Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On July 25, 2012, TX Energy Services, LLC, or TXE, and C.C. Forbes, LLC, or CCF, two subsidiaries of Forbes Energy Services Ltd., or the Company, entered into two equipment finance schedules under that certain Master Agreement dated as of June 6, 2012 among the TXE, CCF, Regions Equipment Finance Corporation and Regions Commercial Equipment Finance, LLC, collectively, Regions Finance. These equipment finance schedules were the last of several equipment finance schedules entered into during the last several weeks to finance various components of the Company's first coil tubing unit and equipment related thereto. In addition to this coil tubing unit, the Company has also recently funded additional equipment, including rigs and frac tanks, pursuant to equipment finance and operating lease schedules under the Master Agreement.

The term for both the equipment finance schedules and the operating lease schedules varies from 48 months to 60 months, with the term for the operating leases automatically extending for consecutive additional two-month periods unless either party provides notice of termination. Further, under the operating lease schedules, TXE and CCF have the right to purchase the property subject to each lease schedule at fair market value, which is determined by a formula set forth in each schedule. The aggregate amount funded under these new equipment finance schedules is approximately $4.7 million and the aggregate lease payments under these new operating lease schedules is approximately $0.7 million. These amounts are in addition to the financial obligations under the Master Agreement disclosed in the Company's Current Report on Form 8-K filed on June 20, 2012.

Concurrently with the funding of each of these schedules, Regions Finance provided notice to TXE and CCF that they had assigned their rights and obligations thereunder to a third party, one of either NewStar Equipment Finance I, LLC, CIT Bank, CapitalSource Bank and the United States Life Insurance Company in the City of New York. The Master Agreement and the schedules contain customary representations and warranties, covenants and indemnification provisions. The Company has agreed to guaranty the obligations under these schedules pursuant to that certain Guaranty Agreement dated as of June 6, 2012, between the Company and Regions Finance.

In the coming months, the Company plans to have TXE and CCF enter into similar schedules under the Master Agreement to fund four additional coil tubing units and other equipment that have been previously ordered. The Company expects to incur additional direct financial obligations of approximately $15.3 million pursuant to these additional schedules.

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