================================================================================
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 September 30, 2001
OR
[ ] 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-UTI 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)
Patterson Energy, Inc.
(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 October 29, 2001 the issuer had 76,359,329 outstanding shares of common
stock, $0.01 par value, its only class of voting stock.
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PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
INDEX
<Table>
<Caption>
PAGE
Part I - Financial Information
Item 1. Financial Statements
Unaudited condensed consolidated balance sheets............................ 3
Unaudited condensed consolidated statements of income...................... 4
Unaudited condensed consolidated statement of stockholders' equity......... 5
Unaudited condensed consolidated statements of cash flows.................. 6
Notes to unaudited condensed consolidated financial statements............. 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................... 16
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995................................................... 17
Part II - Other Information
Item 5. Other Information.............................................................. 18
Item 6. Exhibits and Reports on Form 8-K............................................... 19
Signatures....................................................................................... 23
</Table>
2
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-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2001 2000
-------------- --------------
ASSETS (IN THOUSANDS, EXCEPT SHARE DATA)
Current assets:
Cash and cash equivalents ........................................................ $ 30,519 $ 66,916
Accounts receivable, net of allowance for doubtful accounts of $4,121 at
September 30, 2001 and $3,462 at December 31, 2000 ........................... 220,074 136,894
Federal and state income taxes receivable ........................................ -- 1,116
Inventory ........................................................................ 14,617 12,953
Deferred income taxes ............................................................ 9,851 11,090
Other ............................................................................ 4,722 7,442
-------------- --------------
Total current assets ......................................................... 279,783 236,411
Property and equipment, at cost, net ................................................. 569,814 442,559
Intangible assets, net ............................................................... 52,921 56,374
Other ................................................................................ 3,762 3,223
-------------- --------------
Total assets ................................................................. $ 906,280 $ 738,567
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable .............................................. $ -- $ 4,477
Accounts payable:
Trade ......................................................................... 53,332 69,829
Other ......................................................................... 4,684 10,119
Federal and state income taxes payable ........................................... 50,759 --
Accrued expenses ................................................................. 47,685 24,687
-------------- --------------
Total current liabilities .................................................... 156,460 109,112
Deferred income taxes ................................................................ 94,577 71,899
Other ................................................................................ 474 1,318
Notes payable, net of current maturities ............................................. -- 74,939
-------------- --------------
Total liabilities ............................................................ 251,511 257,268
-------------- --------------
Commitments and contingencies ........................................................ -- --
Stockholders' equity:
Preferred stock par value $.01; authorized 1,000,000 shares, no shares issued .... -- --
Common stock, par value $.01; authorized 200,000,000 shares with 77,808,544
and 76,249,642 issued and 76,301,996 and 74,743,094 outstanding at
September 30, 2001 and December 31, 2000, respectively ...................... 778 763
Additional paid-in capital ....................................................... 427,467 397,489
Retained earnings ................................................................ 240,131 94,672
Accumulated other comprehensive income ........................................... (1,952) 30
Treasury stock, at cost, 1,506,548 shares ........................................ (11,655) (11,655)
-------------- --------------
Total stockholders' equity ................................................... 654,769 481,299
-------------- --------------
Total liabilities and stockholders' equity ................................... $ 906,280 $ 738,567
============== ==============
</Table>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Operating revenues:
Drilling ..................................... $ 248,942 $ 133,824 $ 702,174 $ 345,761
Drilling and completion fluids ............... 24,369 4,912 71,555 14,386
Pressure pumping ............................. 12,144 6,160 28,231 13,902
Other ........................................ 3,649 4,252 13,294 11,029
------------- ------------- ------------- -------------
289,104 149,148 815,254 385,078
------------- ------------- ------------- -------------
Operating costs and expenses:
Drilling ..................................... 131,573 100,202 399,494 268,817
Drilling and completion fluids ............... 20,903 3,846 60,478 11,380
Pressure pumping ............................. 6,231 3,717 15,381 9,004
Depreciation, depletion and amortization ..... 23,211 14,744 61,912 44,193
General and administrative ................... 7,623 5,713 24,442 15,653
Merger costs ................................. -- -- 5,943 --
Restructuring and other charges .............. -- -- 7,202 --
Other ........................................ 691 930 3,121 2,351
------------- ------------- ------------- -------------
190,232 129,152 577,973 351,398
------------- ------------- ------------- -------------
Operating income ................................. 98,872 19,996 237,281 33,680
------------- ------------- ------------- -------------
Other income (expense):
Interest income .............................. 267 291 1,783 807
Interest expense ............................. (365) (2,959) (3,087) (8,349)
Other ........................................ 27 (459) 158 (362)
------------- ------------- ------------- -------------
(71) (3,127) (1,146) (7,904)
------------- ------------- ------------- -------------
Income before income taxes ....................... 98,801 16,869 236,135 25,776
------------- ------------- ------------- -------------
Income tax expense:
Current ...................................... 36,760 6,375 73,189 7,811
Deferred ..................................... 1,659 201 17,487 1,954
------------- ------------- ------------- -------------
38,419 6,576 90,676 9,765
------------- ------------- ------------- -------------
Net income ....................................... $ 60,382 $ 10,293 $ 145,459 $ 16,011
============= ============= ============= =============
Net income per common share:
Basic ........................................ $ 0.79 $ 0.14 $ 1.91 $ 0.23
============= ============= ============= =============
Diluted ...................................... $ 0.77 $ 0.14 $ 1.84 $ 0.22
============= ============= ============= =============
Weighted average number of common shares
outstanding:
Basic ........................................ 76,567 71,642 76,272 70,183
============= ============= ============= =============
Diluted ...................................... 78,332 75,240 79,123 73,876
============= ============= ============= =============
</Table>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<Table>
<Caption>
Common Stock Accumulated
--------------------- Additional other
Number of paid-in Retained comprehensive Treasury
shares Amount capital earnings income stock Total
--------- --------- --------- --------- ------------- --------- ---------
Balance, December 31, 2000 ....... 76,250 $ 763 $ 397,489 $ 94,672 $ 30 $ (11,655) $ 481,299
Issuance of common stock ......... 810 8 21,712 -- -- -- 21,720
Exercise of stock options......... 628 6 3,252 -- -- -- 3,258
Exercise of warrants ............. 121 1 1,819 -- -- -- 1,820
Tax benefit related to exercise of
stock options ................ -- -- 3,195 -- -- -- 3,195
Foreign currency translation ..... -- -- -- -- (1,982) -- (1,982)
Net income ....................... -- -- -- 145,459 -- -- 145,459
--------- --------- --------- --------- --------- --------- ---------
Balance, September 30, 2001 ...... 77,809 $ 778 $ 427,467 $ 240,131 $ (1,952) $ (11,655) $ 654,769
========= ========= ========= ========= ========= ========= =========
</Table>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
2001 2000
------------- -------------
Cash flows from operating activities:
Net income ........................................................................ $ 145,459 $ 16,011
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization ......................................... 61,912 44,193
Amortization of debt discount..................................................... -- 594
Net gain on sale of assets ....................................................... (801) (568)
Abandonments ..................................................................... 478 --
Deferred income tax expense (benefit) ............................................ 18,534 (2,430)
Change in operating assets and liabilities:
Increase in trade accounts receivable and other current assets ...... (74,003) (30,808)
Increase in inventory ............................................... (1,665) (271)
Decrease in accrued federal income taxes receivable ................. 2,443 --
Increase (decrease) in trade accounts payable and other current
liabilities ..................................................... (4,944) 18,108
Increase in federal income taxes payable ............................ 49,432 6,183
------------- -------------
Net cash provided by operating activities ....................... 196,845 51,012
------------- -------------
Cash flows from investing activities:
Acquisitions ..................................................................... (27,045) (24,370)
Purchases of property and equipment .............................................. (131,687) (80,264)
Proceeds from sales of property and equipment .................................... 668 1,326
Change in other assets ........................................................... (736) (214)
------------- -------------
Net cash used in investing activities ........................... (158,800) (103,522)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock ........................................... -- 99,000
Purchase of treasury stock ....................................................... -- (1,650)
Proceeds from notes payable ...................................................... 9,760 70,469
Payments of notes payable ........................................................ (89,176) (69,056)
Proceeds from exercise of stock options and warrants ............................. 5,078 3,909
------------- -------------
Net cash provided by (used in) financing activities ............. (74,338) 102,672
------------- -------------
Net increase (decrease) in cash and cash equivalents ............ (36,293) 50,162
Foreign currency translation adjustment ......................... (104) (230)
Cash and cash equivalents at beginning of period ...................................... 66,916 16,339
------------- -------------
Cash and cash equivalents at end of period ............................................ $ 30,519 $ 66,271
============= =============
Supplemental disclosure of cash flow information:
Net cash paid during the period for:
Interest ....................................................................... $ 3,612 $ 8,078
Income taxes ................................................................... $ 18,150 $ 69
</Table>
On January 5, 2001, the Company issued 810,070 shares of its common
stock valued at $26.8125 per share and paid approximately $11.3 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.
6
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF CONSOLIDATION AND PRESENTATION
On May 8, 2001, the merger between Patterson Energy, Inc. and UTI
Energy Corp. ("UTI") was consummated by vote of the stockholders of each of the
companies. The merger was treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and was
accounted for as a pooling of interests for financial accounting purposes.
Accordingly, historical financial statements as presented herein, have been
restated to provide for the retroactive effect of the merger. As a part of the
merger, the name of Patterson Energy, Inc. was changed to "Patterson-UTI Energy,
Inc." (see Note 2).
The consolidated financial statements include the accounts of
Patterson-UTI Energy, Inc. ("Patterson-UTI") and its wholly-owned subsidiaries,
(collectively referred to herein as "Patterson-UTI" 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 sheets of the Company and UTI, but does not include all disclosures
required by generally accepted accounting principles.
The U.S. dollar is the functional currency for all of the Company's
operations except for its Canadian operations, which use the Canadian dollar as
functional currency. The effects of exchange rate changes are reflected in
accumulated other comprehensive income, which is a separate component of
stockholders' equity.
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 and nine-month periods
ended September 30, 2001, the dilutive securities were approximately 1.8 million
and 2.9 million, respectively, compared to dilutive securities of approximately
3.6 million and 3.7 million for the three and nine-month periods ended September
30, 2000.
The results of operations for the three and nine months ended September
30, 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.
7
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
2. RECENT ACQUISITIONS AND UTI MERGER
Acquisitions
On January 5, 2001, the Company consummated the transactions
contemplated by certain agreements among the Company and Jones Drilling
Corporation, Henderson Welding, Inc., L.E.J. Truck and Crane, Inc., and L.E.
Jones Drilling Company (collectively the "Jones Entities"). 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 the Company's
common stock valued at $26.8125 per share and $11.3 million cash plus
approximately $240,000 in transaction costs. The pro forma results of combining
the consolidated results of operations as if the Jones Entities had been
acquired on January 1, 2000, are considered immaterial and have no effect on
earnings per share.
In January 2001, the Company acquired six drilling rigs, through three
separate transactions, for approximately $15.7 million in cash.
The above acquisitions were accounted for as purchases and the related
results of operations and cash flows have been included in the condensed
consolidated financial statements since the respective dates of acquisition. No
goodwill was recorded in connection with these acquisitions.
UTI Merger
On February 4, 2001, Patterson Energy, Inc. entered into an Agreement
and Plan of Merger with UTI providing for the merger of the two entities. On May
8, 2001, the stockholders of each company approved the merger. Each outstanding
share of UTI common stock was converted into one share of Patterson-UTI common
stock and each option or warrant then outstanding representing the right to
receive UTI common stock was converted into the right to purchase Patterson-UTI
common stock on an equivalent basis. A total of 37,782,135 shares of
Patterson-UTI common stock was issued pursuant to the merger and an additional
3,621,079 shares were reserved for issuance under the then outstanding UTI stock
options. Additionally, the stockholders of Patterson-UTI approved an increase in
the Company's authorized shares of common stock from 50 million to 200 million
and a name change to "Patterson-UTI Energy, Inc." following consummation of the
merger.
The Company incurred $13.1 million in expenses related to the merger.
Such expenses consisted of $5.9 million in merger costs which were primarily
related to professional fees paid to investment banking firms, attorneys,
accountants and commercial printers for their professional services rendered and
$7.2 million in restructuring costs and other related charges incurred as a
result of the following:
o severance costs and related expenses of $2.8 million,
o closing of duplicate operational facilities of $1.6 million,
o costs of $1.0 million incurred for repaying the Company's
credit facility (see Note 6),
o fees and expenses related to the transfer of licenses and
leaseholds, and in some instances the impairment of such
leaseholds, the combination or cancellation of various service
contracts and the renegotiation of certain insurance policies
of $1.8 million.
The merger was treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and was
accounted for as a pooling of interests for financial accounting purposes. The
consolidated financial statements give retroactive effect to the merger, which
includes combining the companies' previous historical consolidated financial
statements as of December 31, 2000 and for the three and nine-month periods
ended September 30, 2000. Certain immaterial adjustments were made in those
periods to conform the previous accounting policies of UTI with those of
Patterson-UTI.
8
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
3. STOCKHOLDERS' EQUITY
As a part of the merger with UTI, the Company's stockholders approved
the merger and an amendment to the Company's Charter increasing the number of
authorized shares of the Company's common stock to 200 million (see Note 2).
On May 7, 2001, warrants to purchase 121,250 shares of UTI's common
stock were exercised. The exercise price ranged from $13.25 to $17.50. The $1.8
million in proceeds resulting from the exercise was used as partial payment of
notes payable owed to the same parties (see Note 6).
In January 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 valued at $26.8125 per
share, its fair market value on the date of the announcement of the transaction.
4. COMPREHENSIVE INCOME
The following table illustrates the Company's comprehensive income
including the effects of foreign currency translation adjustments for the three
and nine months ended September 30, 2001 and 2000 (in thousands):
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net income .................................. $ 60,382 $ 10,293 $ 145,459 $ 16,011
Other comprehensive income (loss):
Foreign currency translation adjustment ..... (1,628) (373) (1,982) (124)
------------ ------------ ------------ ------------
Comprehensive income ........................ $ 58,754 $ 9,920 $ 143,477 $ 15,887
============ ============ ============ ============
</Table>
5. PRO FORMA FINANCIAL INFORMATION
The following includes selected unaudited pro forma combined financial
information (in thousands) for the three and nine-month periods ended September
30, 2000, to give effect to the merger of Patterson-UTI and UTI January 1, 2000
using the pooling of interests method of accounting.
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
------------------ ------------------
Patterson revenues .................... $ 78,628 $ 204,333
UTI revenues .......................... 72,331 182,189
Adjustments ........................... (1,811) (1,444)
------------------ ------------------
Patterson-UTI revenues ................ $ 149,148 $ 385,078
================== ==================
Patterson net income .................. $ 6,749 $ 11,468
UTI net income ........................ 3,898 4,947
Adjustments ........................... (354) (404)
------------------ ------------------
Patterson-UTI net income .............. $ 10,293 $ 16,011
================== ==================
</Table>
The adjustments above were made to conform the accounting methods of
Patterson-UTI and UTI to adjust for certain differences between the two
companies' relative methods of accounting for the recognition of revenue under
turnkey drilling contract arrangements. Patterson-UTI applies the completed
contract method to turnkey drilling contracts which requires revenue and costs
associated with drilling the well to be deferred until drilling is complete. UTI
accounted for its turnkey arrangements using the percentage-of-completion method
in which revenue was recognized as costs were incurred relative to the expected
total cost of drilling the well.
9
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
6. NOTES PAYABLE
On July 30, 2001, the Company paid $12.0 million on its outstanding
debt with CIT Group/Business Credit, Inc., Foothill Capital Corp., Fleet Capital
Corp., and The CIT Group/Equipment Financing, Inc. ("CIT"), and on August 17,
2001, the Company paid the remaining $8.0 million then outstanding, incurring an
additional $355,000 in fees associated with the early repayment.
During the first six months of 2001, the Company repaid, prior to their
scheduled maturities, $69.2 million under its existing credit facilities and
other term obligations. The Company incurred expenses of $448,000 as a result of
prepayment penalties and $587,000 related to deferred financing costs which were
unamortized at the time the debt was extinguished.
On June 29, 2001, the Company increased its existing revolving line of
credit with CIT to $100.0 million and extended the term of the facility to June
2005. The revolving line of credit carries a floating interest rate of LIBOR
plus 1.75% to 2.75% based on Patterson-UTI's twelve-month trailing Earnings
Before Income Taxes, Depreciation, Depletion and Amortization ("EBITDA"). The
facility has no significantly restrictive financial or operational covenants
until amounts drawn under the facility exceed $80.0 million.
7. CONTINGENCIES
The Company is involved in several claims arising in the ordinary
course of business. Management believes all such claims are covered by insurance
or that such matters will not have a material adverse effect on the Company's
financial statements.
The Company is self-insured for employee health insurance claims up to
a maximum of $100,000 per employee under medical claims, at which point the
Company is fully insured. The Company is self-insured for workers compensation
up to a maximum of $500,000 per event for workers compensation claims, at which
point the Company is fully insured. Although the Company believes that adequate
reserves have been provided for expected liabilities arising from its
self-insured obligations, management's estimates of these liabilities may change
in the future as circumstances develop.
The Company's operations are subject to the many hazards inherent in
the onshore drilling industry, such as blowouts, explosions, sour gas, well
fires and spills. These hazards can result in personal injury and loss of life,
severe damage to or destruction of property and equipment, pollution or
environmental damage and suspension of operations. Although the Company
maintains insurance protection as management deems appropriate, such insurance
coverage may not provide sufficient funds to protect the Company from all
liabilities that could result from its operations. Also, claims will be subject
to various retentions and deductibles. While the Company has generally been able
to obtain some degree of contractual indemnification from its customers in most
of its dayrate drilling contracts, no such indemnification is typically
available for footage or turnkey contracts. The indemnity agreements require the
customers to hold the Company harmless in the event of loss of production or
reservoir damage. This contractual indemnification may not be supported by
adequate insurance maintained by the customer.
The Company's operations routinely involve the handling of various
materials, including hazardous materials. The Company may be exposed to
liability under numerous state and federal environmental laws, rules and
regulations including dealing with hazardous materials. In addition,
environmental laws and regulations including The Comprehensive Environmental
Response, Compensation and Liability Act (also know as the "Superfund Law"), may
impose strict liability whereby the Company could be liable for clean-up costs,
even if the situation resulted from previous conduct of the Company that was
lawful at the time conducted or from improper conduct of or conditions caused by
previous property owners or other persons not associated with the Company.
10
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
7. CONTINGENCIES - (CONTINUED)
The Company maintains insurance coverage against some environmental liabilities,
including pollution caused by sudden and accidental oil spills.
Management believes it has adequately reserved for these contingencies.
Management believes that the outcome of known and potential claims will not have
a material adverse effect on the Company's operations.
8. BUSINESS SEGMENTS
The Company primarily conducts its business through three distinct
operating activities: contract drilling of oil and natural gas wells and
provision of pressure pumping services and drilling and completion fluid
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.
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
(IN THOUSANDS)
2001 2000 2001 2000
------------- ------------- ------------- -------------
Revenues:
Drilling .......................................... $ 248,942 $ 133,824 $ 702,174 $ 345,761
Drilling and completion fluids .................... 24,369 4,912 71,555 14,386
Pressure pumping .................................. 12,144 6,160 28,231 13,902
Other ............................................. 3,649 4,252 13,294 11,029
------------- ------------- ------------- -------------
Total operating revenues .............................. $ 289,104 $ 149,148 $ 815,254 $ 385,078
============= ============= ============= =============
Income from operations:
Drilling .......................................... $ 98,459 $ 17,836 $ 242,699 $ 32,102
Drilling and completion fluids .................... 687 (166) 2,793 (484)
Pressure pumping .................................. 4,399 1,265 8,682 1,351
Other ............................................. (4,673) 1,061 (3,748) 711
Merger costs and other restructuring charges ...... -- -- (13,145) --
------------- ------------- ------------- -------------
98,872 19,996 237,281 33,680
Interest income ....................................... 267 291 1,783 807
Interest expense ...................................... (365) (2,959) (3,087) (8,349)
Other ................................................. 27 (459) 158 (362)
------------- ------------- ------------- -------------
Income before income taxes ............................ $ 98,801 $ 16,869 $ 236,135 $ 25,776
============= ============= ============= =============
</Table>
9. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 141, "Business Combinations," ("SFAS No.
141") in June 2001. SFAS No. 141 addresses financial accounting and reporting
for business combinations and supersedes APB Opinion No. 16, "Business
Combinations," and FASB Statement No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises." SFAS No. 141 is effective for all
business combinations initiated after June 30, 2001 and provides that such
combinations are to be accounted for using the purchase method. The Company has
adopted SFAS No. 141 as of June 30, 2001.
11
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
9. RECENTLY ISSUED ACCOUNTING STANDARDS - (CONTINUED)
The FASB issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," ("SFAS No. 142") in June 2001. SFAS No.
142 addresses financial accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17, "Intangible Assets." SFAS
No. 142 applies to all fiscal years beginning after December 15, 2001. The
provisions of SFAS No. 142, which the Company will adopt on January 1, 2002, are
not expected to have a material impact on the Company's consolidated financial
statements.
The FASB issued Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations," ("SFAS No. 143") in July 2001.
SFAS No. 143 addresses financial accounting requirements for retirement
obligations associated with tangible long-lived assets. SFAS No. 143 is
effective beginning June 15, 2002. The provisions of SFAS No. 143 are not
expected to have a material impact on the Company's consolidated financial
statements.
The FASB issued Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," (SFAS No. 144)
in August 2001. SFAS No. 144 addresses financial accounting and reporting for
the impairment or disposal of long-lived assets and supersedes SFAS No. 121 and
APB Opinion No. 30. SFAS No. 144 is effective beginning January 1, 2002, and is
not expected to have a material impact on the Company's consolidated financial
statements.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING SUMMARY OF LIQUIDITY AND CAPITAL RESOURCES AND RESULTS OF
OPERATIONS IS BASED ON CONSOLIDATED FINANCIAL INFORMATION THAT HAS BEEN RESTATED
TO REFLECT THE MERGER OF UTI INTO PATTERSON-UTI ON MAY 8, 2001, UNDER THE
POOLING OF INTERESTS METHOD OF ACCOUNTING.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2001, we had working capital of approximately
$123.3 million including cash and cash equivalents of $30.5 million as compared
to working capital of $127.3 million including cash and cash equivalents of
$66.9 million at December 31, 2000. For the nine months ended September 30,
2001, our various sources and uses of cash flow were:
Sources:
o $196.8 million derived from operations primarily attributable
to the following factors:
o Net income of $145.5 million which was largely
attributable to an:
o Increase in average dayrates from $9,121 per day in
the fourth quarter of 2000 to $12,033 per day in the
third quarter of 2001 and a resulting increase in
average daily cash margins from $2,793 per day in the
fourth quarter of 2000 to $5,673 per day in the third
quarter of 2001,
o Improvement in utilization rates as indicated in
"Results of Operations" on page 14, and
o Increase in average operating rigs from 199 in the
fourth quarter of 2000 to 225 in the third quarter of
2001, primarily due to the addition of 27 drilling
rigs in January of 2001 with the purchase of Jones
Drilling Corporation and three other affiliated
entities and three other transactions.
o $5.1 million from the exercise of stock options and warrants,
o $668 thousand from the sale of certain property and
equipment and
o $9.8 million in loan proceeds from the Company's revolving
line of credit.
Uses:
o $11.3 million as partial consideration in the acquisition of
Jones Drilling Corporation and its related entities and $15.7
million for six drilling rigs from three other non-affiliated
entities,
o $89.2 million in payments on debt and
o $131.6 million for capital 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
and pressure pumping segments.
On January 5, 2001, the Company consummated the transactions
contemplated by certain agreements among the Company and Jones Drilling
Corporation, 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.
During the nine months ended September 30, 2001, the Company paid
approximately $18.2 million in cash to the Internal Revenue Service and other
state taxing authorities for its federal and state income tax obligations. On
October 1, 2001, the Company paid, with its cash on hand, an additional $26.7
million to the Internal Revenue Service for its estimated federal income taxes
payable through that date. To date, the Company's line of credit remains fully
available.
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.
13
RESULTS OF OPERATIONS
The following tables summarize operations of the Company for the three months
ended September 30, 2001 and 2000:
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------
CONTRACT DRILLING 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 248,942 $ 133,824 86.0 %
Drilling cost .................................... 131,573 100,202 31.3 %
General and administrative expense ............... 749 1,721 (56.5)%
Corporate overhead and other ..................... (431) (28) (1,439.3)%
Depreciation and amortization .................... 18,592 14,093 31.9 %
Operating income ................................. 98,459 17,836 452.0 %
Rig utilization rate ............................. 74% 67% 10.4 %
Average # of rigs owned .......................... 302 272 11.0 %
Operating days ................................... 20,688 16,789 23.2 %
Average revenue per operating day ................ $ 12.03 $ 7.97 50.9 %
Average drilling cost per operating day .......... 6.36 5.97 6.5 %
</Table>
The significant increases shown were reflective of increased
productivity in the contract drilling industry as evidenced by:
o increases in average rig utilization and in the number of
operating days and
o the addition of an average 30 drilling rigs from the third
quarter of 2000 to that of 2001.
Deteriorating economic environment conditions which began in the
quarter and have continued through October 2001 have had an adverse impact on
the market prices for crude oil and natural gas. Accordingly, the demand for the
Company's contract drilling services have been negatively impacted as evidenced
by an estimated 50% average rig utilization through October 2001. Demand for the
Company's contract drilling services is not expected to increase until such
economic conditions improve.
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------
DRILLING AND COMPLETION FLUIDS 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 24,369 $ 4,912 396.1 %
Drilling and completion fluids cost .............. 20,903 3,846 443.5 %
General and administrative expense ............... 2,181 871 150.4 %
Corporate overhead and other ..................... (96) -- (100.0)%
Depreciation and amortization .................... 694 361 92.2 %
Operating income (loss) .......................... 687 (166) 513.9 %
Total jobs ....................................... 495 209 136.8 %
Average revenue per job .......................... $ 49.23 $ 23.50 109.5 %
</Table>
The increases noted were primarily attributable to the addition of the
fluids division of Ambar, Inc., during October 2000.
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------
PRESSURE PUMPING 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 12,144 $ 6,160 97.1%
Pressure pumping cost ............................ 6,231 3,717 67.6%
General and administrative expense ............... 983 789 24.6%
Corporate overhead and other ..................... 26 (1) 2,700.0%
Depreciation ..................................... 505 390 29.5%
Operating income ................................. 4,399 1,265 2,477.5%
Total jobs ....................................... 1,341 966 38.8%
Average revenue per job .......................... $ 9.06 $ 6.38 42.0%
</Table>
The improvement in the pressure pumping segment's operating results were
primarily attributable to improved market conditions as evidenced by the
increase in number of jobs and revenue per job.
14
RESULTS OF OPERATIONS - (CONTINUED)
The following tables summarize operations of the Company for the nine months
ended September 30, 2001 and 2000:
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
CONTRACT DRILLING 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 702,174 $ 345,761 103.1%
Drilling cost .................................... 399,494 268,817 48.6%
General and administrative expense ............... 5,411 4,756 13.8%
Corporate overhead and other ..................... 1,557 787 97.8%
Depreciation and amortization .................... 53,013 39,299 34.9%
Operating income ................................. 242,699 32,102 656.0%
Rig utilization rate ............................. 78% 64% 21.9%
Average # of rigs owned .......................... 301 258 16.7%
Operating days ................................... 64,001 44,967 42.3%
Average revenue per operating day ................ $ 10.97 $ 7.69 42.7%
Average drilling cost per operating day .......... 6.24 5.98 4.3%
</Table>
The significant increases shown were reflective of increased
productivity in the contract drilling industry as evidenced by:
o increases in average rig utilization and in the number of
operating days and
o the addition of an average 43 drilling rigs from the first
nine months of 2000 to that of 2001.
Deteriorating economic environment conditions which began in the
quarter and have continued through October 2001 have had an adverse impact on
the market prices for crude oil and natural gas. Accordingly, the demand for the
Company's contract drilling services have been negatively impacted as evidenced
by an estimated 50% average rig utilization through October 2001. Demand for the
Company's contract drilling services is not expected to increase until such
economic conditions improve.
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------
DRILLING AND COMPLETION FLUIDS 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 71,555 $ 14,386 397.4%
Drilling and completion fluids cost .............. 60,478 11,380 431.4%
General and administrative expense ............... 6,020 2,462 144.5%
Corporate overhead and other ..................... 349 70 398.6%
Depreciation and amortization .................... 1,915 958 99.9%
Operating income (loss) .......................... 2,793 (484) 677.1%
Total jobs ....................................... 1,466 601 143.9%
Average revenue per job .......................... $ 48.81 $ 23.94 103.9%
</Table>
The increases noted were primarily attributable to the addition of the
fluids division of Ambar, Inc., during October 2000.
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------
PRESSURE PUMPING 2001 2000 % CHANGE
-------------------------------------------------- ------------- ------------- -------------
(DOLLARS IN 000'S)
Revenues ......................................... $ 28,231 $ 13,902 103.1%
Pressure pumping cost ............................ 15,381 9,004 70.8%
General and administrative expense ............... 2,777 2,355 17.9%
Corporate overhead and other ..................... 26 (1) 2,700.0%
Depreciation ..................................... 1,365 1,193 14.4%
Operating income ................................. 8,682 1,351 542.6%
Total jobs ....................................... 3,361 2,231 50.7%
Average revenue per job .......................... $ 8.40 $ 6.23 34.8%
</Table>
The improvement in the pressure pumping segment's operating results
were primarily attributable to improved market conditions as evidenced by the
increase in number of jobs and revenue per job.
15
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, pressure pumping 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.
Due to a decline in oil and natural gas prices beginning in the second
quarter of this year, demand for drilling rigs declined beginning in August and
is continuing. This decline in demand has resulted in a commensurate steep
decline in drilling rig utilization rates, which in turn has adversely impacted
our operations.
IMPACT OF INFLATION
We believe that inflation will not have a significant impact on our
financial position or operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
The FASB issued Statement of Financial Accounting Standards No. 141,
"Business Combinations," ("SFAS No. 141") in June 2001. SFAS No. 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16, "Business Combinations," and FASB Statement No. 38, "Accounting
for Preacquisition Contingencies of Purchased Enterprises." SFAS No. 141 is
effective for all business combinations initiated after June 30, 2001 and
provides that such combinations are to be accounted for using the purchase
method. The Company has adopted SFAS No. 141 as of June 30, 2001.
The FASB issued Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," ("SFAS No. 142") in June 2001. SFAS No.
142 addresses financial accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17, "Intangible Assets." SFAS
No. 142 applies to all fiscal years beginning after December 15, 2001. The
provisions of SFAS No. 142, which the Company will adopt on January 1, 2002, are
not expected to have a material impact on the Company's consolidated financial
statements.
The FASB issued Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations," ("SFAS No. 143") in July 2001.
SFAS No. 143 addresses financial accounting requirements for retirement
obligations associated with tangible long-lived assets. SFAS No. 143 is
effective beginning June 15, 2002. The provisions of SFAS No. 143 are not
expected to have a material impact on the Company's consolidated financial
statements.
The FASB issued Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," (SFAS No. 144)
in August 2001. SFAS No. 144 addresses financial accounting and reporting for
the impairment or disposal of long-lived assets and supersedes SFAS No. 121 and
APB Opinion No. 30. SFAS No. 144 is effective beginning January 1, 2002, and is
not expected to have a material impact on the Company's consolidated financial
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We currently have no exposure to market risk as we have no outstanding
balance under our credit facility with CIT. Should we incur a balance in the
future, we would have some exposure associated with the floating rate portion of
the interest charged on that balance. The credit facility, which matures on June
29, 2005, bears interest at LIBOR plus 1.75 % to 2.75% based on the Company's
twelve-month trailing EBITDA. Our exposure to interest rate risk due to changes
in LIBOR is not expected to be material.
16
---------------
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:
projected revenues following the merger being lower than expected; 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 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, and "Risk Factors"
included in our joint proxy statement/prospectus dated March 14, 2001, beginning
on page 19 included as a part of our registration statement on Form S-4 filed
with the SEC on March 7, 2001, in connection with the UTI merger.
---------------
17
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Board of Directors of Patterson-UTI Energy, Inc., at a meeting
thereof duly held on October 23, 2001, amended the Rights Agreement between
Patterson-UTI Energy, Inc. and Continental Stock Transfer & Trust Company, dated
as of January 2, 1997 (the "Rights Plan"), as follows:
(a) The fraction of a share of Series A Participating Preferred
Stock of Patterson-UTI into which each Right is exercisable
pursuant to the terms of the Rights Plan was changed from one
one-hundredth of a share of Series A Participating Preferred
Stock to one one-thousandth of a share of Series A
Participating Preferred Stock;
(b) The exercise price of each Right was increased from $41.50 per
Right (gives effect to two 2-for-1 stock splits effected since
the date of adoption of the Rights Plan on January 2, 1997);
and
(c) The final expiration date of the Rights Plan was changed from
January 2, 2007 to October 23, 2011, thereby establishing a
new 10-year term for the Rights Plan.
An earlier amendment to the Rights Plan adopted by the Board of Directors
at a meeting thereof duly held on July 1, 1999, eliminated the so-called
"dead hand" provision from the Rights Plan through deletion of the last
sentence of Section 27 of the Rights Plan.
18
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 Asset Purchase Agreement dated as of September 30, 2000 between Ambar
Drilling Fluids LP, LLLP and Ambar, Inc. (4)
2.4 Agreement and Plan of Merger dated as of January 5, 2001 among
Patterson Energy, Inc., Patterson Drilling Company LP, LLLP and Jones
Drilling Corporation.(5)
2.5 Asset Purchase Agreement, dated as of January 5, 2001 among Patterson
Energy, Inc., Patterson Drilling Company LP, LLLP and L.E. Jones
Drilling Company.(5)
2.6 Agreement and Plan of Merger, dated February 4, 2001, by and between
UTI Energy Corp. and Patterson Energy, Inc. (6)
3.1 Restated Certificate of Incorporation. (7)
3.2 Bylaws. (1)
3.3 Rights Agreement dated January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company. (8)
3.4 Amendment to Rights Agreement dated as of October 23, 2001.
4.1 Excerpt from Restated Certificate of Incorporation of Patterson-UTI
Energy, Inc. regarding authorized Common Stock and Preferred Stock.(15)
10.1 Loan and Security Agreement, dated November 22, 1999. (15)
10.1.1 First Amendment to Loan and Security Agreement, dated May 2, 2000. (15)
10.1.2 Second Amendment to Loan and Security Agreement, dated May 18, 2000.
(15)
10.1.3 Third Amendment to Loan and Security Agreement, dated October 18, 2000.
(15)
10.1.4 Fourth Amendment to Loan and Security Agreement, dated May 8, 2001.
(15)
10.1.5 Fifth Amendment to Loan and Security Agreement, dated June 29, 2001.
(15)
10.1.6 Revolving Loan Promissory Note, dated June 29, 2001. (15)
10.1.7 Guaranty Agreement, dated June 29, 2001. (15)
19
10.1.8 Pledge Agreement, dated June 29, 2001. (15)
10.2 Aircraft Lease, dated December 20, 2000, (effective January 1, 2001)
between Talbott Aviation, Inc. and Patterson Energy, Inc. (9)
10.3 Patterson-UTI Energy, Inc. 1993 Stock Incentive Plan, as amended. (10)
10.4 Patterson-UTI Energy, Inc. Non-Employee Directors' Stock Option Plan,
as amended. (11)
10.5 Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term
Incentive Plan. (12)
10.6 Amended and Restated Non-Employee Director Stock Option Plan of
Patterson-UTI Energy, Inc. (13)
10.7 Amended and Restated Patterson-UTI Energy, Inc. 1996 Employee Stock
Option Plan. (13)
10.8 1997 Stock Option Plan of DSI Industries, Inc. (12)
10.9 Model Form Operating Agreement. (14)
10.10 Form of Drilling Bid Proposal and Footage Drilling Contract. (14)
10.11 Form of Turnkey Drilling Agreement. (14)
----------
20
(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 on 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 by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated October 3, 2000 and filed on November 6,
2000.
(5) Incorporated by reference to Item 16, "Exhibits" to Registration
Statement on Form S-3 filed on January 8, 2001.
(6) Incorporated herein by reference to Joint Proxy Statement/Prospectus
filed on March 14, 2001.
(7) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated and filed on May 8, 2001.
(8) Incorporated by reference to Item 2, "Exhibits" to Registration
Statement on For 8-A filed on January 14, 1997.
(9) 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.
(10) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 333-47917) filed on March 13, 1998.
(11) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 33-39471) filed on November 4, 1997.
(12) Incorporated herein by reference to Item 8, "Exhibits" to
Post-Effective Amendment No. 1 to Registration Statement on Form S-8
(file No. 333-60470) filed on July 25, 2001.
(13) Incorporated herein by reference to Item 8, "Exhibits" to
Post-Effective Amendment No.1 to Registration Statement on Form S-8
(file No. 333-60466) filed on July 25, 2001.
(14) Incorporated by reference to Item 27, "Exhibits" to Registration
Statement on Form SB-2 (File No. 33-68058-FW) filed on August 30, 1993.
(15) 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, 2001,
filed on August 1, 2001.
21
(b) REPORTS ON FORM 8-K.
The following reports on Form 8-K were filed:
(1) Report dated May 8, 2001 announcing selected unaudited proforma
combined financial statements as of and for the three month period
ended March 31, 2001, to give effect to the merger of Patterson
Energy, Inc. and UTI Energy Corp., filed July 23, 2001.
22
SIGNATURES
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-UTI ENERGY, INC.
By: /s/ Cloyce A. Talbott
----------------------------------------
Cloyce A. Talbott
Chief Executive Officer
By: /s/ Jonathan D. Nelson
---------------------------------------
Jonathan D. Nelson
Vice President-Finance
Chief Financial Officer
DATED: October 31, 2001
23
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.4 Amendment to Rights Agreement dated as of October 23, 2001.
</Table>
24