Patterson-UTI Energy (PTEN) 10-K 19 Feb 10 2009 FY Annual report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	12 Months Ended Dec. 31, 2009	Feb. 17, 2010	Jun. 30, 2009
Document and Company Information [Abstract]
Entity Registrant Name	PATTERSON UTI ENERGY INC
Entity Central Index Key	0000889900
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$1,944,259,033
Entity Common Stock, Shares Outstanding		153,567,174

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$49,877	$81,223
Accounts receivable, net of allowance for doubtful accounts of $10,911 and $9,330 at December 31, 2009 and 2008, respectively	164,498	414,531
Federal and state income taxes receivable	118,869	10,175
Inventory	6,941	41,999
Deferred tax assets, net	32,877	35,928
Assets held for sale	42,424	0
Other	41,782	57,518
Total current assets	457,268	641,374
Property and equipment, net	2,110,402	1,937,112
Goodwill	86,234	86,234
Deposits on equipment purchases	914	43,944
Other	7,334	4,153
Total assets	2,662,152	2,712,817
Current liabilities:
Accounts payable	83,700	169,958
Accrued expenses	109,608	132,655
Total current liabilities	193,308	302,613
Borrowings under revolving credit facility	0	0
Deferred tax liabilities, net	381,656	277,717
Other	5,488	5,545
Total liabilities	580,452	585,875
Stockholders' equity:
Preferred stock, par value $.01; authorized 1,000,000 shares, no shares issued	0	0
Common stock, par value $.01; authorized 300,000,000 shares with 180,828,773 and 180,192,093 issued and 153,610,785 and 153,094,803 outstanding at December 31, 2009 and 2008, respectively	1,808	1,801
Additional paid-in capital	781,635	765,512
Retained earnings	1,901,853	1,970,824
Accumulated other comprehensive income	14,996	5,774
Treasury stock, at cost, 27,217,988 shares and 27,097,290 shares at December 31, 2009 and 2008, respectively	(618,592)	(616,969)
Total stockholders' equity	2,081,700	2,126,942
Total liabilities and stockholders' equity	$2,662,152	$2,712,817

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Allowance for doubtful accounts	$10,911	$9,330
Stockholders' equity:
Preferred stock, par value	0.01	0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	0.01	0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	180,828,773	180,192,093
Common stock, shares outstanding	153,610,785	153,094,803
Treasury stock, shares	27,217,988	27,097,290

Consolidated Statements of Oper

Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Operating revenues:
Contract drilling	$599,287	$1,804,026	$1,741,647
Pressure pumping	161,441	217,494	202,812
Oil and natural gas	21,218	42,360	41,637
Total operating revenues	781,946	2,063,880	1,986,096
Operating costs and expenses:
Contract drilling	357,742	1,038,327	963,150
Pressure pumping	111,414	132,570	105,273
Oil and natural gas	7,341	12,793	10,864
Depreciation, depletion and impairment	289,847	275,990	246,346
Selling, general and administrative	56,621	58,080	54,665
Embezzlement recoveries	0	0	(43,955)
Net loss (gain) on asset disposals	3,385	(4,163)	(16,432)
Other operating expenses	3,810	4,350	2,875
Total operating costs and expenses	830,160	1,517,947	1,322,786
Operating income (loss)	(48,214)	545,933	663,310
Other income (expense):
Interest income	381	1,553	2,351
Interest expense	(4,148)	(630)	(2,187)
Other	426	502	363
Total other income (expense)	(3,341)	1,425	527
Income (loss) before income taxes	(51,555)	547,358	663,837
Income tax expense (benefit):
Current	(119,038)	128,098	191,028
Deferred	101,443	65,392	38,322
Total income tax expense (benefit)	(17,595)	193,490	229,350
Income (loss) from continuing operations	(33,960)	353,868	434,487
Income (loss) from discontinued operations, net of income taxes	(4,330)	(6,799)	4,152
Net income (loss)	($38,290)	$347,069	$438,639
Basic income (loss) per common share:
Income (loss) from continuing operations	-0.22	2.29	2.78
Income (loss) from discontinued operations, net of income taxes	-0.03	-0.04	0.03
Net income (loss)	-0.25	2.25	2.81
Diluted income (loss) per common share:
Income (loss) from continuing operations	-0.22	2.27	2.75
Income (loss) from discontinued operations, net of income taxes	-0.03	-0.04	0.03
Net income (loss)	-0.25	2.23	2.78
Weighted average number of common shares outstanding:
Basic	152,069	153,379	154,755
Diluted	152,069	154,358	156,612
Cash dividends per common share	0.2	0.6	0.44

Consolidated Statements of Chan

Consolidated Statements of Changes in Stockholders Equity (USD $)
In Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Total
Beginning Balance, Shares at Dec. 31, 2006	176,656
Beginning Balance at Dec. 31, 2006	$1,766	$681,069	$1,346,542	$8,390	($475,301)	$1,562,466
Comprehensive income (loss):
Net income (loss)			438,639			438,639
Foreign currency translation adjustment, (net of tax of $5,347, $8,368, $6,755 for 2009, 2008, and 2007 respectively)				11,817		11,817
Total comprehensive income (loss)			438,639	11,817		450,456
Issuance of restricted stock	6	(6)				0
Issuance of restricted stock, Shares	601
Forfeitures of restricted stock	(1)	1				0
Forfeitures of restricted stock, shares	(101)
Exercise of stock options	2	2,048				2,050
Exercise of stock options, shares	230
Stock-based compensation		19,364				19,364
Tax benefit (expense) related to stock-based compensation		1,105				1,105
Payment of cash dividends			(68,561)			(68,561)
Purchase of treasury stock					(70,850)	(70,850)
Ending Balance at Dec. 31, 2007	1,773	703,581	1,716,620	20,207	(546,151)	1,896,030
Ending Balance, Shares at Dec. 31, 2007	177,386
Comprehensive income (loss):
Net income (loss)			347,069			347,069
Foreign currency translation adjustment, (net of tax of $5,347, $8,368, $6,755 for 2009, 2008, and 2007 respectively)				(14,433)		(14,433)
Total comprehensive income (loss)			347,069	(14,433)		332,636
Issuance of restricted stock	6	(6)				0
Issuance of restricted stock, Shares	577
Forfeitures of restricted stock	(1)	1				0
Forfeitures of restricted stock, shares	(75)
Exercise of stock options	23	25,525				25,548
Exercise of stock options, shares	2,304
Stock-based compensation		20,131				20,131
Tax benefit (expense) related to stock-based compensation		16,280				16,280
Payment of cash dividends			(92,865)			(92,865)
Purchase of treasury stock					(70,818)	(70,818)
Ending Balance at Dec. 31, 2008	1,801	765,512	1,970,824	5,774	(616,969)	2,126,942
Ending Balance, Shares at Dec. 31, 2008	180,192
Comprehensive income (loss):
Net income (loss)			(38,290)			(38,290)
Foreign currency translation adjustment, (net of tax of $5,347, $8,368, $6,755 for 2009, 2008, and 2007 respectively)				9,222		9,222
Total comprehensive income (loss)			(38,290)	9,222		(29,068)
Issuance of restricted stock	6	(6)				0
Issuance of restricted stock, Shares	604
Vesting of restricted stock units	6
Forfeitures of restricted stock, shares	(56)
Exercise of stock options	1	568				569
Exercise of stock options, shares	83
Stock-based compensation		18,565				18,565
Tax benefit (expense) related to stock-based compensation		(3,004)				(3,004)
Payment of cash dividends			(30,681)			(30,681)
Purchase of treasury stock					(1,623)	(1,623)
Ending Balance at Dec. 31, 2009	$1,808	$781,635	$1,901,853	$14,996	($618,592)	$2,081,700
Ending Balance, Shares at Dec. 31, 2009	180,829

1_Consolidated Statements of Ch

Consolidated Statements of Changes in Stockholders Equity (Parenthetical) (USD $)
In Thousands	Accumulated Other Comprehensive Income	Total
Comprehensive income (loss):
Tax effect of foreign currency translation adjustment	$6,755	$6,755
Comprehensive income (loss):
Tax effect of foreign currency translation adjustment	8,368	8,368
Comprehensive income (loss):
Tax effect of foreign currency translation adjustment	$5,347	$5,347

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Cash flows from operating activities:
Net income (loss)	($38,290)	$347,069	$438,639
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and impairment	289,847	275,990	246,346
Provision for bad debts	3,810	4,350	2,875
Dry holes and abandonments	129	1,617	1,309
Deferred income tax expense	101,443	65,392	38,322
Stock-based compensation expense	18,214	19,688	18,873
Net loss (gain) on asset disposals	3,385	(4,163)	(16,432)
Tax expense related to stock-based compensation	(3,004)	0	0
Changes in operating assets and liabilities:
Accounts receivable	213,813	(30,777)	100,429
Income taxes receivable/payable	(108,664)	(11,258)	7,174
Inventory and other assets	14,178	2,498	2,211
Accounts payable	(52,673)	6,486	(37,412)
Accrued expenses	(21,178)	(4,474)	(5,640)
Other liabilities	(92)	1,242	1,434
Net cash provided by operating activities of discontinued operations	32,759	1,344	14,096
Net cash provided by operating activities	453,677	675,004	812,224
Cash flows from investing activities:
Acquisitions	0	0	(29,000)
Purchases of property and equipment	(452,646)	(445,426)	(604,604)
Proceeds from disposal of assets	3,359	11,436	34,054
Net cash used in investing activities of discontinued operations	(54)	(3,286)	(2,912)
Net cash used in investing activities	(449,341)	(437,276)	(602,462)
Cash flows from financing activities:
Purchases of treasury stock	(1,623)	(70,818)	(70,850)
Dividends paid	(30,681)	(92,865)	(68,561)
Tax benefit related to stock-based compensation	0	16,280	1,105
Proceeds from borrowings under revolving credit facility	0	0	142,500
Repayment of borrowings under revolving credit facility	0	(50,000)	(212,500)
Revolving credit facility issuance costs	(6,169)	0	0
Proceeds from exercise of stock options	569	25,548	2,050
Net cash used in financing activities	(37,904)	(171,855)	(206,256)
Effect of foreign exchange rate changes on cash	2,222	(2,084)	543
Net increase (decrease) in cash and cash equivalents	(31,346)	63,789	4,049
Cash and cash equivalents at beginning of year	81,223	17,434	13,385
Cash and cash equivalents at end of year	49,877	81,223	17,434
Net cash (paid) received during the year for:
Interest expense	(1,804)	(323)	(1,808)
Income taxes	14,029	(126,331)	(176,281)
Non-cash investing and financing activities:
Net increase (decrease) in payables for purchases of property and equipment	(25,110)	(3,590)	597
Net (increase) decrease in deposits on equipment purchases	$43,029	($42,293)	$23,095

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Description of Business and Summary of Significant Accounting Policies [Abstract]
Description of Business and Summary of Significant Accounting Policies	1. Description of Business and Summary of Significant Accounting Policies A description of the business and basis of presentation follows: Description of business Patterson-UTI Energy, Inc., through its wholly-owned subsidiaries (collectively referred to herein as Patterson-UTI or the Company), is a leading provider of onshore contract drilling services to major and independent oil and natural gas operators in Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi, Colorado, Utah, Wyoming, Montana, North Dakota, Pennsylvania, West Virginia and western Canada. The Company provides pressure pumping services primarily in the Appalachian Basin. The Company also owns and invests in oil and natural gas assets as a working interest owner primarily in Texas and New Mexico. Basis of presentation The consolidated financial statements include the accounts of Patterson-UTI and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Except for wholly-owned subsidiaries, the Company has no controlling financial interests in any entity which would require consolidation. The U.S.dollar is the functional currency for all of the Companys operations except for its Canadian operations, which use the Canadian dollar as its functional currency. The effects of exchange rate changes are reflected in accumulated other comprehensive income, which is a separate component of stockholders equity. A summary of the significant accounting policies follows: Management estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from such estimates. Revenue recognition Revenues are recognized when services are performed, except for revenues earned under turnkey contract drilling arrangements which are recognized using the completed contract method of accounting. The Company follows the percentage-of-completion method of accounting for footage contract drilling arrangements. Under the percentage-of-completion method, management estimates are relied upon in the determination of the total estimated expenses to be incurred drilling the well. Due to the nature of turnkey contract drilling arrangements and risks therein, the Company follows the completed contract method of accounting for such arrangements. Under this method, all drilling revenues and expenses related to a well in progress are deferred and recognized in the period the well is completed. Provisions for losses on incomplete or in-process wells are made when estimated total expenses are expected to exceed estimated total revenues. The Company recognizes reimbursements received from third parties for out-of-pocket expenses incurred as revenues and accounts for these out-of-pocket expenses as direct costs. Except for two wells dri

Discontinued Operations

Discontinued Operations
	12 Months Ended Dec. 31, 2009 USD / shares
Discontinued Operations [Abstract]
Discontinued Operations	2. Discontinued Operations On January20, 2010, the Company exited the drilling and completion fluids services business, which had previously been presented as one of the Companys reportable operating segments. On that date, the Companys wholly owned subsidiary, Ambar Lone Star Fluids Services LLC, completed the sale of substantially all of its assets, excluding billed accounts receivable. The sales price was approximately $44.3million, subject to any post-closing adjustments to reflect the actual assets transferred as of the closing date. Upon the Companys exit from the drilling and completion fluids services business, the Company classified its drilling and completion fluids operating segment as a discontinued operation. Accordingly, the results of operations of this business have been reclassified and presented as results of discontinued operations for all periods presented in these consolidated financial statements. As of December31, 2009, the assets to be disposed of are considered held for sale and are presented separately under the caption Assets held for sale in the consolidated balance sheet. These assets are included in the balance sheet at fair value less transaction costs. The fair value of the assets to be disposed of was estimated to be approximately $44.3million based on the expected sales price described above. The source of this estimate was from a third party and it is considered a level 2 input in the fair value hierarchy of fair value accounting. Costs to sell the disposal group were estimated to be $1.9 million. An impairment charge of $1.9 million was recognized to reduce the carrying value of the disposal group to its estimated fair value less costs to sell. Summarized operating results from discontinued operations for the years ended December31, 2009, 2008 and 2007 are shown below (in thousands): 2009 2008 2007 Drilling and completion fluids revenues $ 79,786 $ 145,246 $ 128,098 Income (loss) before income taxes $ (6,538 ) $ (4,410 ) $ 6,970 Income tax benefit (expense) 2,208 (2,389 ) (2,818 ) Income (loss) from discontinued operations $ (4,330 ) $ (6,799 ) $ 4,152 The loss before income taxes in 2008 includes $9.96million in non-deductible charges resulting from the impairment of goodwill. As a result, income tax expense was incurred for the year despite the fact that the discontinued operation had a pre-tax book loss. The components of assets held for sale at December31, 2009 are shown below (in thousands): Assets held for sale: Inventory $ 28,620 Unbilled accounts receivable 6,587 Prepaid expenses and other current assets 324 Property and equipment, net 8,793 Reserve to reduce disposal group to fair value less costs to sell (1,900 ) Total assets held for sale $ 42,424

Acquisitions

Acquisitions
	12 Months Ended Dec. 31, 2009 USD / shares
Acquisitions [Abstract]
Acquisitions	3. Acquisitions On October9, 2007, the Company acquired three recently refurbished SCR electric land-based drilling rigs and spare drilling equipment for $29.0million. The transaction was accounted for as an acquisition of assets and the purchase price was allocated among the assets acquired based on their estimated fair market values.

Property and Equipment

Property and Equipment
	12 Months Ended Dec. 31, 2009 USD / shares
Property and Equipment [Abstract]
Property and Equipment	4. Property and Equipment Property and equipment consisted of the following at December31, 2009 and 2008 (in thousands): 2009 2008 Equipment $ 3,230,737 $ 2,897,431 Oil and natural gas properties 93,354 89,809 Buildings 56,563 61,529 Land 9,795 10,196 3,390,449 3,058,965 Less accumulated depreciation and depletion (1,280,047 ) (1,121,853 ) Property and equipment, net $ 2,110,402 $ 1,937,112 Depreciation, depletion and impairment The following table summarizes depreciation, depletion and impairment expense related to property and equipment for 2009, 2008 and 2007 (in millions): 2009 2008 2007 Depreciation and impairment expense $ 280.6 $ 264.5 $ 232.9 Depletion expense 9.2 11.5 13.4 Total $ 289.8 $ 276.0 $ 246.3 The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. In light of adverse market conditions affecting the Company beginning in the fourth quarter of 2008 and continuing into 2009, including a substantial decrease in the operating levels of certain of its business segments, a significant decline in oil and natural gas commodity prices, and the results of the Companys annual goodwill impairment test at December31, 2008 (see Note5), the Company deemed it necessary to assess the recoverability of long-lived assets within its contract drilling and drilling and completion fluids segments in 2008. Due to a continued decrease in the operating levels in its contract drilling business segment through the first three quarters of 2009, the Company again deemed it necessary to assess the recoverability of long-lived assets within that segment during 2009. With respect to the long-lived assets in the Companys oil and natural gas exploration and production segment, the Company assesses the recoverability of long-lived assets at the end of each quarter due to revisions in its oil and natural gas reserve estimates and expectations about future commodity prices. The Company concluded that its pressure pumping segment was not subject to the negative events and trends, to the same degree as the contract drilling segment, and thus did not require further assessment of recoverability. The Company performs the first step of its impairment assessments by comparing the undiscounted cash flows for each long-lived asset or asset group to its respective carrying value. Based on the results of these impairment tests, the carrying amounts of long-lived assets in the contract drilling and oil and natural gas segments were determined to be recoverable, except as described below. The Companys analysis indicated that the carrying amounts of c

Goodwill

Goodwill
	12 Months Ended Dec. 31, 2009 USD / shares
Goodwill [Abstract]
Goodwill	5. Goodwill Goodwill by operating segment as of December31, 2009 and 2008 and changes for the years then ended are as follows (in thousands): 2009 2008 Contract Drilling: Balance as of January 1: Goodwill $ 86,234 $ 86,234 Accumulated impairment losses 86,234 86,234 Changes to goodwill Balance as of December 31: Goodwill 86,234 86,234 Accumulated impairment losses 86,234 86,234 Drilling and Completion Fluids (Discontinued Operations): Balance as of January 1: Goodwill 9,964 9,964 Accumulated impairment losses (9,964 ) 9,964 Impairment (9,964 ) Balance as of December 31: Goodwill 9,964 9,964 Accumulated impairment losses (9,964 ) (9,964 ) Total goodwill as of December 31 $ 86,234 $ 86,234 Goodwill is evaluated at least annually to determine if the fair value of recorded goodwill has decreased below its carrying value. For purposes of impairment testing, goodwill is evaluated at the reporting unit level. The Companys reporting units for impairment testing have been determined to be its operating segments. Goodwill as of December31, 2009 and 2008 is recorded in the Companys contract drilling segment. Prior to 2008, goodwill was also recorded in the Companys drilling and completion fluids segment. In connection with its annual goodwill impairment assessment performed as of December31, 2008, the Company performed an impairment test of goodwill recorded in its contract drilling and drilling and completion fluids reporting units. In light of the adverse market conditions affecting the Companys common stock price beginning in the fourth quarter of 2008 and continuing into 2009, including a significant decrease in the number of its rigs operating and a significant decline in oil and natural gas commodity prices, the Company utilized a discounted cash flow methodology to estimate the fair values of its reporting units. In completing its first step of the analysis, the Company used a three-year projection of discounted cash flows, plus a terminal value determined using the constant growth method to estimate the fair value of its reporting units. In developing these fair value estimates, the Company applied key assumptions, including an assumed discount rate of 13.99% for all reporting units, an assumed long-term growth rate of 3.50% for the contract drilling reporting unit and an assumed long-term growth rate of 2.00% for the drilling and completion fluids reporting unit. Based on the results of the first step of

Accrued Expenses

Accrued Expenses
	12 Months Ended Dec. 31, 2009 USD / shares
Accrued Expenses [Abstract]
Accrued Expenses	6. Accrued Expenses Accrued expenses consisted of the following at December31, 2009 and 2008 (in thousands): 2009 2008 Salaries, wages, payroll taxes and benefits $ 14,744 $ 30,334 Workers compensation liability 66,015 70,439 Sales, use and other taxes 10,975 12,105 Insurance, other than workers compensation 11,261 14,209 Other 6,613 5,658 $ 109,608 $ 132,655

Asset Retirement Obligation

Asset Retirement Obligation
	12 Months Ended Dec. 31, 2009 USD / shares
Asset Retirement Obligation [Abstract]
Asset Retirement Obligation	7. Asset Retirement Obligation The Company records a liability for the estimated costs to be incurred in connection with the abandonment of oil and natural gas properties in the future. This liability is included in the caption other liabilities on the consolidated balance sheet. The following table describes the changes to the Companys asset retirement obligations during 2009 and 2008 (in thousands): 2009 2008 Balance at beginning of year $ 3,047 $ 1,593 Liabilities incurred 157 516 Liabilities settled (354 ) (424 ) Accretion expense 118 59 Revision in estimated costs of plugging oil and natural gas wells (13 ) 1,303 Asset retirement obligation at end of year $ 2,955 $ 3,047

Borrowings Under Revolving Cred

Borrowings Under Revolving Credit Facility
	12 Months Ended Dec. 31, 2009 USD / shares
Borrowings Under Revolving Credit Facility [Abstract]
Borrowings Under Revolving Credit Facility	8. Borrowings Under Revolving Credit Facility In March 2009, the Company entered into an unsecured revolving credit facility with a maximum borrowing capacity of $240million, including a letter of credit sublimit of $150million and a swing line sublimit of $40million. In addition, the aggregate borrowing and letter of credit capacity under the revolving credit facility may, subject to the terms and conditions set forth therein including the receipt of additional commitments from lenders, be increased up to a maximum amount not to exceed $450million. Interest is paid on the outstanding principal amount of revolving credit facility borrowings at a floating rate based on, at the Companys election, LIBOR or a base rate. The margin on LIBOR loans ranges from 3.00% to 4.00% and the margin on base rate loans ranges from 2.00% to 3.00%, based on the Companys debt to capitalization ratio. At December31, 2009, the margin on LIBOR loans would have been 3.00% and the margin on base rate loans would have been 2.00%. Any outstanding borrowings must be repaid at maturity on January31, 2012 and letters of credit may remain in effect up to six months after such maturity date. This revolving credit facility includes various fees, including a commitment fee on the actual daily unused commitment (the commitment fee rate was 1.00% at December31, 2009). The Company incurred line of credit issuance costs of approximately $6.2million during 2009 in connection with the revolving credit facility. These costs are being amortized to interest expense over the contractual term of the revolving credit facility. There are customary representations, warranties, restrictions and covenants associated with the revolving credit facility. Financial covenants provide for a maximum debt to capitalization ratio and a minimum interest coverage ratio. As of December31, 2009, the maximum debt to capitalization ratio was 35% and the minimum interest coverage ratio was 3.00 to 1. The Company does not expect that the restrictions and covenants will impact its ability to operate or react to opportunities that might arise. As of December31, 2009, the Company had no borrowings outstanding under the revolving credit facility. The Company had $46.3million in letters of credit outstanding at December31, 2009 and, as a result, had available borrowing capacity of approximately $194million at that date. Each domestic subsidiary of the Company has unconditionally guaranteed the existing and future obligations of the Company and each other guarantor under the revolving credit facility and related loan documents, as well as obligations of the Company and its subsidiaries under any interest rate swap contracts that may be entered into with lenders party to the revolving credit facility.

Commitments Contingencies and O

Commitments Contingencies and Other Matters
	12 Months Ended Dec. 31, 2009 USD / shares
Commitments, Contingencies and Other Matters [Abstract]
Commitments, Contingencies and Other Matters	9. Commitments, Contingencies and Other Matters Commitments As of December31, 2009, the Company maintained letters of credit in the aggregate amount of $46.3million for the benefit of various insurance companies as collateral for retrospective premiums and retained losses which could become payable under the terms of the underlying insurance contracts. These letters of credit expire annually at various times during the year and are typically renewed. As of December31, 2009, no amounts had been drawn under the letters of credit. As of December31, 2009, the Company had commitments to purchase approximately $186million of major equipment. Contingencies The Companys contract services operations are subject to inherent risks, including blowouts, cratering, fire and explosions which could result in personal injury or death, suspended drilling operations, damage to, or destruction of equipment, damage to producing formations and pollution or other environmental hazards. As a protection against these hazards, the Company maintains general liability insurance coverage of $1.0million per occurrence in excess of a $1.0million self-insured retention for a total limit of $2.0million per occurrence, with $10.0million of aggregate coverage and excess liability and umbrella coverages up to $200million per occurrence and in the aggregate. The Company maintains a $1.0million per occurrence deductible on its workers compensation, general liability and automobile liability insurance coverages. Accrued expenses related to insurance claims are set forth in Note6. The Company believes it is adequately insured for bodily injury and property damage to others with respect to its operations. However, such insurance may not be sufficient to protect the Company against liability for all consequences of personal injury, well disasters, extensive fire damage, or damage to the environment. The Company also carries insurance to cover physical damage to, or loss of, its rigs. However, it does not cover the full replacement cost of the rigs and the Company does not carry insurance against loss of earnings resulting from such damage. There can be no assurance that such insurance coverage will always be available on terms that are satisfactory to the Company, if at all. The Company is party to various legal proceedings arising in the normal course of its business. The Company does not believe that the outcome of these proceedings, either individually or in the aggregate, will have a material adverse effect on its financial condition, results of operations or cash flows. Other Matters The Company has Change in Control Agreements with its Chairman of the Board, Chief Executive Officer, two Senior Vice Presidents and its General Counsel (the Key Employees). Each Change in Control Agreement generally has an initial term with automatic twelve month renewals unless the Company notifies the Key Employee at least ninety days before the end of such renewal period that the term will not be extended. If a change in control of the Company occurs during the term of the agreement and the Key Employees employment is terminated (i)by the Compan

Stockholders Equity

Stockholders Equity
	1/1/2009 - 12/31/2009 USD / shares
Stockholders' Equity [Abstract]
Stockholders' Equity	10. Stockholders Equity Cash Dividends The Company paid cash dividends during the years ended December31, 2007, 2008 and 2009 as follows: Per Share Total (in thousands) 2007: Paid on March30, 2007 $ 0.08 $ 12,527 Paid on June29, 2007 0.12 18,860 Paid on September28, 2007 0.12 18,690 Paid on December28, 2007 0.12 18,484 Total cash dividends $ 0.44 $ 68,561 2008: Paid on March28, 2008 $ 0.12 $ 18,493 Paid on June27, 2008 0.16 25,011 Paid on September29, 2008 0.16 24,803 Paid on December29, 2008 0.16 24,558 Total cash dividends $ 0.60 $ 92,865 2009: Paid on March31, 2009 $ 0.05 $ 7,655 Paid on June30, 2009 0.05 7,675 Paid on September30, 2009 0.05 7,675 Paid on December30, 2009 0.05 7,676 Total cash dividends $ 0.20 $ 30,681 On February10, 2010, the Companys Board of Directors approved a cash dividend on its common stock in the amount of $0.05 per share to be paid on March30, 2010 to holders of record as of March15, 2010. The amount and timing of all future dividend payments, if any, is subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of the Companys credit facilities and other factors. On August1, 2007, the Companys Board of Directors approved a stock buyback program authorizing purchases of up to $250million of the Companys common stock in open market or privately negotiated transactions. During the year ended December31, 2007, the Company purchased 3,308,850shares of its common stock under the program at a cost of approximately $70.4million. During the year ended December31, 2008, the Company purchased 3,502,047shares of its common stock under the program at a cost of approximately $66.3million. During the year ended December31, 2009, the Company purchased 5,715shares of its common stock under the program at a cost of approximately $79,000. As of December31, 2009, the Company is authorized to purchase approximately $113million of the Companys outstanding common stock under the program. Shares purchased under the program are accounted for as treasury stock. Additionally, the Company purchased 114,983, 152,235 and 20,269shares of treasury stock from employees during 2009, 2008 and 2007, respectively. These shares were purchased at fair market value upon the vesting of restricted stock to provide the employees with the funds necessary to satisfy payroll tax withholding obligations. The total purchase price for these shares was approximately $1.5million, $4.5million and $496,000 in 2009, 2008 and 2007, respectively. Th

Stock based Compensation

Stock based Compensation
	12 Months Ended Dec. 31, 2009 USD / shares
Stock-based Compensation [Abstract]
Stock-based Compensation	11. Stock-based Compensation The Company uses share-based payments to compensate employees and non-employee directors. The Company recognizes the cost of share-based payments under the fair-value-based method. Prior to 2009, share-based awards consisted of equity instruments in the form of stock options, restricted stock or restricted stock units, with all such awards subject to service conditions and, in certain cases, performance conditions. Beginning in 2009, share-based awards also include cash-settled performance unit awards which are accounted for as liability awards. The Company issues shares of common stock when vested stock options are exercised, when restricted stock is granted and when restricted stock units vest. The Companys shareholders have approved the Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan (the 2005 Plan), and the Board of Directors adopted a resolution that no future grants would be made under any of the Companys other previously existing plans. During 2008, the Company amended the 2005 Plan to, among other things, increase the total number of shares authorized for grant from 6,250,000 to 10,250,000. The Companys share-based compensation plans at December31, 2009 follow: Shares Shares Authorized Awards Available Plan Name for Grant Outstanding for Grant Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan, as amended 10,250,000 4,980,068 2,545,524 Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term Incentive Plan, as amended (1997 Plan) 2,860,634 Amended and Restated Patterson-UTI Energy, Inc. 2001 Long-Term Incentive Plan (2001 Plan) 214,136 Amended and Restated Patterson-UTI Energy, Inc. 1996 Employee Stock Option Plan (1996 Plan) 35,000 A summary of the 2005 Plan follows: The Compensation Committee of the Board of Directors administers the plan. All employees including officers and directors are eligible for awards. The Compensation Committee determines the vesting schedule for awards. Awards typically vest over one year for non-employee directors and 3 to 4years for employees. The Compensation Committee sets the term of awards and no option term can exceed 10years. All options granted under the plan are granted with an exercise price equal to or greater than the fair market value of the Companys common stock at the time the option is granted. The plan provides for awards of incentive stock options, non-incentive stock options, tandem and freestanding stock appreciation rights, restricted stock awards, other stock unit awards, performance share awards, performance unit awards and dividend equivalents. As of December31, 2009, only non-incentive stock options, restricted stock awards, restricted stock units and performance unit awards had been granted under the plan. Options granted under the 1997 Plan typically vest over three or five years as dictated

Leases

Leases
	12 Months Ended Dec. 31, 2009 USD / shares
Leases [Abstract]
Leases	12. Leases The Company incurred rent expense of $11.9million, $31.5million and $27.6million for the years 2009, 2008 and 2007, respectively. Rent expense is primarily related to short-term equipment rentals that are passed through to customers. The Companys obligations under non-cancelable operating lease agreements are not material to the Companys operations or cash flows.

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	13. Income Taxes Components of the income tax provision applicable to Federal, state and foreign income taxes for the years ended December31, 2009, 2008 and 2007 are as follows (in thousands): 2009 2008 2007 Federal income tax expense (benefit): Current $ (117,493 ) $ 117,367 $ 169,634 Deferred 103,574 57,879 36,911 (13,919 ) 175,246 206,545 State income tax expense (benefit): Current (1,883 ) 6,475 16,174 Deferred (1,875 7,070 987 (3,758 ) 13,545 17,161 Foreign income tax expense (benefit): Current 338 4,256 5,220 Deferred (256 ) 443 424 82 4,699 5,644 Total income tax expense (benefit): Current (119,038 ) 128,098 191,028 Deferred 101,443 65,392 38,322 Total income tax expense (benefit) $ (17,595 ) $ 193,490 $ 229,350 The difference between the statutory Federal income tax rate and the effective income tax rate for the years ended December31, 2009, 2008 and 2007 is summarized as follows: 2009 2008 2007 Statutory tax rate 35.0 % 35.0 % 35.0 % State income taxes 4.7 1.7 1.4 Permanent differences (5.7 ) (1.2 ) (1.6 ) Other, net 0.1 (0.2 ) (0.3 ) Effective tax rate 34.1 % 35.3 % 34.5 % The tax effect of significant temporary differences representing deferred tax assets and liabilities and changes therein were as follows (in thousands): December31, Net December31, Net December31, Net December31, 2009 Change 2008 Change 2007 Change 2006 Deferred tax assets: Current: Net operating loss carryforwards $ $ $ $ (374 ) $ 374 $ (1,496 ) $ 1,870 Workers compensation allowance 24,624 (1,360 ) 25,984 (602 ) 26,586 223 26,363 Embezzlement costs 773

Employee Benefits

Employee Benefits
	12 Months Ended Dec. 31, 2009 USD / shares
Employee Benefits [Abstract]
Employee Benefits	14. Employee Benefits The Company maintains a 401(k) plan for all eligible employees. The Companys operating results include expenses of approximately $2.8million in 2009, $4.5million in 2008 and $4.0million in 2007 for the Companys cash contributions to the plan.

Business Segments

Business Segments
	12 Months Ended Dec. 31, 2009 USD / shares
Business Segments [Abstract]
Business Segments	15. Business Segments The Companys revenues, operating profits and identifiable assets are primarily attributable to three business segments: (i)contract drilling of oil and natural gas wells, (ii)pressure pumping services and (iii)the investment, on a working interest basis, in oil and natural gas properties. Each of these segments represents a distinct type of business. These segments have separate management teams which report to the Companys chief operating decision maker. The results of operations in these segments are regularly reviewed by the chief operating decision maker for purposes of determining resource allocation and assessing performance. As discussed in Note2, the Company exited the drilling and completion fluids services business which previously was reported as a business segment in January 2010. Operating results for that business for the years ended December31, 2009, 2008 and 2007 are presented as discontinued operations in the consolidated statements of operations. Contract Drilling The Company markets its contract drilling services to major and independent oil and natural gas operators. As of December31, 2009, the Company had 341 marketable land-based drilling rigs, of which 73 of the drilling rigs were based in west Texas and southeastern New Mexico; 100 in north central and east Texas, northern Louisiana and Mississippi; 56 in the Rocky Mountain region (Colorado, Utah, Wyoming, Montana and North Dakota); 49 in south Texas; 28 in the Texas panhandle, Oklahoma and Arkansas; 20 in western Canada; and 15 in the Appalachian Basin. For the years ended December31, 2009, 2008 and 2007, contract drilling revenue earned in Canada was $45.4million, $88.5million and $72.9million, respectively. Additionally, we had long-lived assets within our contract drilling segment located in Canada of $69.2million and $67.2million as of December31, 2009 and 2008, respectively. Pressure Pumping The Company provides pressure pumping services primarily in the Appalachian Basin. Pressure pumping services consist primarily of well stimulation and cementing for the completion of new wells and remedial work on existing wells. Well stimulation involves processes inside a well designed to enhance the flow of oil, natural gas, or other desired substances from the well. Cementing is the process of inserting material between the hole and the pipe to center and stabilize the pipe in the hole. Oil and Natural Gas The Company has been engaged in the development, exploration, acquisition and production of oil and natural gas. Through October31, 2007, the Company served as operator with respect to several properties and was actively involved in the development, exploration, acquisition and production of oil and natural gas. Effective November1, 2007 the Company sold the related operations portion of its exploration and production business. The Company continues to own and invest in oil and natural gas assets as a working interest owner. The Companys oil and natural gas interests are located primarily in Texas and New Mexico. The following tables summarize selected financial information relating to the Companys busi

Concentrations of Credit Risk

Concentrations of Credit Risk
	12 Months Ended Dec. 31, 2009 USD / shares
Concentrations of Credit Risk [Abstract]
Concentrations of Credit Risk	16. Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of demand deposits, temporary cash investments and trade receivables. The Company believes it has placed its demand deposits and temporary cash investments with high credit-quality financial institutions. At December31, 2009 and 2008, the Companys demand deposits and temporary cash investments consisted of the following (in thousands): 2009 2008 Deposits in FDIC and SIPC-insured institutions under insurance limits $ 20,543 $ 588 Deposits in FDIC and SIPC-insured institutions over insurance limits 47,376 79,387 Deposits in foreign banks 4,383 18,805 72,302 98,780 Less outstanding checks and other reconciling items (22,425 ) (17,557 ) Cash and cash equivalents $ 49,877 $ 81,223 Concentrations of credit risk with respect to trade receivables are primarily focused on companies involved in the exploration and development of oil and natural gas properties. The concentration is somewhat mitigated by the diversification of customers for which the Company provides services. As is general industry practice, the Company typically does not require customers to provide collateral. No significant losses from individual customers were experienced during the years ended December31, 2009, 2008, or 2007. The Company recognized bad debt expense for 2009, 2008 and 2007 of $3.8million, $4.4million and $2.9million, respectively. The carrying values of cash and cash equivalents, trade receivables and accounts payable approximate fair value due to the short-term maturity of these items.

Related Party Transactions

Related Party Transactions
	12 Months Ended Dec. 31, 2009 USD / shares
Related Party Transactions [Abstract]
Related Party Transactions	17. Related Party Transactions Joint Operation of Oil and Natural Gas Properties Through October31, 2007, the Company served as operator with respect to several properties and was actively involved in the development, exploration, acquisition and production of oil and natural gas. Effective November1, 2007, the Company sold the operations portion of its exploration and production business. The Company continues to own and invest in oil and natural gas assets as a working interest owner. During the time that the Company served as operator, it served as operator with respect to certain oil and natural gas properties in which certain of its affiliated persons have participated, either individually or through entities they control. These participations were typically through working interests in prospects or properties originated or acquired by Patterson Petroleum LLC, a wholly owned subsidiary of Patterson-UTI Energy, Inc. During the time that the Company served as operator, sales of working interests to affiliated parties were made by the Company at its cost, comprised of the Companys costs of acquiring and preparing the working interests for sale plus a promote fee in some cases. These costs were paid by the working interest owners on a pro rata basis based upon their working interest ownership percentage. The price at which working interests were sold to affiliated persons was the same price at which working interests were sold to unaffiliated persons except that in some cases the affiliated persons also paid a promote fee. The affiliated persons received oil and natural gas production revenue (net of royalty) of $19.0million from these properties in 2007. These persons or entities in turn paid for joint operating costs (including drilling and other development expenses) of $9.2million incurred in 2007.

Quarterly Financial Information

Quarterly Financial Information (in thousands, except per share amounts) (unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Quarterly Financial Information (in thousands, except per share amounts) (unaudited) [Abstract]
Quarterly Financial Information (in thousands, except per share amounts) (unaudited)	18. Quarterly Financial Information (in thousands, except per share amounts) (unaudited) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 Operating revenues $ 472,004 $ 487,538 $ 572,798 $ 531,540 Operating income 119,191 122,364 166,126 138,252 Income from continuing operations, net of income taxes 76,354 75,184 110,047 92,282 Income (loss) from discontinued operations, net of income taxes 1,055 6,238 (1,301 ) (12,790 ) Net income 77,409 81,422 108,746 79,492 Basic income (loss) per common share: From continuing operations $ 0.50 $ 0.48 $ 0.71 $ 0.60 From discontinued operations $ 0.01 $ 0.04 $ (0.01 ) $ (0.08 ) Net income $ 0.51 $ 0.52 $ 0.70 $ 0.52 Diluted income (loss) per common share: From continuing operations $ 0.49 $ 0.48 $ 0.70 $ 0.60 From discontinued operations $ 0.01 $ 0.04 $ (0.01 ) $ (0.08 ) Net income $ 0.50 $ 0.52 $ 0.69 $ 0.52 2009 Operating revenues $ 268,209 $ 140,497 $ 159,671 $ 213,569 Operating income (loss) 25,154 (25,855 ) (24,619 ) (22,894 ) Income (loss) from continuing operations, net of income taxes 15,835 (16,891 ) (16,814 ) (16,090 ) Income (loss) from discontinued operations, net of income taxes 368 (852 ) (1,766 ) (2,080 ) Net income (loss) 16,203 (17,743 ) (18,580 ) (18,170 ) Basic income (loss) per common share: From continuing operations $ 0.10 $ (0.11 ) $ (0.11 ) $ (0.11 ) From discontinued operations $ 0.00 $ (0.01 ) $ (0.01 ) $ (0.01 ) Net income (loss) $ 0.10 $ (0.12 ) $ (0.12 ) $ (0.12 ) Diluted income (loss) per common share: From continuing operations $ 0.10 $ (0.11 ) $ (0.11 ) $ (0.11 ) From discontinued operations $ 0.00 $ (0.01 ) $ (0.01 ) $ (0.01 ) Net income (loss) $ 0.10 $ (0.12 ) $ (0.12 ) $ (0.12 ) As discussed in Note2, the Company exited the drilling and completion fluids services business in January 2010. The results of operations related

Valuation and Qualifying Accoun

Valuation and Qualifying Accounts
	12 Months Ended Dec. 31, 2009 USD / shares
Valuation and Qualifying Accounts [Abstract]
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS	Schedule of Valuation and Qualifying Accounts Disclosure PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES SCHEDULEII VALUATION AND QUALIFYING ACCOUNTS Charged to Beginning Costs and Ending Description Balance Expenses Deductions(1) Balance (In thousands) Year Ended December31, 2009 Deducted from asset accounts: Allowance for doubtful accounts $ 9,330 $ 4,700 $ 3,119 $ 10,911 Year Ended December31, 2008 Deducted from asset accounts: Allowance for doubtful accounts $ 10,014 $ 4,350 $ 5,034 $ 9,330 Year Ended December31, 2007 Deducted from asset accounts: Allowance for doubtful accounts $ 7,484 $ 2,550 $ 20 $ 10,014 (1) Uncollectible accounts written off net of recoveries.