- --------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 0-22664

PATTERSON ENERGY, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of 75-2504748
incorporation or organization) (I.R.S. Employer Identification No.)

P. O. BOX 1416, 4510 LAMESA HIGHWAY, SNYDER, TEXAS, 79550
(Address of principal executive offices) (Zip Code)

(915) 573-1104
(Registrant's telephone number, including area code)

No change
(Former name, former address and former fiscal year,
if changed since last report.)

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 the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [x] No [ ]

As of May 6, 2001 the issuer had outstanding 38,149,816 shares of common stock,
$0.01 par value, its only class of voting stock.

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PATTERSON ENERGY, INC. AND SUBSIDIARIES

INDEX

PAGE

Report of Independent Accountants................................................................ 3

Part I - Financial Information

Item 1. Financial Statements

Unaudited condensed consolidated balance sheets............................ 4

Unaudited condensed consolidated statements of income...................... 5

Unaudited condensed consolidated statement of stockholders' equity......... 6

Unaudited condensed consolidated statements of cash flows.................. 7

Notes to unaudited condensed consolidated financial statements............. 8

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... 11

Item 3. Quantitative and Qualitative Disclosures About Market Risk................. 13

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995................................................... 14

Part II - Other Information

Item 6. Exhibits and Reports on Form 8-K........................................... 15

Signatures....................................................................................... 19

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

2
3

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders
of Patterson Energy, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of
Patterson Energy, Inc. and its subsidiaries as of March 31, 2001 and the related
condensed consolidated statements of income and cash flows for each of the three
month periods ended March 31, 2001 and 2000 and the related condensed
consolidated statement of stockholders' equity for the three month period ended
March 31, 2001. These financial statements are the responsibility of the
Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.

We previously audited, in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2000, and the related consolidated statements of operations and cash flows
for the year then ended (not presented herein), and in our report dated February
27, 2001, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet information as of December 31, 2000 is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Fort Worth, Texas
April 19, 2001

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

3
4
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE FOLLOWING UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS INCLUDE ALL ADJUSTMENTS WHICH IN THE OPINION OF MANAGEMENT
ARE NECESSARY IN ORDER TO MAKE SUCH FINANCIAL STATEMENTS NOT
MISLEADING.

PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
ASSETS

MARCH 31, DECEMBER 31,
2001 2000
------------- -------------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

Current assets:
Cash and cash equivalents ........................................... $ 60,514 $ 59,355
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,903 at
March 31, 2001 and $1,503 at December 31, 2000 .................. 96,066 78,364
Oil and natural gas sales ........................................ 1,482 1,255
Federal income taxes receivable ..................................... -- 2,447
Inventories ......................................................... 11,861 12,186
Deferred income taxes ............................................... 6,346 9,133
Other ............................................................... 3,930 3,343
------------- -------------
Total current assets ............................................ 180,199 166,083
Property and equipment, at cost, net .................................... 256,878 204,272
Intangible assets, net .................................................. 37,995 38,641
Other ................................................................... 4,432 1,590
------------- -------------
Total assets .................................................... $ 479,504 $ 410,586
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

MARCH 31, DECEMBER 31,
2001 2000
------------ ------------
(IN THOUSANDS, EXCEPT FOR SHARE DATA)

Current liabilities:
Current maturities of notes payable ................................. $ 5,697 $ 4,477
Accounts payable:
Trade ............................................................ 34,264 28,484
Revenue distribution ............................................. 3,624 3,896
Other ............................................................ 8,720 10,119
Federal income taxes payable ........................................ 4,514 --
Accrued Expenses .................................................... 14,931 9,902
------------ ------------
Total current liabilities ....................................... 71,750 56,878
Deferred income taxes, net .............................................. 42,258 30,083
Other ................................................................... 735 880
Notes payable, net of current maturities ................................ 17,499 19,939
------------ ------------
Total liabilities ............................................... 132,242 107,780
------------ ------------

Commitments and contingencies ........................................... -- --

Stockholders' equity:
Preferred stock, par value $.01; authorized 1,000,000 shares,
no shares issued ............................................... -- --
Common stock, par value $.01; authorized 50,000,000 shares with
38,445,816 and 37,477,276 issued and 38,145,816 and
38,177,276 outstanding at March 31, 2001 and
December 31, 2000, respectively ................................ 384 375
Additional paid-in capital .......................................... 269,365 245,462
Retained earnings ................................................... 79,163 58,619
Treasury stock, at cost, 300,000 shares ............................. (1,650) (1,650)
------------ ------------
Total stockholders' equity ...................................... 347,262 302,806
------------ ------------
Total liabilities and stockholders' equity ...................... $ 479,504 $ 410,586
============ ============

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

4
5
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

THREE MONTHS ENDED
MARCH 31,
-------------------------------
2001 2000
------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Operating revenues:
Drilling ............................................... $ 104,803 $ 51,157
Drilling and completion fluids ......................... 19,670 4,365
Oil and natural gas .................................... 4,910 2,484
Well operation fees .................................... 553 560
------------ ------------
129,936 58,566
------------ ------------
Operating costs and expenses:
Drilling costs ......................................... 63,478 41,835
Drilling and completion fluids ......................... 16,365 3,547
Lease operating and production ......................... 1,005 632
Exploration cost, dry holes and abandonments ........... 212 168
Depreciation, depletion and amortization ............... 11,341 7,717
General and administrative ............................. 4,846 2,196
------------ ------------
97,247 56,095
------------ ------------
Operating income ........................................... 32,689 2,471
------------ ------------
Other income (expense):
Net gain on sale of assets ............................. 13 43
Interest income ........................................ 796 113
Interest expense ....................................... (567) (1,193)
Other .................................................. 35 (20)
------------ ------------
277 (1,057)
------------ ------------
Income before income taxes ................................. 32,966 1,414
------------ ------------
Income tax expense (benefit):
Current ................................................ 5,135 731
Deferred ............................................... 7,287 (228)
------------ ------------
12,422 503
------------ ------------
Net income ................................................. $ 20,544 $ 911
============ ============
Net income per common share:
Basic .................................................. $ 0.54 $ 0.03
============ ============
Diluted ................................................ $ 0.52 $ 0.03
============ ============

Weighted average number of common shares
outstanding:
Basic .................................................. 38,295 32,553
============ ============
Diluted ................................................ 39,514 33,972
============ ============

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

5
6

PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)
(in thousands)

Common Stock
---------------------------
Number of Additional Retained Treasury
Shares Amount paid-in capital earnings Stock Total
------------ ------------ --------------- ------------ ------------ ------------

Balance, December 31, 2000 ........... 37,477 $ 375 $ 245,462 $ 58,619 $ (1,650) $ 302,806
Issuance of common stock ............. 810 8 21,712 -- -- 21,720
Exercise of stock options ............ 159 1 1,224 -- -- 1,225
Tax benefit related to exercise of
stock options .................... -- -- 967 -- -- 967
Net income ........................... -- -- -- 20,544 -- 20,544
------------ ------------ ------------ ------------ ------------ ------------
Balance, March 31, 2001 .............. 38,446 $ 384 $ 269,365 $ 79,163 $ (1,650) $ 347,262
============ ============ ============ ============ ============ ============

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

6
7

PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

THREE MONTHS ENDED
MARCH 31,
-------------------------------
2001 2000
------------ ------------

Cash flows from operating activities: (IN THOUSANDS)
Net income ................................................................. $ 20,544 $ 911
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization .................................. 11,341 7,717
Net gain on sale of assets ................................................ (13) (43)
Deferred income tax expense (benefit) ..................................... 7,287 (228)
Change in operating assets and liabilities:
Increase in trade accounts receivable ........................ (11,783) (7,440)
Increase in oil and natural gas sales receivable ............. (227) (76)
Decrease in inventories ...................................... 325 225
Decrease in accrued federal income taxes
receivable .......................................... 2,447 --
Decrease in other current assets ............................. 281 656
Increase (decrease) in trade accounts payable ................ (1,074) 4,984
Increase (decrease) in revenue distribution
payable ............................................. (272) 651
Increase in accrued expenses ................................. 6,521 1,488
Increase in federal income taxes payable ..................... 4,514 700
Increase (decrease) in other current payables ................ (1,399) 419
Decrease in other liabilities ................................ (145) (6)
------------ ------------
Net cash provided by operating activities ................ 38,347 9,958
------------ ------------
Cash flows from investing activities:
Acquisitions .............................................................. (11,370) (5,261)
Purchases of property and equipment ....................................... (23,059) (12,009)
Proceeds from sales of property and equipment ............................. 78 55
Change in other assets .................................................... (2,842) (234)
------------ ------------
Net cash used in investing activities .................... (37,193) (17,449)
------------ ------------
Cash flows from financing activities:
Purchase of treasury stock ................................................ -- (1,650)
Proceeds from notes payable ............................................... -- 9,908
Payments of notes payable ................................................. (1,220) --
Proceeds from exercise of stock options ................................... 1,225 896
------------ ------------
Net cash provided by financing activities ................ 5 9,154
------------ ------------
Net increase in cash and cash equivalents ................ 1,159 1,663
Cash and cash equivalents at beginning of period ............................... 59,355 8,792
------------ ------------
Cash and cash equivalents at end of period ..................................... $ 60,514 $ 10,455
============ ============

Supplemental disclosure of cash flow information:
Cash received (paid) during the period for:
Interest ................................................................ $ (567) $ (1,193)
Income taxes ............................................................ $ 1,850 $ --

On January 5, 2001, the Company issued 810,070 shares of its common
stock valued at $26.8125 per share and paid approximately $11.5 million cash as
consideration for Jones Drilling Corporation and certain assets of three other
entities affiliated with Jones Drilling Corporation.

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.

7
8
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF CONSOLIDATION AND PRESENTATION

The consolidated financial statements include the accounts of Patterson
Energy, Inc. ("Patterson") and its wholly-owned subsidiaries, (collectively
referred to herein as "Patterson" or the "Company"). All significant
intercompany accounts and transactions have been eliminated.

The interim condensed consolidated financial statements have been
prepared by management of the Company, without audit, 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 generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes the
disclosures included herein are adequate to make the information presented not
misleading. In the opinion of management, all adjustments (consisting of only
normal recurring accruals) considered necessary for presentation of the
information have been included. The unaudited condensed consolidated balance
sheet as of December 31, 2000, as presented herein, was derived from the audited
balance sheet, but does not include all disclosures required by generally
accepted accounting principles.

The Company provides a dual presentation of its earnings per share;
Basic Earnings per Share ("Basic EPS") and Diluted Earnings per Share ("Diluted
EPS"). Basic EPS is based on the weighted average number of shares outstanding
during the periods presented. Diluted EPS includes common stock equivalents,
which are dilutive to earnings per share. For the three months ended March 31,
2001, the dilutive securities, consisting of certain stock options and warrants,
were approximately 1.2 million, compared to dilutive securities of approximately
1.4 million for the three months ended March 31, 2000.

The results of operations for the three months ended March 31, 2001,
are not necessarily indicative of the results to be expected for the full year.

Certain reclassifications have been made to the 2000 consolidated
financial statements in order for them to conform with the 2001 presentation.

Our independent accountants have performed a review of these interim
financial statements in accordance with standards established by the American
Institute of Certified Public Accountants. Pursuant to Rule 436(c) of the
Securities and Exchange Commission Act of 1933, their report of that review
should not be considered as part of any registration prepared or certified by
them within the meaning of Sections 7 and 11 of that Act.

2. RECENT ACQUISITION AND PENDING MERGER

On January 5, 2001, the Company consummated the transactions
contemplated by a merger agreement among Patterson Energy, Inc., Patterson
Drilling Company LP, LLLP ("Patterson Drilling") and Jones Drilling Corporation
and asset purchase agreements between Patterson Drilling and Henderson Welding,
Inc., L.E.J. Truck and Crane, Inc., and L.E. Jones Drilling Company. The
acquired assets consisted of 21 drilling rigs (of which 14 were marketable when
acquired) and related equipment and approximately $2.3 million of net working
capital. The net purchase price of $33.2 million consisted of 810,070 shares of
Patterson's common stock valued at $26.8125 per share and $11.5 million cash
including approximately $240,000 in transaction costs. The pro forma results of
combining the consolidated results of operations as if Jones Drilling
Corporation and its related entities had been acquired on January 1, 2000, are
considered immaterial and have no effect on earnings per share

On February 5, 2001, the Company announced that its Board of Directors along
with the Board of Directors of UTI Energy Corp. (UTI), approved a merger of the
two companies, with Patterson as the surviving entity. According to the terms of
the merger agreement, shareholders of UTI will receive one share of Patterson
common stock for each share of UTI common stock and Patterson will assume UTI's
outstanding options and warrants. The

8
9

PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

2. RECENT ACQUISITION AND PENDING MERGER (CONTINUED)

Board of Directors of the combined company will consist of eleven directors, six
to be selected by Patterson and five to be selected by UTI. Although the merger
agreement does not specify who will be the officers of the combined company,
management of the Company understands that Mark S. Siegel, UTI's Chairman of the
Board, would be the Chairman of the Board and Cloyce A. Talbott, Patterson's
Chairman of the Board and Chief Executive Officer, would be Chief Executive
Officer. Patterson's and UTI's special meeting of shareholders to approve the
merger proposal will be held on May 8, 2001. A Joint Proxy Statement/Prospectus
was mailed to shareholders on or about March 16, 2001.

3. STOCKHOLDERS' EQUITY

On January 5, 2001, the Company issued 810,070 shares of its common
stock as partial consideration for the acquisition of Jones Drilling Corporation
and its related entities (see Note 2). The common stock was recorded at $26.8125
per share, its fair market value on the date of the announcement of the
transaction.

4. BUSINESS SEGMENTS

The Company conducts its business through three distinct operating
activities: contract drilling of oil and natural gas wells, oil and natural gas
exploration, development, acquisition and production and providing drilling and
completion fluids services to operators in the oil and natural gas industry.
Separate financial data for each of the Company's three business segments is
provided below.

MARCH 31, MARCH 31,
2001 2000
------------ ------------

Revenues: (IN 000's)
Drilling ..................................... $ 104,803 $ 51,157
Drilling and completion fluids ............... 19,670 4,365
Oil and natural gas .......................... 5,463 3,044
------------ ------------
Total operating revenues ......................... $ 129,936 $ 58,566
============ ============
Income (loss) from operations:
Drilling ..................................... $ 29,906 $ 2,011
Drilling and completion fluids ............... 854 (310)
Oil and natural gas .......................... 1,964 750
------------ ------------
32,724 2,451
Net gain on sale of assets ....................... 13 43
Interest income .................................. 796 113
Interest expense ................................. (567) (1,193)
------------ ------------
Income before income taxes ....................... $ 32,966 $ 1,414
============ ============

9
10

PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

5. RECENTLY ISSUED ACCOUNTING STANDARD

The Company adopted Statement of Financial Accounting Standards No.
133, as amended, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS No. 133") on January 1, 2001. SFAS No. 133 establishes accounting and
reporting standards for derivatives or instruments and for hedging activities.
It requires enterprises to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
The requisite accounting for changes in the fair value of a derivative depends
on the intended use of the derivative and the resulting designation. The Company
was not required to record any transitional adjustment upon the adoption of SFAS
No. 133.

10
11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2001, we had working capital of approximately $108.4 million
including cash and cash equivalents of $60.5 million as compared to working
capital of $109.2 million including cash and cash equivalents of $59.4 million
at December 31, 2000. For the three months ended March 31, 2001, our various
sources and uses of cash flow were:

Sources:

o $38.3 million derived from operations primarily attributable to
the following factors:

<-- Net income of $20.5 million,

<-- Increase in average dayrates from $8,912 per day in the
fourth quarter of 2000 to $9,903 per day in the first
quarter of 2001,

<-- Increase in average cash margin from $3,131 per day in the
fourth quarter of 2000 to $3,905 per day in the first
quarter of 2001,

<-- Improved utilization rates as indicated in "Results of
Operations" on page 12, and

<-- Increase in marketable drilling rigs from 124 at December
31, 2000 to 141 at March 31, 2001, primarily due to the
addition of 21 drilling rigs (of which 14 were marketable
when acquired) in January of 2001 with the purchase of Jones
Drilling Corporation.

o $1.2 million from the exercise of stock options, and

o $78,000 from the sale of certain property and equipment.

Uses:

o $11.5 million as partial consideration in the acquisition of
Jones Drilling Corporation and its related entities,

o $1.2 million in payments on our credit facility with Transamerica
Equipment Financial Services,

o $2.8 million of expenses related to the merger with UTI Energy
Corp., and

o $23.1 million for capital maintenance expenditures for the
betterment and refurbishment of both the marketable and
non-marketable drilling rigs, as well as the acquisition and
procurement of drilling equipment, to fund leasehold acquisition,
exploration and development of oil and natural gas properties and
to fund capital expenditures for our drilling and completion
fluids segment.

On January 5, 2001, we consummated the transactions contemplated by a
merger agreement among Patterson Energy, Inc., Patterson Drilling Company LP,
LLLP ("Patterson Drilling") and Jones Drilling Corporation and asset purchase
agreements between Patterson Drilling and Henderson Welding, Inc., L.E.J. Truck
and Crane, Inc., and L.E. Jones Drilling Company. The acquired assets consisted
of 21 drilling rigs (of which 14 were marketable when acquired) and related
equipment. In addition to the $11.5 million paid in cash, we issued 810,070
shares of our common stock valued at $26.8125 per share, for a total purchase
price of $33.2 million.

We believe that the current level of cash and cash equivalents,
together with cash generated from operations should be sufficient to meet our
immediate capital needs. From time to time, acquisition opportunities are
reviewed relating to our business. The timing, size or success of any
acquisition and the associated capital commitments are unpredictable. Should
further opportunities for growth requiring capital arise, we believe we would be
able to satisfy these needs through a combination of working capital, cash
generated from operations, and either debt or equity financing. However, there
can be no assurance that such capital would be available.

11
12

RESULTS OF OPERATIONS

The following tables summarize the operations of the three months ended March
31, 2001 and 2000:

THREE MONTHS ENDED
MARCH 31,
---------------------------
CONTRACT DRILLING 2001 2000 % CHANGE
- ----------------- ---------- ---------- ----------
(DOLLARS IN 000'S)

Revenues ...................................................... $ 104,803 $ 51,157 104.9%
Drilling cost ................................................. 63,478 41,835 51.7%
General and administrative expense ............................ 2,141 1,032 107.5%
Depreciation and amortization ................................. 9,101 6,279 44.9%
Operating income .............................................. 29,906 2,011 1,387.1%
Rig utilization rate .......................................... 84% 65% 29.2%
Average # of marketable rigs .................................. 140 114 22.8%
Operating days ................................................ 10,582 6,777 56.1%
Average revenue per operating day ............................. $ 9.90 $ 7.55 31.1%
Average drilling cost per operating day ....................... 6.00 6.17 (2.8)%

The significant increases shown are reflective of increased
productivity in the contract drilling industry as evidenced by:

o increase in utilization and in number of operating days,

o addition of an average 26 marketable drilling rigs from the
first quarter of 2000 to that of 2001, and

o increases in oil and natural gas prices.

THREE MONTHS ENDED
MARCH 31,
--------------------------
DRILLING AND COMPLETION FLUIDS 2001 2000 % CHANGE
---------- ---------- ----------
(DOLLARS IN 000'S)

Revenues ................................. $ 19,670 $ 4,365 350.6%
Drilling and completion fluids cost ...... 16,365 3,547 361.4%
General and administrative expense ....... 1,884 822 129.2%
Depreciation and amortization ............ 586 285 105.6%
Operating income (loss) .................. 854 (310) 375.5%

The increases noted were primarily attributable to the addition of the
fluids division of Ambar, Inc., during October 2000. Also contributing are
improvements in the industry's economic conditions which are related to
increases in oil and natural gas prices as stated below.

THREE MONTHS ENDED
MARCH 31,
--------------------------
OIL AND NATURAL GAS 2001 2000 % CHANGE
---------- ---------- ----------
(DOLLARS IN 000'S, EXCEPT PRICE DATA)

Revenues ......................................... $ 5,463 $ 3,044 79.5%
Exploration cost, dry holes and abandonments ..... 212 168 26.2%
General and administrative expense ............... 821 342 140.1%
Depletion and depreciation ....................... 1,654 1,153 43.5%
Operating income ................................. 1,964 750 161.9%
Volume of oil and natural gas sold (BOE) ......... 131,112 106,948 22.6%
Average price per Bbl of crude oil ............... $ 29.39 $ 28.47 3.2%
Average price per Mcf of natural gas ............. $ 7.65 $ 2.62 192.0%

The increases in the oil and natural gas segment's operating results
are primarily attributable to the increased commodity prices and production.

12
13

VOLATILITY OF OIL AND NATURAL GAS PRICES AND ITS IMPACT ON OPERATIONS

Our revenue, profitability and future rate of growth are substantially
dependent upon prevailing prices for oil and natural gas, with respect to our
contract drilling, oil and natural gas and drilling and completion fluids
segments. Historically, oil and natural gas prices and markets have been
volatile. Prices are affected by market supply and demand factors as well as
actions of state and local agencies, the United States and foreign governments
and international cartels. All of these are beyond our control. Any significant
or extended decline in oil and/or natural gas prices would have a material
adverse effect on our financial condition and results of operations. Low level
commodity prices beginning in the fourth quarter of 1997 and continuing into
mid-1999 adversely impacted our operations. Although there has been significant
improvement in oil and natural gas prices since mid-1999, we expect oil and
natural gas prices to continue to be volatile and therefore to affect our
financial condition and operations and our ability to access capital sources.

IMPACT OF INFLATION

We believe that inflation will not have a significant impact on our
financial position or operations.

RECENTLY ISSUED ACCOUNTING STANDARD

We adopted Statement of Financial Accounting Standards No. 133, as
amended, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133") on January 1, 2001. SFAS No. 133 establishes accounting and reporting
standards for derivatives or instruments and for hedging activities. It requires
enterprises to recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. The requisite
accounting for changes in the fair value of a derivative depends on the intended
use of the derivative and the resulting designation. We were not required to
record any transitional adjustment upon the adoption of SFAS No. 133.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk associated with the floating rate
portion of the interest charged on the $23.2 million outstanding under our
credit facility with Transamerica Equipment Financial Services Corporation. The
credit facility, which matures on January 1, 2006, bears interest at LIBOR plus
3.10 % to 3.51%. Our exposure to interest rate risk due to changes in LIBOR is
not expected to be material. At March 31, 2001, the fair value of the obligation
approximates its related carrying value because the obligation bears interest at
the current market rate.

13
14

---------------

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

"Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 2 of this Report contains
forward-looking statements which are made pursuant to the "safe harbor"
provisions of The Private Securities Litigation Reform Act of 1995. These
statements include, without limitation, statements relating to: liquidity;
financing of operations; continued volatility of oil and natural gas prices;
source and sufficiency of funds required for immediate capital needs and
additional rig acquisitions (if further opportunities arise); and such other
matters. The words "believes," "plans," "intends," "expected," "estimates" or
"budgeted" and similar expressions identify forward-looking statements. The
forward-looking statements are based on certain assumptions and analyses we make
in light of our experience and our perception of historical trends, current
conditions, expected future developments and other factors we believe are
appropriate in the circumstances. We do not undertake to update, revise or
correct any of the forward-looking information. Factors that could cause actual
results to differ materially from our expectations expressed in the
forward-looking statements include, but are not limited to, the following:
intense competition in the contract drilling industry; low oil prices and/or
natural gas prices; adverse market conditions for contract drilling services;
drill-pipe shortages; labor shortages, primarily qualified drilling rig
personnel; insurance coverage limitations and requirements; inability to acquire
additional drilling rigs on terms favorable to us and the loss of key personnel,
particularly Cloyce A. Talbott and A. Glenn Patterson, our Chairman and Chief
Executive Officer and our President and Chief Operating Officer, respectively.
For a more complete explanation of these various factors and others, see
"Cautionary Statement for Purposes of the 'Safe Harbor' Provisions of the
Private Securities Litigation Reform Act of 1995" included in our Annual Report
on Form 10-K for the year ended December 31, 2000, beginning on page 20.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS.

The following exhibits are filed herewith or incorporated by reference:

2.1 Plan and Agreement of Merger dated October 14, 1993, between Patterson
Energy, Inc., a Texas corporation, and Patterson Energy, Inc., a
Delaware corporation, together with related Certificates of Merger.(1)

2.2 Agreement and Plan of Merger, dated April 22, 1996 among Patterson
Energy, Inc., Patterson Drilling Company and Tucker Drilling Company,
Inc.(2)

2.2.1 Amendment to Agreement and Plan of Merger, dated May 16, 1996 among
Patterson Energy, Inc., Patterson Drilling Company and Tucker Drilling
Company, Inc.(3)

2.3 Stock Purchase Agreement, dated January 5, 1998, among Patterson
Energy, Inc., Spencer D. Armour, III and Richard G. Price.(16)

2.4 Stock Purchase Agreement, dated September 17, 1998, among Lone Star
Mud, Inc. and Mark Campbell (shareholder of Tejas Drilling Fluids,
Inc.).(4)

2.5 Asset Purchase Agreement dated as of September 30, 2000 between Ambar
Drilling Fluids LP, LLLP and Ambar, Inc.(5)

2.6 Agreement and Plan of Merger dated as of January 5, 2001 among
Patterson Energy, Inc., Patterson Drilling Company LP, LLP and Jones
Drilling Corporation.(6)

2.7 Asset Purchase Agreement, dated as of January 5, 2001 among Patterson
Energy, Inc., Patterson Drilling Company LP, LLP and L.E. Jones
Drilling Company.(6)

2.8 Agreement and Plan of Merger, dated February 4, 2001, by and between
UTI Energy Corp. and Patterson Energy, Inc. Disclosure schedules for
each of the parties to the merger agreement setting forth exceptions of
other information relating to their respective representations and
warrants in the agreement have not been filed with this exhibit. They
will, however, be made available supplementally by the SEC upon
request.(7)

3.1 Restated Certificate of Incorporation.(8)

3.1.1 Certificate of Amendment to the Certificate of Incorporation.(9)

3.2 Bylaws.(1)

3.3 Rights Agreement dated January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company.(16)

4.1 Excerpt from Restated Certificate of Incorporation of Patterson Energy,
Inc. regarding authorized Common Stock and Preferred Stock.(10)

10.1 Loan and Security Agreement dated December 21, 1999 among Patterson
Drilling Company and Transamerica Equipment Financial Services
Corporation.(18)

10.1.1 Promissory Note dated December 21, 1999 between Patterson Drilling
Company and Transamerica Equipment Financial Services Corporation.(18)

10.1.2 Corporate guarantees of Lone Star Mud, Inc. and Patterson Energy,
Inc.(18)

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16

10.2 Aircraft Lease, dated December 20, 2000, (effective January 1, 2001)
between Talbott Aviation, Inc. and Patterson Energy, Inc.(19)

10.3 Participation Agreement, dated October 19, 1994, between Patterson
Petroleum Trading Company, Inc. and BHT Marketing, Inc.(11)

10.3.1 Participation Agreement dated October 24, 1995, between Patterson
Petroleum Trading Company, Inc. and BHT Marketing, Inc.(12)

10.4 Crude Oil Purchase Contract, dated October 19, 1994, between Patterson
Petroleum, Inc. and BHT Marketing, Inc.(11)

10.4.1 Crude Oil Purchase Contract, dated October 24, 1995, between Patterson
Petroleum, Inc. and BHT Marketing, Inc.(12)

10.5 Patterson Energy, Inc. 1993 Stock Incentive Plan, as amended.(13)

10.6 Patterson Energy, Inc. Non-Employee Directors' Stock Option Plan, as
amended.(14)

10.7 Model Form Operating Agreement.(15)

10.8 Form of Drilling Bid Proposal and Footage Drilling Contract.(15)

10.9 Form of Turnkey Drilling Agreement.(15)

15.1 Awareness Letter of Independent Accountants - PricewaterhouseCoopers
LLP

21.1 Subsidiaries of the registrant.(19)

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(1) Incorporated herein by reference to Item 27, "Exhibits" to Amendment
No. 2 to Registration Statement on Form SB-2 (File No. 33-68058-FW);
filed October 28, 1993.

(2) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated April 22, 1996 and filed on April 30, 1996.

(3) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated May 16, 1996 and filed on May 22, 1996.

(4) Incorporated herein by reference to Item 14, "Exhibits, Financial
Statement Schedules and Reports on Form 8-K", to Form 10-K dated
December 31, 1998.

(5) Incorporated by reference to Item 7, "Financial Statements and
Exhibits", to Form 8-K dated October 3, 2000 and filed on November 6,
2000.

(6) Incorporated by reference to Item 16, "Exhibits" to Registration
Statement on Form S-3 filed with the Securities Exchange Commission on
January 8, 2001.

(7) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated February 4, 2001 and filed February 16,
2001.

(8) Incorporated herein by reference to Item 6, "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 1996;
filed August 12, 1996.

(9) Incorporated herein by reference to Item 6. "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 1997;
filed August 14, 1997.

(10) Incorporated herein by reference to Item 16, "Exhibits" to Registration
Statement on Form S-3 filed with the Securities Exchange Commission on
December 18, 1996.

(11) Incorporated herein by reference to Item 27, "Exhibits" to Post
Effective Amendment No. 1 to Registration Statement on Form SB-2 (File
No. 33-68058-FW); filed on June 21, 1995.

(12) Incorporated by reference to Item 13, "Exhibits and Reports on Form
8-K" to Form 10-KSB for the year ended December 31, 1995.

(13) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 333-47917); filed March 13, 1998.

(14) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 33-39471); filed November 4, 1997.

(15) Incorporated by reference to Item 27, "Exhibits" to Registration
Statement on Form SB-2 (File No. 33-68058-FW); filed on August 30,
1993.

(16) Incorporated by reference to Item 2, "Exhibits" to Registration
Statement on Form 8-A filed on January 14, 1997.

(17) Incorporated herein by reference to Item 16, "Exhibits" to Registration
Statement on Form S-3 filed January 5, 1998.

(18) Incorporated by reference to Item 14, "Exhibits, Financial Statement
Schedules and Reports on Form 8-K" to Form 10-K dated December 31,
1999.

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(19) Incorporated herein by reference to Item 14, "Exhibits, Financial
Statement Schedules and Reports on Form 8-K" to Form 10-K dated
December 31, 2000.

(b) REPORTS ON FORM 8-K.

The following reports on Form 8-k were filed:

(1) Report dated March 27, 2001 announcing the Company's clearance
of the waiting period of Hart-Scott-Rodino Antitrust
Improvements Act of 1976, related to its merger with UTI
Energy Corp., filed March 27, 2001.

(2) Report dated February 4, 2001 announcing the Company's
Agreement and Plan of Merger with UTI Energy, Inc. filed
February 16, 2001.

(3) Report dated February 5, 2001 announcing the approval of the
Company's Agreement and Plan of Merger with UTI Energy, Inc.
by the Boards of Directors of both companies filed February 6,
2001.

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SIGNATURE

In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

PATTERSON ENERGY, INC.

By: /s/ Cloyce A. Talbott
------------------------------------
Cloyce A. Talbott
Chairman of the Board and
Chief Executive Officer

By: /s/ Jonathan D. Nelson
-----------------------------------
Jonathan D. (Jody) Nelson
Vice President-Finance
Chief Financial Officer

DATED: May 7, 2001

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EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
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15.1 Awareness Letter of Independent Accountants,
PricewaterhouseCoopers LLP