Smith International, Inc. Announces Acquisition

Smith International, Inc. (NYSE:SII) announced that on December 31, 2009 its PathFinder Energy Services business acquired a contract with Petróleo Brasileiro ("Petrobras”) representing an estimated $80-100 million of revenue over the 3-year term and substantially all of the directional drilling assets from San Antonio International do Brasil. It is anticipated that employees supporting the contract will be retained and future operations will be provided by PathFinder through the newly completed Smith facility in Macae, Brazil. "The new base is a state-of-the-art facility bringing together all Oilfield Segment divisions of Smith under one roof. The addition of this contract provides a pivotal piece in our region-wide initiative to provide Optimized Drilling Services to Brazil and the region,” stated Nigel Evans Geographic Business Unit VP for Smith in Latin America. Although PathFinder has been working for Petrobras in Brazil for several years, San Antonio had previously been the lead contractor through which PathFinder served clients in the country.

"This deal provides a significant operating base for Smith and PathFinder in one of the fastest growing markets in the world,” stated Brent Janner, President of PathFinder Energy Services. "We are confident this transaction is a key step to expanding our formation evaluation and directional drilling services throughout Latin America.”

PathFinder Energy Services is a provider of directional drilling services including drilling motors, measurement-while-drilling and one of only five companies worldwide offering a complete line of logging-while-drilling services. In addition to its operations in Brazil, PathFinder has operations in the United States, Canada, the North Sea, Egypt, Saudi Arabia, Mexico, Bolivia, Romania and Kazakhstan.

Smith International, Inc. is a leading supplier of premium products and services to the oil and gas exploration and production industry. The Company employs over 21,000 full-time personnel and operates in over 80 countries around the world.

This material includes "forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections, or other statements other than statements of historical fact, are forward-looking statements. Similarly, statements that describe our future plans, objectives or goals or future revenues or other financial metrics are also forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to, among other things, risk factors that are discussed on Forms 10-Q and in the Company’s Form 10-K for the fiscal year ended December 31, 2008, the prospectus supplement filed November 16, 2009 and other documents filed with the Commission. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any of them in light of new information, future events or otherwise.