Patterson-UTI Energy (PTEN) 10-Q 4 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	3 Months Ended Mar. 31, 2010	May. 03, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	PATTERSON UTI ENERGY INC
Entity Central Index Key	0000889900
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
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		153,854,555

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Current assets:
Cash and cash equivalents	$63,884	$49,877
Accounts receivable, net of allowance for doubtful accounts of $9,887 and $10,911 at March 31, 2010 and December 31, 2009, respectively	178,574	164,498
Federal and state income taxes receivable	122,479	118,869
Inventory	9,354	6,941
Deferred tax assets, net	28,079	32,877
Assets held for sale	0	42,424
Other	40,355	41,782
Total current assets	442,725	457,268
Property and equipment, net	2,189,972	2,110,402
Goodwill	86,234	86,234
Deposits on equipment purchases	17,713	914
Other	6,854	7,334
Total assets	2,743,498	2,662,152
Current liabilities:
Accounts payable	164,401	83,700
Accrued expenses	105,020	109,608
Total current liabilities	269,421	193,308
Deferred tax liabilities, net	380,966	381,656
Other	5,909	5,488
Total liabilities	656,296	580,452
Commitments and contingencies (see Note 10)
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 180,816,010 and 180,828,773 issued and 153,576,049 and 153,610,785 outstanding at March 31, 2010 and December 31, 2009, respectively	1,808	1,808
Additional paid-in capital	785,691	781,635
Retained earnings	1,898,362	1,901,853
Accumulated other comprehensive income	20,321	14,996
Treasury stock, at cost, 27,239,961 shares and 27,217,988 shares at March 31, 2010 and December 31, 2009, respectively	(618,980)	(618,592)
Total stockholders' equity	2,087,202	2,081,700
Total liabilities and stockholders' equity	$2,743,498	$2,662,152

1_Consolidated Balance Sheets (

Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data	Mar. 31, 2010	Dec. 31, 2009
Current assets:
Allowance for doubtful accounts	$9,887	$10,911
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	180,816,010	180,828,773
Common stock, shares outstanding	153,576,049	153,610,785
Treasury stock, shares	27,239,961	27,217,988

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating revenues:
Contract drilling	$210,745	$225,704
Pressure pumping	53,751	38,105
Oil and natural gas	7,102	4,400
Total operating revenues	271,598	268,209
Operating costs and expenses:
Contract drilling	135,146	126,321
Pressure pumping	39,131	30,440
Oil and natural gas	2,062	1,976
Depreciation, depletion and impairment	75,716	69,732
Selling, general and administrative	11,463	10,375
Net loss on asset disposals	249	211
Provision for bad debts		4,000
Total operating costs and expenses	263,767	243,055
Operating income	7,831	25,154
Other income (expense):
Interest income	187	61
Interest expense	(1,401)	(447)
Other	75	23
Total other income (expense)	(1,139)	(363)
Income before income taxes	6,692	24,791
Income tax expense (benefit):
Current	(4,417)	(166)
Deferred	6,923	9,122
Total income tax expense	2,506	8,956
Income from continuing operations	4,186	15,835
Income from discontinued operations, net of income taxes		368
Net income	$4,186	$16,203
Basic income per common share:
Income from continuing operations	0.03	0.1
Income from discontinued operations, net of income taxes	$0	$0
Net income	0.03	0.11
Diluted income per common share:
Income from continuing operations	0.03	0.1
Income from discontinued operations, net of income taxes	$0	$0
Net income	0.03	0.11
Weighted average number of common shares outstanding:
Basic	152,458	151,735
Diluted	153,122	151,829
Cash dividends per common share	0.05	0.05

Consolidated Statement of Chang

Consolidated Statement of Changes in Stockholders Equity (Unaudited) (USD $)
In Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Total
Beginning Balance, Shares at Dec. 31, 2008	180,192
Beginning Balance at Dec. 31, 2008	$1,801	$765,512	$1,970,824	$5,774	($616,969)	$2,126,942
Comprehensive income:
Net income			16,203			16,203
Foreign currency translation adjustment, (net of tax of $2,814 and $213 for 2010 and 2009 respectively)				(368)		(368)
Total comprehensive income			16,203	(368)		15,835
Issuance of restricted stock, Shares	17
Forfeitures of restricted stock, shares	(9)
Exercise of stock options		37				37
Exercise of stock options, shares	18
Stock-based compensation		4,694				4,694
Tax expense related to stock-based compensation		(591)				(591)
Payment of cash dividends			(7,655)			(7,655)
Purchase of treasury stock					(216)	(216)
Ending Balance at Mar. 31, 2009	1,801	769,652	1,979,372	5,406	(617,185)	2,139,046
Ending Balance, Shares at Mar. 31, 2009	180,218
Beginning Balance, Shares at Dec. 31, 2009	180,829
Beginning Balance at Dec. 31, 2009	1,808	781,635	1,901,853	14,996	(618,592)	2,081,700
Comprehensive income:
Net income			4,186			4,186
Foreign currency translation adjustment, (net of tax of $2,814 and $213 for 2010 and 2009 respectively)				5,325		5,325
Total comprehensive income			4,186	5,325		9,511
Issuance of restricted stock, Shares	12
Forfeitures of restricted stock, shares	(43)
Exercise of stock options		163				163
Exercise of stock options, shares	18
Stock-based compensation		4,126				4,126
Tax expense related to stock-based compensation		(233)				(233)
Payment of cash dividends			(7,677)			(7,677)
Purchase of treasury stock					(388)	(388)
Ending Balance at Mar. 31, 2010	$1,808	$785,691	$1,898,362	$20,321	($618,980)	$2,087,202
Ending Balance, Shares at Mar. 31, 2010	180,816

2_Consolidated Statement of Cha

Consolidated Statement of Changes in Stockholders Equity (Unaudited) (Parenthetical) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Comprehensive income:
Tax effect of foreign currency translation adjustment	$2,814	$213
Accumulated Other Comprehensive Income
Comprehensive income:
Tax effect of foreign currency translation adjustment	$2,814	$213

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net income	$4,186	$16,203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and impairment	75,716	69,732
Provision for bad debts		4,000
Dry holes and abandonments	350	127
Deferred income tax expense	6,923	9,122
Stock-based compensation expense	4,126	4,614
Net loss on asset disposals	249	211
Tax expense related to stock-based compensation	(233)	(591)
Changes in operating assets and liabilities:
Accounts receivable	(25,732)	194,907
Income taxes receivable/payable	(3,617)	(1,152)
Inventory and other assets	(2,248)	4,604
Accounts payable	19,465	(73,601)
Accrued expenses	(2,632)	(23,529)
Other liabilities	506	27
Net cash provided by operating activities of discontinued operations	10,687	9,630
Net cash provided by operating activities	87,746	214,304
Cash flows from investing activities:
Purchases of property and equipment	(108,938)	(89,792)
Proceeds from disposal of assets	288	404
Net cash provided by investing activities of discontinued operations	42,646	31
Net cash used in investing activities	(66,004)	(89,357)
Cash flows from financing activities:
Purchases of treasury stock	(388)	(216)
Dividends paid	(7,677)	(7,655)
Line of credit issuance costs		(5,548)
Proceeds from exercise of stock options	163	37
Net cash used in financing activities	(7,902)	(13,382)
Effect of foreign exchange rate changes on cash	167	(500)
Net increase in cash and cash equivalents	14,007	111,065
Cash and cash equivalents at beginning of period	49,877	81,223
Cash and cash equivalents at end of period	63,884	192,288
Net cash (paid) received during the year for:
Interest expense	(1,700)	(15)
Income taxes	912	(264)
Non-cash investing and financing activities:
Net increase in payables for purchases of property and equipment	62,235	20,063
Net (increase) decrease in deposits on equipment purchases	($16,798)	$20,417

Basis of Consolidation and Pres

Basis of Consolidation and Presentation
	3 Months Ended Mar. 31, 2010
Basis of Consolidation and Presentation [Abstract]
Basis of Consolidation and Presentation	1. Basis of Consolidation and Presentation The unaudited interim consolidated financial statements include the accounts of Patterson-UTI Energy, Inc. (the Company) 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 unaudited interim consolidated financial statements have been prepared by management of the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although the Company believes the disclosures included either on the face of the financial statements or herein are sufficient to make the information presented not misleading. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair statement of the information in conformity with accounting principles generally accepted in the United States have been included. The Unaudited Consolidated Balance Sheet as of December31, 2009, as presented herein, was derived from the audited consolidated balance sheet of the Company, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Companys Annual Report on Form 10-K for the fiscal year ended December31, 2009. The results of operations for the three months ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year. The U.S. dollar is the functional currency for all of the Companys operations except for its Canadian operations, which uses 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. Certain reclassifications have been made to the 2009 consolidated financial statements in order for them to conform with the 2010 presentation. The carrying values of cash and cash equivalents, trade receivables and accounts payable approximate fair value. The Company provides a dual presentation of its net income per common share in its unaudited consolidated statements of operations: Basic net income per common share (Basic EPS) and diluted net income per common share (Diluted EPS). Basic EPS excludes dilution and is computed by first allocating earnings between common stockholders and holders of non-vested shares of restricted stock. Basic EPS is then determined by dividing the earnings attributable to common stockholders by the weighted average number of common shares outstanding during the period, excluding non-vested shares of restricted stock. Diluted EPS is based on the weighted average number o

Discontinued Operations

Discontinued Operations
	3 Months Ended Mar. 31, 2010
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 $42.6million. 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 were considered held for sale and were presented separately within current assets under the caption Assets held for sale in the consolidated balance sheet. Upon being classified as held for sale, the assets to be disposed of were adjusted to fair value less estimated costs to sell resulting in an impairment loss of $1.9million. Due to the fact that the carrying value of the assets had been adjusted to net realizable value, no additional gain or loss was recognized in connection with the sale in the first quarter of 2010. Summarized operating results from discontinued operations for the three months ended March31, 2010, and 2009 are shown below (in thousands): 2010 2009 Drilling and completion fluids revenues $ 3,737 $ 27,830 Income before income taxes $ $ 555 Income tax expense (187 ) Income from discontinued operations $ $ 368

Stock-based Compensation

Stock-based Compensation
	3 Months Ended Mar. 31, 2010
Stock-based Compensation [Abstract]
Stock-based Compensation	3. 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. Share-based awards consist of equity instruments in the form of stock options, restricted stock or restricted stock units and have included service and, in certain cases, performance conditions. Additionally, 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. Stock Options. The Company estimates the grant date fair values of stock options using the Black-Scholes-Merton valuation model. Volatility assumptions are based on the historic volatility of the Companys common stock over the most recent period equal to the expected term of the options as of the date the options are granted. The expected term assumptions are based on the Companys experience with respect to employee stock option activity. Dividend yield assumptions are based on the expected dividends at the time the options are granted. The risk-free interest rate assumptions are determined by reference to United States Treasury yields. Weighted-average assumptions used to estimate the grant date fair values for stock options granted in the three month periods ended March31, 2010 and 2009 follow: Three Months Ended March 31, 2010 2009 Volatility 47.30 % 47.26 % Expected term (in years) 5.00 4.00 Dividend yield 1.30 % 5.56 % Risk-free interest rate 2.69 % 1.28 % Stock option activity from January1, 2010 to March31, 2010 follows: Weighted Average Underlying Exercise Shares Price Outstanding at January1, 2010 6,841,770 $ 20.17 Granted 40,000 $ 15.35 Exercised (18,534 ) $ 8.80 Cancelled (10,000 ) $ 13.17 Outstanding at March31, 2010 6,853,236 $ 20.18 Exercisable at March31, 2010 5,417,444 $ 21.28 Restricted Stock. For all restricted stock awards to date, shares of common stock were issued when the awards were made. Non-vested shares are subject to forfeiture for failure to fulfill service conditions and, in certain cases, performance conditions. Non-forfeitable dividends are paid on non-vested shares of restricted stock. For restricted stock awards made prior to 2008, the Company uses the graded-vesting attribution method to recognize periodic compensation cost over the vesting period. For restricted stock awards made in 2008 and thereafter, the Company uses the straight-line method to recognize periodic compensation cost over the vesting period. Restricted stock activity from January1, 2010 to March31, 2010 follows: Weighted Average Grant Date Shares Fair Value Non-vested restricted stock outstanding at January1, 2010

Property and Equipment

Property and Equipment
	3 Months Ended Mar. 31, 2010
Property and Equipment [Abstract]
Property and Equipment	4. Property and Equipment Property and equipment consisted of the following at March31, 2010 and December31, 2009 (in thousands): March 31, December 31, 2010 2009 Equipment $ 3,379,962 $ 3,230,737 Oil and natural gas properties 97,029 93,354 Buildings 57,250 56,563 Land 9,795 9,795 3,544,036 3,390,449 Less accumulated depreciation and depletion (1,354,064 ) (1,280,047 ) Property and equipment, net $ 2,189,972 $ 2,110,402

Business Segments

Business Segments
	3 Months Ended Mar. 31, 2010
Business Segments [Abstract]
Business Segments	5. 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. Separate financial data for each of our business segments is provided in the table below (in thousands): Three Months Ended March 31, 2010 2009 Revenues: Contract drilling (a) $ 211,477 $ 225,822 Pressure pumping 53,751 38,105 Oil and natural gas 7,102 4,400 Total segment revenues 272,330 268,327 Elimination of intercompany revenues (a) (732 ) (118 ) Total revenues $ 271,598 $ 268,209 Income (loss)before income taxes: Contract drilling $ 8,701 $ 41,011 Pressure pumping 4,477 (875 ) Oil and natural gas 2,817 (3,556 ) 15,995 36,580 Corporate and other (7,915 ) (11,215 ) Net loss on asset disposals (b) (249 ) (211 ) Interest income 187 61 Interest expense (1,401 ) (447 ) Other 75 23 Income from continuing operations before income taxes $ 6,692 $ 24,791 March 31, December 31, 2010 2009 Identifiable assets: Contract drilling $ 2,270,085 $ 2,129,567 Pressure pumping 218,051 213,094 Oil and natural gas 28,737 25,355 Corporate and other (c) 226,625 294,136 Total assets $ 2,743,498 $ 2,662,152 (a) Includes contract drilling intercompany revenues of approximately $732,000 and $118,000 for the three months ended March31, 2010 and 2009, respectively. (b) Net gains or losses associated with the disposal of assets relate to corporate strategy decisions of the executive management group. Accordingly, the related gains or losses have been separately presented and excluded from the results of specific segments. (c) Corporate and other assets at December31, 2009 primarily include identifiable assets associated with the Companys former drilling and completion fluids segment as well as cash on hand and certain deferred Federal income tax assets. Corporate assets at March31, 2010 primarily include cash on hand and certain deferred Federal income tax assets.

Goodwill

Goodwill
	3 Months Ended Mar. 31, 2010
Goodwill [Abstract]
Goodwill	6. Goodwill 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. As of March31, 2010 and December31, 2009, the Company had goodwill of $86.2million, all in its contract drilling reporting unit. In the event that market conditions weaken, the Company may be required to record an impairment of goodwill in its contract drilling reporting unit in the future, and such impairment could be material.

Accrued Expenses

Accrued Expenses
	3 Months Ended Mar. 31, 2010
Accrued Expenses [Abstract]
Accrued Expenses	7. Accrued Expenses Accrued expenses consisted of the following at March31, 2010 and December31, 2009 (in thousands): March 31, December 31, 2010 2009 Salaries, wages, payroll taxes and benefits $ 18,189 $ 14,744 Workers compensation liability 62,166 66,015 Insurance, other than workers compensation 13,356 11,261 Sales, use and other taxes 7,325 10,975 Other 3,984 6,613 $ 105,020 $ 109,608

Asset Retirement Obligation

Asset Retirement Obligation
	3 Months Ended Mar. 31, 2010
Asset Retirement Obligation [Abstract]
Asset Retirement Obligation	8. 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 in the liabilities section of the consolidated balance sheet. The following table describes the changes to the Companys asset retirement obligations during the three months ended March31, 2010 and 2009 (in thousands): Three Months Ended March 31, 2010 2009 Balance at beginning of year $ 2,955 $ 3,047 Liabilities incurred 47 48 Liabilities settled (125 ) (37 ) Accretion expense 28 30 Revision in estimated costs of plugging oil and natural gas wells 14 Asset retirement obligation at end of period $ 2,905 $ 3,074

Borrowings Under Revolving Cred

Borrowings Under Revolving Credit Facility
	3 Months Ended Mar. 31, 2010
Borrowings Under Revolving Credit Facility [Abstract]
Borrowings Under Revolving Credit Facility	9. Borrowings Under Revolving Credit Facility The Company has 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 March31, 2010, 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 March31, 2010. There are customary representations, warranties, restrictions and covenants associated with the revolving credit facility. Financial covenants under the revolving credit facility provide for a maximum debt to capitalization ratio and a minimum interest coverage ratio. As of March31, 2010, 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 March31, 2010, the Company had no borrowings outstanding under the revolving credit facility. The Company had $45.9million in letters of credit outstanding at March31, 2010 and, as a result, had available borrowing capacity of approximately $194 million 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

Commitments, Contingencies and Other Matters
	3 Months Ended Mar. 31, 2010
Commitments, Contingencies and Other Matters [Abstract]
Commitments, Contingencies and Other Matters	10. Commitments, Contingencies and Other Matters As of March31, 2010, the Company maintained letters of credit in the aggregate amount of $45.9million 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 March31, 2010, no amounts had been drawn under the letters of credit. As of March31, 2010, the Company had commitments to purchase approximately $168million of major equipment. 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.

Stockholders Equity

Stockholders Equity
	3 Months Ended Mar. 31, 2010
Stockholders' Equity [Abstract]
Stockholders' Equity	11. Stockholders Equity Cash Dividends The Company paid cash dividends during the three months ended March31, 2009 and 2010 as follows: Per Share Total (in thousands) 2009: Paid on March31, 2009 $ 0.05 $ 7,655 Total cash dividends $ 0.05 $ 7,655 Per Share Total (in thousands) 2010: Paid on March30, 2010 $ 0.05 $ 7,677 Total cash dividends $ 0.05 $ 7,677 On April28, 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 June30, 2010 to holders of record as of June 15, 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 three months ended March31, 2010, the Company did not purchase any shares of its common stock under the program. As of March31, 2010, 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. The Company purchased 21,973 shares of treasury stock from employees during the three months ended March31, 2010. 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 $388,000. These purchases were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan and not pursuant to the stock buyback program.

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes [Abstract]
Income Taxes	12. Income Taxes On January 1, 2010, the Company converted its Canadian operations from a Canadian branch to a controlled foreign corporation for Federal income tax purposes. Because the statutory tax rates in Canada are lower than those in the United States, this transaction triggered a $5.1 million reduction in the Companys deferred tax liabilities, which is being amortized as a reduction to deferred income tax expense over the weighted average remaining useful life of the Canadian assets. As a result of the above conversion, the Companys Canadian assets are no longer subject to United States taxation, provided that the related unremitted earnings are permanently reinvested in Canada. Effective January 1, 2010, the Company has elected to permanently reinvest these unremitted earnings in Canada, and it intends to do so for the foreseeable future. As a result, no deferred United States Federal or state income taxes have been provided on such unremitted foreign earnings, which totaled approximately $2.8 million as of March 31, 2010.

Recently Issued Accounting Stan

Recently Issued Accounting Standards
	3 Months Ended Mar. 31, 2010
Recently Issued Accounting Standards [Abstract]
Recently Issued Accounting Standards	13. Recently Issued Accounting Standards In December2008, the SEC issued a Final Rule, Modernization of Oil and Gas Reporting (Final Rule). The Final Rule revises certain oil and gas reporting disclosures in RegulationS-K and RegulationS-X under the Securities Act, and the Exchange Act, as well as Industry Guide 2. The amendments are designed to modernize and update oil and gas disclosure requirements to align them with current practices and changes in technology. The disclosure requirements are effective for registration statements filed on or after January1, 2010 and for annual financial statements filed on or after December31, 2009. The Company applied the provisions of the Final Rule in connection with its December31, 2009 oil and natural gas reserve estimation process. The application of the Final Rule did not have a material impact on the Company. In June2009, the FASB issued a new accounting standard that amends the accounting and disclosure requirements for the consolidation of variable interest entities. This new standard removes the previously existing exception from applying consolidation guidance to qualifying special-purpose entities and requires ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity. Before this new standard, generally accepted accounting principles required reconsideration of whether an enterprise is the primary beneficiary of a variable interest entity only when specific events occurred. This new standard is effective as of the beginning of each reporting entitys first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. This new standard became effective for the Company on January1, 2010. The adoption of this standard did not impact the Companys consolidated financial statements.