporation 1.50% convertible Senior Debentures due 2024
No. 333-128414	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation 2005 Equity Incentive Plan

 /s/ Ernst & Young LLP

ERNST & YOUNG LLP

Houston, Texas

March 3, 2006

EX-31.1

EXHIBIT 31.1

Cooper Cameron Corporation and Subsidiaries

Certifications

I, Sheldon R. Erikson, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in “Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2006

/s/ SHELDON R. ERIKSON  

Sheldon R. Erikson 

Chairman & Chief Executive Officer 

EX-31.2

EXHIBIT 31.2

Cooper Cameron Corporation and Subsidiaries
Certifications

I, Franklin Myers, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in “Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2006

/s/ FRANKLIN MYERS  

Franklin Myers 

Senior Vice President of Finance and Chief Financial Officer 

EX-32.1

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K for the year ended December 31, 2005 of Cooper Cameron Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 6, 2006

/s/ Sheldon R. Erikson
Name:	Sheldon R. Erikson
Title:	Chairman, President & Chief Executive Officer
/s/ Franklin Myers
Name:	Franklin Myers
Title:	Senior Vice President of Finance & Chief Financial Officer

     A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cooper Cameron Corporation and will be retained by Cooper Cameron Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

     Note: The certification the registrant furnishes in this exhibit is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.