UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
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[x]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2004 |
OR
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[ ]
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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.
| 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) |
(325) 574-6300
(Registrant’s telephone number, including area code)
N/A
(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 [ ] |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
| Yes [x] | No [ ] |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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Certification of CEO Pursuant to Rule 13a-14(a)
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Certification of CFO Pursuant to Rule 13a-14(a)
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Certification of CEO & CFO Pursuant to Section 906
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| Restated Certificate of Incorporation | ||||||||
| Amendment to Restated Certificate of Incorporation | ||||||||
| Restricted Stock Agreement - Mark S. Siegel | ||||||||
| Restricted Stock Agreement - Cloyce A. Talbott | ||||||||
| Restricted Stock Agreement - A. Glenn Patterson | ||||||||
| Restricted Stock Agreement - Kenneth N. Berns | ||||||||
| Restricted Stock Agreement - Jonathan D. Nelson | ||||||||
| Restricted Stock Agreement - John E. Vollmer III | ||||||||
| Amendment to the Amended and Restated 1997 Long-Term Incentive Plan | ||||||||
| Certication of Chief Executive Officer | ||||||||
| Certication of Chief Financial Officer | ||||||||
| Certification of CEO and CFO Pursuant to Section 906 | ||||||||
2
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
Non-Cash investing and financing activities:
In February 2004, the Company completed its merger with TMBR/Sharp
Drilling, Inc. (“TMBR”) in which one of its wholly-owned subsidiaries acquired
100% of the remaining outstanding shares of TMBR for a net cash payment of
approximately $32.5 million ($40.4 million paid to TMBR shareholders less $7.9
million in cash acquired in the transaction) and the issuance of 2.78 million
shares of the Company’s common stock valued at $17.82 per share, adjusted to
reflect the two-for-one stock split in the form of a stock dividend on June 20, 2004.
The assets of TMBR included 18 land-based drilling rigs and related equipment,
shop facilities, equipment yards and their oil and natural gas properties. The
transaction was accounted for as a business combination and the purchase price was allocated among the assets acquired and liabilities assumed
based on their estimated fair market values (See Note 2).
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The interim condensed consolidated financial statements include the
accounts of Patterson-UTI Energy, Inc. (the “Company”) and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.
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, 2003, as presented herein, was derived from the
audited balance sheet of the Company. These unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2003, as amended.
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 (see Note 4 of these Notes to Unaudited Condensed
Consolidated Financial Statements).
The Company provides a dual presentation of its earnings per share in its
Condensed Consolidated Statements of Income: Basic Earnings per Share (“Basic
EPS”) and Diluted Earnings per Share (“Diluted EPS”). Basic EPS is computed
using the weighted average number of shares outstanding during the periods
presented. Diluted EPS includes common stock equivalents, generally stock
options and warrants which are dilutive to earnings per share. For the three
months ended June 30, 2004 and 2003, dilutive securities included in the
calculation of Diluted EPS were 2.4 million shares and 3.9 million shares,
respectively. For the six months ended June 30, 2004 and 2003, dilutive
securities included in the calculation of Diluted EPS were 2.8 million shares
and 3.5 million shares, respectively. For the three and six months ended June
30, 2004, there were 540,000 potentially dilutive options and warrants which
were excluded from the calculation of Diluted EPS as their exercise price was
greater than the average market price for the period. For the six months ended
June 30, 2003, there were 30,000 potentially dilutive options and warrants
which were excluded from the calculation of Diluted EPS as their exercise price
was greater than the average market price for the period.
On April 28, 2004, the Company’s Board of Directors authorized a
two-for-one stock split in the form of a stock dividend which was distributed
on June 30, 2004 to holders of record on June 14, 2004. At June 30, 2004, an
adjustment was made to reclassify an amount from retained earnings to common
stock to account for the par value of the common stock issued as a
stock dividend.
This adjustment had no overall effect on equity. The June 30, 2003 balance
sheet was not restated as a result of this transaction; however, historical
earnings per share amounts included in the statements of income and elsewhere
in this report have been restated as if the two-for-one stock split had
occurred on January 1, 2003.
The results of operations for the three and six months ended June 30, 2004
are not necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the 2003 consolidated
financial statements in order for them to conform with the 2004 presentation.
7
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
On February 11, 2004, the Company completed its merger with TMBR/Sharp
Drilling, Inc. (“TMBR”), a Texas corporation, in which one of its wholly-owned
subsidiaries acquired 100 % of the remaining outstanding shares of TMBR.
Operations of TMBR subsequent to February 11, 2004, are included in the
Company’s consolidated financial statements. The transaction was accounted for
as a business combination and the purchase price was allocated among the assets
acquired and liabilities assumed based on their estimated fair market values.
The assets of TMBR included 18 land-based drilling rigs and related equipment,
shop facilities, equipment yards and their oil and natural gas properties.
The purchase price was calculated as follows (in thousands, except per
share data and exchange ratio):
The purchase price was allocated among assets acquired and liabilities
assumed based on their estimated fair market values as follows (in thousands):
The purchase price allocation is based on preliminary estimates, including
estimates of federal tax contingencies, which are subject to change once
additional information becomes available. Changes to these estimates could
result in changes to the purchase price allocation.
The Company acquired TMBR to increase its productive asset base in the
Permian Basin, which is one of the most active land drilling regions in the
U.S. TMBR was well established in the contract drilling industry and
maintained favorable customer relationships. Goodwill was recognized in the
transaction as a result of these factors.
8
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The following represents pro-forma unaudited financial information as if
the merger had been completed on January 1, 2003 (in thousands, except per
share amounts):
Since the merger was completed on February 11, 2004, and the results of
TMBR have been included subsequent to that date, no pro-forma information for
the three months ended June 30, 2004 is necessary.
At June 30, 2004, the Company had seven stock-based employee compensation
plans, of which three were active. The Company accounts for those plans under
the recognition and measurement principles of APB Opinion No. 25, “Accounting
for Stock Issued to Employees,” and related interpretations. During the second
quarter of 2004, the Company granted restricted shares of the Company’s common
stock (the “Restricted Shares”) to certain key employees under the
Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended. As
required by APB Opinion No. 25, the Restricted Shares were valued based upon
the market price of the Company’s common stock on the date of the grant. The
resulting value is being amortized over the vesting period of the stock.
Compensation expense of $165,000, net of tax, was included in net income for
the three and six months ended June 30, 2004. Other than the Restricted Shares
discussed above, no additional stock-based employee compensation cost is
reflected in net income, as all options granted under the plans discussed above
had an exercise price equal to the market value of the underlying common stock
on the date of grant. The following table illustrates the effect on net income
and net income per share if the Company had applied the fair value recognition
provisions of Financial Accounting Standards Board Statement No. 123,
“Accounting for Stock-Based Compensation,” to stock-based employee compensation
(in thousands, except per share amounts):
9
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The following table illustrates the Company’s comprehensive income
including the effects of foreign currency translation adjustments for the three
and six months ended June 30, 2004 and 2003 (in thousands):
10
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
Our revenues, operating profits and identifiable assets are primarily
attributable to four business segments: (i) contract drilling of oil and
natural gas wells, (ii) pressure pumping services and (iii) drilling and
completion fluid services to operators in the oil and natural gas industry, and
(iv) the exploration, development, acquisition and production of oil and
natural gas. Each of these segments represents a distinct type of business
based upon the type and nature of services and products offered. These
segments have separate management teams which report to the Company’s chief
executive officer and have distinct and identifiable revenues and expenses.
Separate financial data for each of our four business segments is provided
below (in thousands).
11
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The Financial Accounting Standards Board issued Interpretation No. 46R,
“Consolidation of Variable Interest Entities” (“FIN 46R”) which addresses the
consolidation of variable interest entities (“VIEs”) by business enterprises
that are the primary beneficiaries. A VIE is an entity that does not have
sufficient equity investment at risk to permit it to finance its activities
without additional subordinated financial support, or whose equity investors
lack the characteristics of a controlling financial interest. The primary
beneficiary of a VIE is the enterprise that has the majority of the risks or
rewards associated with the VIE. The Company believes it has no material
interests in VIEs that require disclosure or consolidation under FIN 46R.
In accordance with Statement of Financial Accounting Standards No. 142,
“Goodwill and Other Intangible Assets,” goodwill is evaluated to determine if
fair value of the asset has decreased below its carrying value. At December
31, 2003, we performed the annual goodwill evaluation and determined no
adjustment to impair goodwill was necessary. With respect to our drilling and
completion fluids business, the determination that no impairment existed as of
December 31, 2003, was based on our expectations of improvement in the results
of operations for that business segment. If the expected improvement in results
does not continue to occur, all or part of the goodwill of approximately $10
million associated with that business segment may be determined to be impaired.
Goodwill as of June 30, 2004 and December 31, 2003 are as follows (in
thousands):
During the second quarter of 2004, the Company entered into an agreement
with its workers’ compensation insurance carrier to place restrictions on
approximately $11.3 million in cash which is to be used as collateral for
losses which may become payable under the terms of the underlying insurance
contracts. The agreement restricts the Company from using the cash in
operations for an indefinite period; however, the agreement does allow the
Company to replace the cash with another form of collateral (such as a letter
of credit) acceptable to the insurance carrier. The restricted cash is
included in other long-term assets at June 30, 2004.
During 2002, the Company acquired approximately 19.5% of the outstanding
shares of TMBR. Accordingly, the Company accounted for its investment using a
method other than the equity method. On February 11, 2004, the Company
acquired 100% of the remaining outstanding shares of TMBR. Accordingly, the
Company was required to retroactively account for its investment using the
equity method of accounting. Therefore, the Company has restated its prior
period financial statements to reflect the equity method of accounting for its investment in TMBR for all
prior periods.
12
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The following table presents the restated balances as of December 31, 2003
and for the three and six months ended June 30, 2003 using the equity method of
accounting for its investment in TMBR (in thousands):
Accrued expenses consisted of the following at June 30, 2004, and December
31, 2003 (in thousands):
13
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
The FASB issued Statement of Financial Accounting Standards No. 143,
“Accounting for Asset Retirement Obligations” (“SFAS No. 143”), in June 2001.
SFAS No. 143 requires that, beginning in 2003, we record a liability for the
estimated costs to be incurred in connection with the abandonment of oil and
natural gas properties in the future. We recorded a liability of approximately
$1.1 million in the first quarter of 2003 upon initial adoption of SFAS No.
143. The following table describes the changes to our asset retirement
obligations during the first six months of 2004 (in thousands):
A charge of $469,000 (net of tax) was recorded as a cumulative effect of a
change in accounting principle for the quarter ended March 31, 2003. The
change relates to the cost associated with the future abandonment of oil and
natural gas properties. There was no effect on diluted earnings per share as a
result of the change in accounting principle for the three and six months ended June 30, 2003.
During the second quarter of 2004, the Company entered into an agreement
with its workers’ compensation insurance carrier to place restrictions on
approximately $11.3 million in cash which is to be used as collateral for
losses which may become payable under the terms of the underlying insurance
contracts. The agreement restricts the Company from using the cash in
operations for an indefinite period, however, the agreement does allow the
Company to replace the cash with another form of collateral (such as a letter
of credit) acceptable to the insurance carrier. The restricted cash is
included in other long-term assets at June 30, 2004.
The Company maintains letters of credit in the aggregate amount of $38.0
million for the benefit of various insurance companies as collateral for
retrospective premiums and retained losses which could become payable under the
terms of the underlying insurance contracts. These letters of credit expire at
various times during each calendar year. No amounts have been drawn under the
letters of credit.
Westfort Energy LTD and Westfort Energy (US) LTD f/k/a Canadian Delta,
Inc. (“Westfort”), filed a lawsuit against two of the Company’s subsidiaries,
Patterson Petroleum LP and Patterson Drilling Company LP, in the Circuit Court,
Rankin County, Mississippi, Case No. 2002-18. The lawsuit relates to a letter
agreement entered into in July 2000 between Patterson Petroleum LP and Westfort
concerning the drilling of a daywork well in Mississippi (the “Well”). This
lawsuit was filed by Westfort after Patterson Petroleum LP made demand on
Westfort for payment of the contract drilling services. Westfort’s lawsuit has
been dismissed without prejudice. In its lawsuit, Westfort alleged breach of
contract, fraud, and negligence causes of action. Westfort sought alleged
monetary damages, the return of shares of Westfort stock, unspecified damages
from alleged lost profits, lost use of income stream, and additional operating
expenses, along with alleged punitive damages to be determined by the jury, but
not less than 25% of the Company’s net worth.
Patterson Petroleum LP, LLLP and Patterson-UTI Drilling Company LP, LLLP,
subsidiaries of the Company, filed a lawsuit against Westfort to collect monies
owed concerning the drilling of the Well and to foreclose the lien filed by the
subsidiaries. The Westfort entities filed for bankruptcy in May 2003. The
Westfort bankruptcies were dismissed with prejudice in April 2004. On June 30,
2004, the subsidiaries of the Company obtained an Agreed Judgment against
Westfort for approximately $5.1 million, plus attorneys’ fees, post-judgment
interest, recognition
14
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
We are also party to various legal proceedings arising in the normal
course of our business. We do not believe that the outcome of these
proceedings, either individually or in the aggregate, will have a material
adverse effect on our financial condition.
On April 28, 2004, the Company’s Board of Directors authorized a
two-for-one stock split in the form of a stock dividend which was distributed
on June 30, 2004 to holders of record on June 14, 2004. At June 30, 2004, an
adjustment was made to reclassify an amount from retained earnings to common
stock to account for the par value of the common stock issued as a
stock dividend.
This adjustment had no overall effect on equity. The prior year balance sheet
was not restated as a result of this transaction; however, historical earnings
per share amounts included in the statements of income and elsewhere in this
report have been restated as if the two-for-one stock split had occurred on
January 1, 2003.
On April 28, 2004, the Company’s Board of Directors approved the
initiation of a quarterly cash dividend on each share of the Company’s common
stock. The first quarterly dividend in the amount of $0.02 per share, or
approximately $3.3 million was paid to holders of record on May 17, 2004 and
paid on June 2, 2004. The amount and timing of all dividend payments is,
however, subject to the discretion of the Board of Directors and will depend
upon business conditions, results of operations, financial conditions and other
factors.
On June 7, 2004, the Company’s Board of Directors authorized a stock
buyback program for the purchase of up to $30 million of outstanding shares of
the Company’s common stock. During the second quarter of 2004, the Company
purchased 100,000 shares of its common stock in the open market for approximately $1.5 million.
These shares are included in treasury stock at June 30, 2004.
During the second quarter of 2004, the Company granted the Restricted
Shares to certain key employees under the Patterson-UTI Energy, Inc. 1997
Long-Term Incentive Plan, as amended. As required by APB Opinion No. 25, the
Restricted Shares were valued based upon the market price of the Company’s
common stock on the date of the grant. The resulting value is being amortized
over the vesting period of the stock. Compensation expense of $165,000, net of
tax, was included in net income for the three and six months ended June 30,
2004.
On June 28, 2004, the Company’s Board of Directors approved a cash
dividend on each share of its common stock in the amount of $0.02 per share.
The dividend is to be paid to holders of record on August 16, 2004 and paid on
September 1, 2004.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management Overview
— We are a leading provider of contract services to
the North American oil and natural gas industry. Our services primarily involve
the drilling, on a contract basis, of land-based oil and natural gas wells and
to a lesser extent, we provide pressure pumping services and drilling and
completion fluid services. In addition to the aforementioned contract services,
we also engage in the development, exploration, acquisition and production of
oil and natural gas. For the three and six months ended June 30, 2004 and 2003,
our operating revenues consisted of the following (dollars in thousands):
We provide our contract services to oil and natural gas operators in North
America. Our contract drilling operations are focused in various regions of
Texas, New Mexico, Oklahoma, Louisiana, Mississippi, Colorado, Utah, Wyoming
and Western Canada while our pressure pumping services are focused primarily in
the Appalachian Basin. Our drilling and completion fluids services are provided
to operators in Texas, New Mexico, Oklahoma, the Gulf Coast regions of Texas
and Louisiana and the Gulf of Mexico. Our oil and natural gas operations are
primarily focused in Texas, New Mexico and Mississippi.
We have been a leading consolidator of the domestic land-based contract
drilling industry over the past several years increasing our drilling fleet to
361 rigs, which we believe is the second largest drilling fleet in North
America. Growth by acquisition has been a corporate strategy intended to
expand both revenues and market share.
The profitability of our business is most readily assessed by two primary
indicators: our average number of rigs operating and our average revenue per
operating day. During the second quarter of 2004, our average number of rigs
operating increased to 203 (including an average of ten rigs acquired from
TMBR) from 197 (including an average of five rigs acquired from TMBR) in the first quarter of 2004 and 195 in the second quarter of
2003. Our average revenue per operating day increased to $10,190 in the second
quarter of 2004 from $9,970 in the first quarter of 2004 and $9,240 in the
second quarter of 2003.
Our revenues, profitability and cash flows are highly dependent upon the
market prices of oil and natural gas. During periods of improved commodity
prices, the capital spending budgets of oil and natural gas operators tend to
expand, which results in increased demand for our contract services.
Conversely, in periods of time when these commodity prices deteriorate, the
demand for our contract services generally weakens and we experience downward
pressure on pricing for our services. Our operations are also impacted by
competition, the availability of excess equipment, labor shortages and various
other factors which are more fully described as risk factors in our “Forward
Looking Statements and Cautionary Statements 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,
2003, as amended, beginning
on page 15.
Management believes that the liquidity of our balance sheet as of June 30,
2004, which includes approximately $175 million in working capital (including
$63 million in cash), no long term debt and $62 million available under our
existing $100 million line of credit (availability of $38 million is reserved
for outstanding letters of credit), provides us with the ability to pursue
acquisition opportunities, expand into new regions, make improvements to our
assets and survive downturns in our industry.
Commitments and Contingencies
— During the second quarter of 2004, the
Company entered into an agreement with its workers’ compensation insurance
carrier to place restrictions on approximately $11.3 million in cash which is
to be used as collateral for losses which may become payable under the terms of
the underlying insurance contracts. The agreement restricts the Company from
using the cash in operations for an indefinite period, however, the agreement
does allow the Company to replace the cash with another form of collateral
(such as a letter of credit) acceptable to the insurance carrier. The
restricted cash is included in other long-term assets at June 30, 2004.
16
We have no other commitments or contingencies which require disclosure in
our financial statements other than letters of credit totaling $38.0 million at
June 30, 2004, maintained for the benefit of various insurance companies as
collateral for retrospective premiums and retained losses which may become
payable under the terms of the underlying insurance contracts. No amounts have
been drawn under the letters of credit.
Trading and Investing
— We have not engaged in trading activities that
include high-risk securities, such as derivatives and non-exchange traded
contracts. We invest cash primarily in highly liquid, short-term investments
such as overnight deposits, money markets, and highly rated municipal and
commercial bonds.
Description of Business
— As a leading provider of onshore contract
drilling services, we currently own 361 land-based drilling rigs. Our pressure
pumping services consist primarily of well stimulation and cementing for
completion of new wells and remedial work on existing wells. Our drilling and
completion fluids services are used to control pressure when drilling oil and
natural gas wells. We are also engaged in the development, exploration,
acquisition, and production of oil and natural gas.
The
contract drilling business experienced many downturns in demand over
the last several years. During these periods, there have been substantially more
drilling rigs available than necessary to meet demand in most operational and
geographic segments of the North American land drilling industry. As a result,
drilling contractors have had difficulty sustaining profit margins.
In addition to adverse effects that future declines in demand could have
on the Company, ongoing factors which could adversely affect utilization rates
and pricing, even in an environment of stronger oil and natural gas prices and
increased drilling activity, include:
We cannot predict either the future level of demand for our contract
drilling services or future conditions in the oil and natural gas contract
drilling business.
Critical Accounting Policies
In addition to established accounting policies, our consolidated financial
statements are impacted by certain estimates and assumptions made by
management. The following is a discussion of our critical accounting policies
pertaining to property and equipment, oil and natural gas properties,
intangible assets, revenue recognition, and the use of estimates.
Property
and equipment —
Property and equipment, including betterments
which extend the useful life of the asset, are stated at cost. Maintenance and
repairs are charged to expense when incurred. We provide for the depreciation
of our property and equipment using the straight-line method over the estimated
useful lives. Our method of depreciation does not change when equipment
becomes idle; we continue to depreciate idled equipment on a straight-line
basis. No provision for salvage value is considered in determining
depreciation of our property and equipment. We review our assets, including
intangible assets, for impairment when events or changes in circumstances
indicate that the carrying values of certain assets either exceed their
respective fair values or may not be recovered over their estimated remaining
useful lives. The cyclical nature of our industry has resulted in fluctuations
in rig utilization over periods of time. Management believes that the contract
drilling industry will continue to be cyclical and rig utilization will
fluctuate. Based on management’s expectations of future trends we estimate
future cash flows in our assessment of impairment assuming the following
four-year industry cycle: one year projected with low utilization, one year
projected as a recovery period with improving utilization and the remaining two
years projecting higher utilization. Provisions for asset impairment are
charged to income when estimated future cash flows, on an undiscounted basis,
are less than the asset’s net book value. Impairment charges are recorded
based on discounted cash flows. There were no impairment charges to property
and equipment during
17
the six months ended June 30, 2004 or 2003.
Oil
and natural gas properties
— Oil and natural gas properties are
accounted for using the successful efforts method of accounting. Under the
successful efforts method of accounting, exploration costs which result in the
discovery of oil and natural gas reserves and all development costs are
capitalized to the appropriate well. Exploration costs which do not result in
discovering oil and natural gas reserves are charged to expense when such
determinations are made. In accordance with Statement of Financial Accounting
Standards No. 19, “Financial Accounting and Reporting by Oil and Gas Producing
Companies,” (“SFAS No. 19”) costs of exploratory wells are initially
capitalized to wells in progress until the outcome of the drilling is known.
We review wells in progress quarterly to determine the related reserve
classification. If the reserve classification is uncertain after one year
following the completion of drilling, we consider the costs of the well to be
impaired and recognize the costs as expense. Geological and geophysical costs,
including seismic costs and costs to carry and retain undeveloped properties,
are charged to expense when incurred. The capitalized costs of both
developmental and successful exploratory type wells, consisting of lease and
well equipment, lease acquisition costs, and intangible development costs, are
depreciated, depleted, and amortized on the units-of-production method, based
on petroleum engineer estimates of proved oil and natural gas reserves of each
respective field. The Company reviews its proved oil and natural gas
properties for impairment when an event occurs such as downward revisions in
reserve estimates or decreases in oil and natural gas prices. Proved
properties are grouped by field and undiscounted cash flow estimates are
provided by our reserve engineer. If the net book value of a field exceeds its
undiscounted cash flow estimate, impairment expense is measured and recognized
as the difference between its net book value and discounted cash flow.
Unproved oil and natural gas properties are reviewed quarterly to determine
impairment. The Company’s intent to drill, lease expiration, and abandonment
of area are considered. Assessment of impairment is made on a lease-by-lease
basis. If an unproved property is determined to be impaired, then costs
related to that property are expensed. Impairment expense of approximately
$1.7 million and $2.2 million for the three and six months ended June 30, 2004,
respectively, is included in depreciation, depletion, amortization and
impairment in the accompanying financial statements.
Intangible assets
— Intangible assets consist of goodwill arising from
business combinations. Intangible assets such as goodwill are considered to
have indefinite useful economic lives and are not amortized until their lives
are determined to be finite. As such, we assess impairment of our goodwill
annually or on an interim basis if events or circumstances indicate that the
fair value of the asset has decreased below its carrying value. With respect to
our drilling and completion fluids business, the determination that no
impairment existed as of December 31, 2003, was based on our expectations of
improvement in the results of operations for that business segment. If the
expected improvement in results does not continue to occur, all or part of the
goodwill of approximately $10 million associated with that business segment may
be determined to be impaired.
Revenue recognition —
Revenues are recognized when services are performed,
except for revenues earned under turnkey contract drilling arrangements which
are recognized using the completed contract method of accounting, as described
below. The Company follows the percentage-of-completion method of accounting
for footage contract drilling arrangements. Under the percentage-of-completion
method, management estimates are relied upon in the determination of the total
estimated expenses to be incurred drilling the well. Due to the nature of
turnkey contract drilling arrangements and risks therein, the Company follows
the completed contract method of accounting for such arrangements. Under this
method, all drilling advances and costs related to a well in progress are
deferred and recognized as revenues and expenses in the period the well is
completed. Provisions for losses on incomplete or in-process wells are made
when estimated total costs are expected to exceed estimated total revenues.
In accordance with Emerging Issues Task Force Issue No. 00-14, the Company
recognizes reimbursements received from third parties for out-of-pocket
expenses incurred by the Company as revenues and accounts for out-of-pocket
expenses as direct costs.
Use of estimates —
The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from such estimates.
18
Key estimates used by management include:
Liquidity and Capital Resources
As of June 30, 2004, we had working capital of approximately $175.2
million, including cash and cash equivalents of $63 million. For the six
months ended June 30, 2004, our significant sources of cash flow were
approximately:
We used approximately $33 million to acquire the remaining outstanding
shares of TMBR and approximately $90 million:
Additionally, approximately $3.3 million was used to pay dividends on the
Company’s common stock and approximately $1.5 million was used to buy back
100,000 shares (post stock-split) of the Company’s common stock pursuant to the
stock buyback program authorized by the Company’s Board of Directors on June 7,
2004. Furthermore, restrictions on the Company’s use of approximately $11.3
million were put into place during the second quarter of 2004 as the Company
pledged this cash as collateral for losses which could become payable under the
terms of its workers’ compensation insurance contracts.
In February 2004, the Company completed its merger with TMBR in which one
of the Company’s wholly-owned subsidiaries acquired 100% of the remaining
outstanding shares of TMBR for a net cash payment of approximately $33 million
($40.4 million paid to TMBR shareholders less $7.9 million in cash acquired in
the transaction) and the issuance of 2.78 million shares (post stock-split) of
the Company’s common stock valued at $17.82 per share (post stock-split). The
assets of TMBR included 18 land-based drilling rigs and related equipment, shop
facilities, equipment yards and their oil and natural gas properties. The
transaction was accounted for as a business combination and the purchase price
was allocated among the assets acquired and liabilities assumed based on their
estimated fair market values.
On April 28, 2004, the Company’s Board of Directors approved the
initiation of a quarterly cash dividend on each share of the Company’s common
stock. The first quarterly dividend in the amount of $0.02 per share (post
stock-split), or approximately $3.3 million was paid to holders of record on
May 17, 2004 and paid on June 2, 2004. On July 28, 2004, our Board of Directors
approved a cash dividend of $0.02 per share on each share of our common stock
to be paid on September 1, 2004 to holders of record on August 16, 2004. The
amount and timing of all dividend payments is, however, subject to the
discretion of the Board of Directors and will depend upon business conditions,
results of operations, financial conditions and other factors.
We believe that the current level of cash and short-term investments,
together with cash generated from operations, should be sufficient to meet our
capital needs. From time to time, acquisition opportunities are reviewed. The
timing, size or success of any acquisition and the associated capital
commitments are unpredictable. Over the longer term, 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.
19
Commitments, Contingencies and Other Matters
During the second quarter of 2004, the Company entered into an agreement
with its workers’ compensation insurance carrier to place restrictions on
approximately $11.3 million in cash which is to be used as collateral for
losses which may become payable under the terms of the underlying insurance
contracts. The agreement restricts the Company from using the cash in
operations for an indefinite period, however, the agreement does allow the
Company to replace the cash with another form of collateral (such as a letter
of credit) acceptable to the insurance carrier. The restricted cash is
included in other long-term assets at June 30, 2004.
The Company maintains letters of credit in the aggregate amount of $38.0
million for the benefit of various insurance companies as collateral for
retrospective premiums and retained losses which could become payable under the
terms of the underlying insurance contracts. These letters of credit expire at
various times during each calendar year. No amounts have been drawn under the
letters of credit.
Westfort Energy LTD and Westfort Energy (US) LTD f/k/a Canadian Delta,
Inc. (“Westfort”), filed a lawsuit against two of the Company’s subsidiaries,
Patterson Petroleum LP and Patterson Drilling Company LP, in the Circuit Court,
Rankin County, Mississippi, Case No. 2002-18. The lawsuit relates to a letter
agreement entered into in July 2000 between Patterson Petroleum LP and Westfort
concerning the drilling of a daywork well in Mississippi (the “Well”). This
lawsuit was filed by Westfort after Patterson Petroleum LP made demand on
Westfort for payment of the contract drilling services. Westfort’s lawsuit has
been dismissed without prejudice. In its lawsuit, Westfort alleged breach of
contract, fraud, and negligence causes of action. Westfort sought alleged
monetary damages, the return of shares of Westfort stock, unspecified damages
from alleged lost profits, lost use of income stream, and additional operating
expenses, along with alleged punitive damages to be determined by the jury, but
not less than 25% of the Company’s net worth.
Patterson Petroleum LP, LLLP and Patterson-UTI Drilling Company LP, LLLP,
subsidiaries of the Company, filed a lawsuit against Westfort to collect monies
owed concerning the drilling of the Well and to foreclose the lien filed by the
subsidiaries. The Westfort entities filed for bankruptcy in May 2003. The
Westfort bankruptcies were dismissed with prejudice in April 2004. On June 30,
2004, the subsidiaries of the Company obtained an Agreed Judgment against Westfort for
approximately $5.1 million, plus attorneys’ fees, post-judgment interest,
recognition of the lien, and order of sale. These amounts are not reflected in
the Company’s consolidated financial statements for the period ended June 30,
2004 and other amounts which have been deemed uncollectible have been reserved.
We are also party to various legal proceedings arising in the normal
course of our business. We do not believe that the outcome of these
proceedings, either individually or in the aggregate, will have a material
adverse effect on our financial condition.
20
Results of Operations
The following tables summarize operations by business segment for the three
months ended June 30, 2004 and 2003:
Revenues and direct operating costs increased as a result of the increased
number of operating days, as well as an increase in the average revenue and
average direct operating costs per operating day. Revenue per operating day
increased as a result of increased pricing for our drilling services. Direct
operating costs per operating day increased primarily as a result of field
personnel pay increases implemented in late 2003. Significant capital
expenditures were incurred during the second quarter of 2004 to modify and
upgrade our existing drilling rigs and to acquire additional related equipment such as drill pipe,
drill collars, engines, fluid circulating systems and various safety enhancement equipment. Increased
depreciation expense was due to significant capital expenditures, including the
acquisition of 19 drilling rigs and related equipment during 2003 and 18
drilling rigs and related equipment acquired during the first quarter of 2004.
Revenues and direct operating costs
increased as a result of the increased number of jobs, as well as an
increase in the average revenue and average direct operating costs
per job. The increase in jobs in the quarter
was largely due to the Company’s continued growth in the Appalachian regions of
Kentucky, Tennessee and West Virginia. General and administrative expenses
increased as a result of the expanding operations of the pressure pumping
segment. Increased depreciation expense for the 2004 quarter was largely due
to the expansion of the pressure pumping segment during 2003 and 2004 and related
expenditures to acquire necessary equipment to facilitate the growth. Capital
expenditures increased in 2004 compared to 2003 due to further expansion of
services into Tennessee as well as equipment modifications and upgrades.
21
Revenues and direct operating costs increased during the second quarter of
2004 compared to the second quarter of 2003 primarily as a result of the
increased number of jobs, as well as an increase in the average revenue and
average direct operating costs per job. Average revenue and direct operating
costs per job increased as a result of an increase in the number of larger jobs
in the Gulf of Mexico.
Oil and natural gas revenues
and direct operating costs
increased in the second quarter of 2004
compared to the second quarter of 2003, primarily due to the acquisition of the
oil and natural gas properties acquired in the merger with TMBR during February
2004 and increased market prices received for oil during the second quarter of
2004. Direct operating costs further increased as a result of $815,000 of dry
hole costs incurred during the 2004 quarter. Depreciation, depletion and
impairment expense increased in 2004 primarily as a result of approximately $1.7
million of expenses incurred to impair certain oil and natural gas properties
during the quarter.
Selling,
general and administrative expenses increased as a result
of increased professional expenses and additional compensation expense of
$263,000 related to the Company’s issuance of restricted shares to certain key
employees of the Company. Bad debt expense increased in 2004 as management
increased its allowance for uncollectible accounts.
22
The following tables summarize operations by business segment for the six
months ended June 30, 2004 and 2003:
Revenues and direct operating costs increased as a result of the increased
number of operating days, as well as an increase in the average revenue and
average direct operating costs per operating day. Revenue per operating day
increased as a result of increased pricing for our drilling services. Direct
operating costs per operating day increased primarily as a result of field
personnel pay increases implemented in late 2003. Significant capital
expenditures were incurred during the first six months of 2004 to modify and
upgrade our existing drilling rigs and to acquire additional related equipment such as drill pipe,
drill collars, engines, fluid circulating systems and various safety enhancement equipment. Increased
depreciation expense was due to significant capital expenditures, including the
acquisition of 19 drilling rigs and related equipment during 2003 and 18
drilling rigs and related equipment acquired during the first quarter of 2004.
Revenues and direct operating costs increased as a result of the increased number of jobs,
as well as an increase in the average revenue and average direct operating costs per job. The increase in jobs in the quarter was
largely due to the Company’s continued growth in the Appalachian regions of
Kentucky, Tennessee and West Virginia. General and administrative expenses
increased as a result of the expanding operations of the pressure pumping
segment. Increased depreciation expense for the 2004 quarter was largely due
to the expansion of the pressure pumping segment during 2003 and 2004 and related
expenditures to acquire necessary equipment to facilitate the growth. Capital
expenditures increased in 2004 compared to 2003 due to further expansion of
services into Tennessee as well as equipment modifications and upgrades.
23
Revenues and direct operating costs increased during the first six months
of 2004 compared to the first six months of 2003 primarily as a result of the
increased number of jobs, as well as an increase in the average revenue and
average direct operating costs per job. Average revenue and direct operating
costs per job increased as a result of an increase in the number of larger jobs
in the Gulf of Mexico.
Oil and natural gas revenues and direct operating costs increased in the first six months of 2004
compared to the first six months of 2003, primarily due to the acquisition of
the oil and natural gas properties acquired in the merger with TMBR during
February 2004 and increased market prices received for oil during the first six
months of 2004. Direct operating costs further increased as a result of
$815,000 of dry hole costs incurred during the 2004 period. Depreciation,
depletion and impairment expense increased in 2004 primarily as a result of
approximately $2.2 million of expenses incurred to impair certain oil and
natural gas properties.
Bad debt expense increased as management increased its allowance
for uncollectible accounts. Other income from operations in 2004 includes
approximately $1.4 million from the sale of used equipment. In 2003, other
income from operations includes a $2.5 million payment received as settlement
for contract drilling services previously provided in Mexico by Norton Drilling
Company Mexico, Inc., a wholly-owned subsidiary of the Company. The receivable
had been reserved as uncollectible at the time of the Company’s acquisition of
Norton Drilling Company Mexico, Inc. in 1999. Other income in 2003 includes
approximately $1.6 million representing the
24
Company’s pro rata share of the net income of TMBR for that six month
period, using the equity method of accounting.
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 all
of our operating 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 factors are beyond our
control. Natural gas prices fell from an average of $6.23 per Mcf in the first
quarter of 2001 to an average of $2.51 per Mcf for the same period in 2002.
During this same period, the average number of our rigs operating dropped by
approximately 50%. The average market price of natural gas improved to $5.45 in
2003 compared to $3.36 in 2002, resulting in an increase in demand for our
drilling services. Our average number of rigs operating increased to 188 in
2003 from 126 in 2002. During the second quarter of 2004, the average market
price of natural gas was $5.55 per Mcf and our average number of rigs operating
increased to 203 (including an average of ten rigs acquired from TMBR). We
expect oil and natural gas prices to continue to be volatile and to affect our
financial condition and operations and ability to access sources of capital.
The
contract drilling business experienced many downturns in demand over
the last several years. During these periods, there have been substantially more
drilling rigs available than necessary to meet demand in most operational and
geographic segments of the North American land drilling industry. As a result,
drilling contractors have had difficulty sustaining profit margins.
Impact of Inflation
We believe that inflation will not have a significant near-term impact on
our financial position.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We currently have no significant exposure to interest rate market risk
because we have no outstanding balance under our credit facility. Should we
incur a balance in the future, we would have exposure associated with the
floating rate of the interest charged on that balance. The revolving credit
facility calls for periodic interest payments at a floating rate ranging from
LIBOR plus 1.75 % to 2.75%. The applicable rate above LIBOR (1.75% at June 30,
2004) is based upon our trailing twelve-month EBITDA (earnings before interest
expense, income taxes, and depreciation, depletion, and amortization expense).
Our exposure to interest rate risk due to changes in LIBOR is not expected to
be material.
We conduct some business in Canadian dollars through our Canadian
land-based drilling operations. The exchange rate between Canadian dollars and
U.S. dollars has fluctuated over the last ten years. If the value of the
Canadian dollar against the U.S. dollar weakens, revenues and earnings of our
Canadian operations will be reduced when they are translated to U.S. dollars.
Also, the value of our Canadian net assets in U.S. dollars may decline.
ITEM 4. Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q,
the effectiveness of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of
1934) was evaluated by our management, with the participation of our Chief
Executive Officer, Cloyce A. Talbott (principal executive officer), and our
Vice President, Chief Financial Officer, Secretary and Treasurer, Jonathan D.
Nelson (principal financial officer). Messrs. Talbott and Nelson have
concluded that our disclosure controls and procedures are effective, as of the
end of the period covered by this Quarterly Report on Form 10-Q, to help ensure
that information we are required to disclose in reports that we file with the
SEC is accumulated and communicated to management and recorded, processed,
summarized and reported within the time periods prescribed by the SEC.
25
There were no changes in our internal control over financial reporting
that occurred during our last fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
FORWARD LOOKING STATEMENTS AND CAUTIONARY STATEMENTS 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 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:
For a more complete explanation of these various factors and others, see
“Forward Looking Statements and Cautionary Statements 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,
2003, as amended, beginning on page 15.
You are cautioned not to place undue reliance on any of our
forward-looking statements, which speak only as of the date of the document or
in the case of documents incorporated by reference, the date of those
documents.
26
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.
June 30,
December 31,
2004
2003
$
63,353
$
100,483
183,505
156,345
—
12,667
15,025
15,206
21,645
16,449
9,819
6,910
293,347
308,060
785,153
693,631
101,360
51,179
—
19,771
13,914
2,686
$
1,193,774
$
1,075,327
$
45,180
$
41,093
11,863
8,545
5,165
6,743
4,301
—
51,658
52,066
118,167
108,447
149,747
142,517
4,906
3,822
272,820
254,786
—
—
—
—
1,700
825
579,314
506,018
(6,488
)
—
354,522
318,419
5,043
6,934
(13,137
)
(11,655
)
920,954
820,541
$
1,193,774
$
1,075,327
Table of Contents
Three Months Ended
Six Months Ended
June 30,
June 30,
2004
2003
2004
2003
$
188,222
$
163,951
$
367,397
$
299,532
14,577
9,800
28,827
18,311
23,424
16,003
41,563
31,851
8,287
5,870
15,502
11,169
234,510
195,624
453,289
360,863
134,387
124,309
262,378
230,737
8,328
5,800
16,416
10,806
19,837
13,922
35,476
28,303
2,768
1,292
4,336
2,371
30,451
24,973
57,734
49,109
7,910
6,813
14,708
13,707
217
82
307
162
(187
)
(720
)
(1,375
)
(3,329
)
203,711
176,471
389,980
331,866
30,799
19,153
63,309
28,997
204
285
455
545
(54
)
(76
)
(130
)
(148
)
172
319
257
1,660
322
528
582
2,057
31,121
19,681
63,891
31,054
14,655
10,642
19,204
13,762
(3,141
)
(3,163
)
4,398
(1,961
)
11,514
7,479
23,602
11,801
19,607
12,202
40,289
19,253
—
—
—
(469
)
$
19,607
$
12,202
$
40,289
$
18,784
$
0.12
$
0.08
$
0.24
$
0.12
$
—
$
—
$
—
$
—
$
0.12
$
0.08
$
0.24
$
0.12
$
0.12
$
0.07
$
0.24
$
0.12
$
—
$
—
$
—
$
—
$
0.12
$
0.07
$
0.24
$
0.11
166,681
161,058
165,211
160,694
169,062
164,914
168,005
164,218
Table of Contents
Common Stock
Accumulated
Number
Additional
other
of
paid-in
Deferred
Retained
comprehensive
Treasury
shares
Amount
capital
compensation
earnings
income
stock
Total
82,483
$
825
$
506,018
$
—
$
318,419
$
6,934
$
(11,655
)
$
820,541
1,388
14
49,462
—
—
—
—
49,476
195
2
6,749
(6,751
)
—
—
—
—
—
—
—
263
—
—
—
263
920
9
8,689
—
—
—
—
8,698
—
—
8,396
—
—
—
—
8,396
—
—
—
—
—
(1,891
)
—
(1,891
)
—
—
—
—
—
—
(1,482
)
(1,482
)
—
—
—
—
(3,336
)
—
—
(3,336
)
84,986
850
—
—
(850
)
—
—
—
—
—
—
—
40,289
—
—
40,289
169,972
$
1,700
$
579,314
$
(6,488
)
$
354,522
$
5,043
$
(13,137
)
$
920,954
Table of Contents
Six Months Ended
June 30,
2004
2003
$
40,289
$
18,784
57,734
49,109
815
—
307
162
4,398
(1,961
)
8,396
5,992
263
—
(1,375
)
(877
)
—
(469
)
(21,969
)
(36,457
)
16,953
25,708
(2,206
)
359
4,445
7,427
(13,333
)
9,852
(4,033
)
840
90,684
78,469
(32,514
)
(32,783
)
(89,723
)
(51,182
)
1,986
1,859
(11,316
)
—
—
(1,304
)
(131,567
)
(83,410
)
(1,482
)
—
(3,336
)
—
8,698
9,488
3,880
9,488
(37,003
)
4,547
(127
)
755
100,483
82,154
$
63,353
$
87,456
$
(130
)
$
(145
)
$
8,000
$
18,530
Table of Contents
1.
Basis of Consolidation and Presentation
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
2.
Recent Acquisitions
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
2.
Recent Acquisitions — (continued)
Three months
Six months ended
ended June 30,
June 30,
2003
2004
2003
$
207,757
$
457,876
$
383,019
12,921
39,990
19,615
12,921
39,990
19,146
$
0.08
$
0.24
$
0.12
$
0.08
$
0.24
$
0.12
3.
Stock-based Compensation
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
4.
Comprehensive Income
Three months ended
Six months ended
June 30,
June 30,
2004
2003
2004
2003
$
19,607
$
12,202
$
40,289
$
18,784
(1,424
)
4,170
(1,891
)
7,071
$
18,183
$
16,372
$
38,398
$
25,855
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
5.
Business Segments
(a)
Corporate and other relates to decisions of the executive management group regarding corporate strategy, credit
risk, loss contingencies and restructuring activities. Due to the non-operating nature of these decisions, the
related income and expenses have been separately presented and excluded from the results of specific
segments. These income and expense items primarily relate to the Drilling segment.
(b)
Corporate assets primarily include cash on hand managed by the parent corporation and certain deferred federal
income tax assets.
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
6.
Recently Issued Accounting Standards
7.
Goodwill
8.
Restricted Cash
9.
Investment in Equity Securities
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
9.
Investment in Equity Securities – (continued)
As Previously
As
Reported
Restated
$
20,274
$
19,771
8,554
6,934
143,490
142,517
316,329
318,419
Three months ended
Six months ended
June 30, 2003
June 30, 2003
As
As
Previously
As
Previously
As
Reported
Restated
Reported
Restated
17,341
16,372
26,094
25,855
77
319
85
1,660
(3,255
)
(3,163
)
(2,560
)
(1,961
)
12,052
12,202
17,808
18,784
$
0.07
$
0.08
$
0.11
$
0.12
$
0.07
$
0.07
$
0.11
$
0.11
10.
Accrued Expenses
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
11.
Asset Retirement Obligation
$
1,163
1,209
(121
)
33
$
2,284
*
Includes $1,091 related to TMBR acquisition.
12.
Commitments, Contingencies and Other Matters
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
12.
Commitments, Contingencies and Other Matters – (continued)
of the lien, and order of sale. These amounts are not reflected in the
Company’s consolidated financial statements for the period ended June 30, 2004
and other amounts which have been deemed uncollectible have been reserved.
13.
Stockholders’ Equity
14.
Subsequent Event
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•
movement of drilling rigs from region to region,
•
reactivation of land-based drilling rigs, or
•
new construction of drilling rigs.
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•
allowance for doubtful accounts,
•
total expenses to be incurred on footage and turnkey drilling contracts,
•
depreciation, depletion, and amortization,
•
asset impairment,
•
reserves for self-insured levels of insurance coverages, and
•
fair values of assets and liabilities assumed.
•
$91 million provided by operations,
•
$9 million from the exercise of stock options and warrants, and
•
$2 million from the proceeds from sales of property and equipment.
•
to make capital expenditures for the betterment and refurbishment of our drilling rigs,
•
for the acquisition and procurement of drilling equipment,
•
to fund capital expenditures for our pressure pumping and
drilling and completion fluids divisions, and
•
to fund leasehold acquisition and exploration and development
of oil and natural gas properties.
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Contract Drilling
2004
2003
% Change
(dollars in thousands)
$
188,222
$
163,951
14.8
%
$
134,387
$
124,309
8.1
%
$
1,080
$
1,094
(1.3
)%
$
24,248
$
20,977
15.6
%
$
28,507
$
17,571
62.2
%
18,473
17,742
4.1
%
$
10.19
$
9.24
10.3
%
$
7.27
$
7.01
3.9
%
361
340
6.2
%
361
334
8.1
%
203
195
4.1
%
56
%
58
%
(3.4
)%
$
42,980
$
27,400
56.9
%
Pressure Pumping
2004
2003
% Change
(dollars in thousands)
$
14,577
$
9,800
48.7
%
$
8,328
$
5,800
43.6
%
$
1,664
$
1,245
33.7
%
$
1,221
$
858
42.3
%
$
3,364
$
1,897
77.3
%
1,578
1,246
26.6
%
$
9.24
$
7.87
17.4
%
$
5.28
$
4.65
13.5
%
$
4,782
$
2,406
98.8
%
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Drilling and Completion Fluids
2004
2003
% Change
(dollars in thousands)
$
23,424
$
16,003
46.4
%
$
19,837
$
13,922
42.5
%
$
1,875
$
1,771
5.9
%
$
546
$
573
(4.7
)%
$
1,166
$
(263
)
N/A
%
593
515
15.1
%
$
39.50
$
31.07
27.1
%
$
33.45
$
27.03
23.8
%
$
416
$
146
184.9
%
Oil and Natural Gas Production and Exploration
2004
2003
% Change
(dollars in thousands, except sales pries)
$
8,287
$
5,870
41.2
%
$
2,768
$
1,292
114.2
%
$
427
$
350
22.0
%
$
4,325
$
2,417
78.9
%
$
767
$
1,811
(57.6
)%
$
3,600
$
2,166
66.2
%
1,171
797
46.9
%
7,335
6,469
13.4
%
$
37.94
$
29.27
29.6
%
$
5.31
$
5.52
(3.8
)%
Corporate and Other
2004
2003
% Change
(in thousands)
$
2,864
$
2,353
21.7
%
$
217
$
82
164.6
%
$
111
$
148
(25.0
)%
$
187
$
720
(74.0
)%
$
204
$
285
(28.4
)%
$
54
$
76
(28.9
)%
$
172
$
319
(46.1
)%
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Contract Drilling
2004
2003
% Change
(dollars in thousands)
$
367,397
$
299,532
22.7
%
$
262,378
$
230,737
13.7
%
$
2,175
$
2,229
(2.4
)%
$
47,249
$
41,483
13.9
%
$
55,595
$
25,083
121.6
%
36,437
33,611
8.4
%
$
10.08
$
8.91
13.1
%
$
7.20
$
6.87
4.8
%
361
340
6.2
%
357
331
7.9
%
200
186
7.5
%
56
%
56
%
—
%
$
71,360
$
40,939
74.3
%
Pressure Pumping
2004
2003
% Change
(dollars in thousands)
$
28,827
$
18,311
57.4
%
$
16,416
$
10,806
51.9
%
$
3,457
$
2,756
25.4
%
$
2,366
$
1,667
41.9
%
$
6,588
$
3,082
113.8
%
3,266
2,307
41.6
%
$
8.83
$
7.94
11.2
%
$
5.03
$
4.68
7.5
%
$
10,604
$
6,119
73.3
%
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Drilling and Completion Fluids
2004
2003
% Change
(dollars in thousands)
$
41,563
$
31,851
30.5
%
$
35,476
$
28,303
25.3
%
$
3,585
$
3,548
1.0
%
$
1,114
$
1,157
(3.7
)%
$
1,388
$
(1,157
)
N/A
%
1,111
1,001
11.0
%
$
37.41
$
31.82
17.6
%
$
31.93
$
28.27
12.9
%
$
627
$
277
126.4
%
Oil and Natural Gas Production and Exploration
2004
2003
% Change
(dollars in thousands, except sales pries)
$
15,502
$
11,169
38.8
%
$
4,336
$
2,371
82.9
%
$
840
$
732
14.8
%
$
6,783
$
4,580
48.1
%
$
3,543
$
3,486
1.6
%
$
7,132
$
4,316
65.2
%
1,050
776
35.3
%
7,488
5,943
26.0
%
$
36.14
$
31.36
15.2
%
$
5.35
$
5.35
—
%
Corporate and Other
2004
2003
% Change
(in thousands)
$
4,651
$
4,442
4.7
%
$
307
$
162
89.5
%
$
222
$
222
—
%
$
1,375
$
3,329
(58.7
)%
$
455
$
545
(16.5
)%
$
130
$
148
(12.2
)%
$
257
$
1,660
(84.5
)%
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•
Changes in prices and demand for oil and natural gas;
•
Changes in demand for contract drilling, pressure pumping
and drilling and completion fluids services;
•
Shortages of drill pipe and other drilling equipment;
•
Labor shortages, primarily qualified drilling personnel;
•
Effects of competition from other drilling contractors
and providers of pressure pumping and drilling and completion
fluids services;
•
Occurrence of operating hazards and uninsured losses inherent in our business operations; and
•
Environmental and other governmental regulation.
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PART II — OTHER INFORMATION
ITEM 1. Legal Proceeding.
Westfort Energy LTD and Westfort Energy (US) LTD f/k/a Canadian Delta,
Inc. (“Westfort”), filed a lawsuit against two of the Company’s subsidiaries,
Patterson Petroleum LP and Patterson Drilling Company LP, in the Circuit Court,
Rankin County, Mississippi, Case No. 2002-18. The lawsuit relates to a letter
agreement entered into in July 2000 between Patterson Petroleum LP and Westfort
concerning the drilling of a daywork well in Mississippi (the “Well”). This
lawsuit was filed by Westfort after Patterson Petroleum LP made demand on
Westfort for payment of the contract drilling services. Westfort’s lawsuit has
been dismissed without prejudice. In its lawsuit, Westfort alleged breach of
contract, fraud, and negligence causes of action. Westfort sought alleged
monetary damages, the return of shares of Westfort stock, unspecified damages
from alleged lost profits, lost use of income stream, and additional operating
expenses, along with alleged punitive damages to be determined by the jury, but
not less than 25% of the Company’s net worth.
Patterson Petroleum LP, LLLP and Patterson-UTI Drilling Company LP, LLLP,
subsidiaries of the Company, filed a lawsuit against Westfort to collect monies
owed concerning the drilling of the Well and to foreclose the lien filed by the
subsidiaries. The Westfort entities filed for bankruptcy in May 2003. The
Westfort bankruptcies were dismissed with prejudice in April 2004. On June 30,
2004, the subsidiaries of the Company obtained an Agreed Judgment against Westfort for
approximately $5.1 million, plus attorneys’ fees, post-judgment interest,
recognition of the lien, and order of sale. These amounts are not reflected in
the Company’s consolidated financial statements for the period ended June 30,
2004 and other amounts which have been deemed uncollectible have been reserved.
ITEM 2. Changes in Securities and Use of Proceeds.
The following table summarizes common stock purchased during the second
quarter of 2004 (post stock-split):
(1) On June 7, 2004, the Company’s Board of Directors authorized a stock
buyback program for the purchase of up to $30 million of outstanding shares of
the Company’s common stock.
ITEM 4. Submission of Matters to a Vote of Security Holders.
On June 29, 2004, the Company held its Annual Meeting of Stockholders. At
the meeting, the stockholders voted on the following matters:
27
The nine nominees to the Board of Directors of the Company were elected at
the meeting, and the other proposals received the affirmative vote required for
approval. The number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes, were as follows:
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are filed herewith or incorporated by reference, as
indicated:
28
(b) Reports on
Form 8-K
.
On June 7, 2004, the Company furnished a Current Report on Form 8-K,
dated June 7, 2004, furnishing the Company’s public announcement relating
to authorization by the Board of Directors of a stock buyback program for
the purchase of up to $30 million of the Company’s outstanding common
stock.
On April 29, 2004, the Company furnished a Current Report on Form
8-K, dated April 28, 2004, furnishing the Company’s public announcement
of a quarterly cash dividend and declaration of a two-for-one stock split
as well as its financial results for the quarter ended March 31, 2004,
including the Condensed Consolidated Statements of Income and Additional
Financial and Operating Data.
29
(d) Maximum
Number (or
(c) Total Number
Approximate
of Shares
Dollar Value) of
Purchase as Part
Shares (of Units)
(a) Total Number
(b) Average Price
of Publicly
That May Yet Be
of Shares
Paid
Announced
Purchased Under the
Purchased
Per Share
Plans or Programs
Plans or Programs(1)
100,000
$
14.82
100,000
$
28,518,000
1.
The election of nine persons to serve as directors of the
Company.
2.
An amendment to the Company’s Restated Certificate of
Incorporation to increase the authorized shares of the Company’s
common stock from 200,000,000 shares to 300,000,000 shares.
3.
Re-approval of the criteria upon which performance objectives
are currently based in the Company’s Amended and Restated 1997
Long-Term Incentive Plan (the “1997 Plan”).
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4.
An amendment to the 1997 Plan to increase the aggregate annual
amount of cash that may be received as a performance award by a
participant under the 1997 Plan and to amend the criteria upon which
performance objectives are currently based in the 1997 Plan.
5.
Ratification of the appointment of PricewaterhouseCoopers LLP
as the independent accountants of the Company for the fiscal year
ending December 31, 2004.
Votes For
Votes Withheld
76,697,198
2,219,885
76,753,043
2,164,040
76,705,317
2,211,766
74,815,566
4,101,517
75,112,777
3,804,306
76,500,309
2,416,774
76,494,465
2,422,618
77,474,444
1,442,639
77,475,191
1,441,892
Broker
Votes For
Votes Against
Abstentions
Non-votes
76,257,778
2,314,558
344,747
0
Broker
Votes For
Votes Against
Abstentions
Non-votes
62,880,881
3,258,830
833,438
11,943,934
Broker
Votes For
Votes Against
Abstentions
Non-votes
61,643,497
4,493,387
836,265
11,943,934
Votes For
Votes Against
Abstentions
Broker
Non-votes
76,864,634
1,739,274
313,175
0
3.1
Restated Certificate of Incorporation, as amended.*
3.2
Amendment to Restated Certificate of Incorporation.*
3.3
Amended and Restated Bylaws.
(2)
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10.1
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and Mark S. Siegel (Chairman of the Board and Director of
Patterson-UTI Energy, Inc.) *
10.2
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and Cloyce A. Talbott (Chief Executive Officer and Director
of Patterson-UTI Energy, Inc.)*
10.3
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and A. Glenn Patterson (President, Chief Operating Officer
and Director of Patterson-UTI Energy, Inc.)*
10.4
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and Kenneth N. Berns (Senior Vice President and Director of
Patterson-UTI Energy, Inc.)*
10.5
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and Jonathan D. Nelson (Vice President, Chief Financial
Officer, Secretary and Treasurer of Patterson-UTI Energy, Inc.)*
10.6
Restricted Stock Agreement dated April 28, 2004 between Patterson-UTI
Energy, Inc. and John E. Vollmer III (Senior Vice President – Corporate
Development of Patterson-UTI Energy, Inc.)*
10.7
Amendment to the Amended and Restated 1997 Long-Term Incentive Plan.*
31.1
Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.*
31.2
Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.*
32.1
Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
*
Filed herewith.
(1)
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, 2003.
(2)
Incorporated herein by reference to Item 14, “Exhibits, Financial
Statement Schedules and Reports on Form 8-K” to Annual Report on Form 10-K
for the fiscal year ended December 31, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly 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 | ||||
| (Principal Executive Officer) Chief Executive Officer | ||||
| By: | /s/ Jonathan D. Nelson | |||
| Jonathan D. Nelson | ||||
|
(Principal Accounting Officer)
Vice President, Chief Financial Officer, Secretary and Treasurer |
||||
DATED: August 9, 2004
30
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
PATTERSON-UTI ENERGY, INC.
(Originally incorporated on October 14, 1993 under the name Patterson Energy, Inc.)
FIRST: The name of the Corporation is Patterson-UTI Energy, Inc.
SECOND: The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock that the Corporation shall have authority to issue is two hundred one million (201,000,000) shares, of which two hundred million (200,000,000) shares shall be Common Stock, having a par value of $0.01 per share, and one million (1,000,000) shares shall be Preferred Stock, having a par value of $0.01 per share. The shares of such classes of stock shall have the following express terms:
Section 1. PREFERRED STOCK
1.1 Authority of the Board of Directors to Create Series. The Board of Directors is hereby expressly granted authority, to the full extent now or hereafter permitted herein and by the General Corporation Law of the State of Delaware, at any time or from time to time, by resolution or resolutions, to create one or more series of Preferred Stock, to fix the authorized number of shares of any series (which number of shares may vary as between series and be changed from time to time by like action), and to fix the terms of such series, including, but not limited to, the following:
(a) the designation of such series, which may be by distinguishing number, letter, or title;
(b) the rate or rates at which shares of such series shall be entitled to receive dividends; the periods in respect of which dividends are payable; the conditions upon, and times of payment of, such dividends; the relationship and preference, if any, of such dividends to dividends payable on any other class or classes or any other series of stock; whether such dividends shall be cumulative and, if cumulative, the date or dates from which such dividends
shall accumulate; and the other terms and conditions applicable to dividends upon shares of such series;
(c) the rights of the holders of the shares of such series in case the Corporation be liquidated, dissolved or wound up (which may vary depending upon the time, manner, or voluntary or involuntary nature or other circumstances of such liquidation, dissolution, or winding up) and the relationship and preference, if any, of such rights to rights of holders of shares of stock of any other class or classes or any other series of stock;
(d) the right, if any, of the Corporation to redeem shares of such series at its option, including any limitation of such right, and the amount or amounts to be payable in respect of the shares of such series in case of such redemption (which may vary depending on the time, manner, or other circumstances of such redemption), and the manner, effect, and other terms and conditions of any such redemption;
(e) the obligation, if any, of the Corporation to purchase, redeem, or retire shares of such series and/or to maintain a fund for such purpose, and the amount or amounts to be payable from time to time for such purpose or into such fund, or the number of shares to be purchased, redeemed, or retired, the per share purchase price or prices, and the other terms and conditions of any such obligation or obligations;
(f) the voting rights, if any, which, if granted, may be full, special, or limited, to be given the shares of such series, including, without limiting the generality of the foregoing, the right, if any, as a series or in conjunction with other series or classes, to elect one or more members of the Board of Directors either generally or at certain times or under certain circumstances, and restrictions, if any, on particular corporate acts without a specified vote or consent of holders of such shares (such as, among others, restrictions on modifying the terms of such series or of the Preferred Stock, restricting the permissible terms of other series or the permissible variations between series of the Preferred Stock, authorizing or issuing additional shares of the Preferred Stock, creating debt, or creating any class of stock ranking prior to or on a parity with the Preferred Stock or any series thereof as to dividends, or assets remaining for distribution to the stockholders in the event of the liquidation, dissolution, or winding up of the Corporation);
(g) the right, if any, to exchange or convert the shares into shares of any other series of the Preferred Stock or into shares of
any other class of stock of the Corporation or the securities of any other corporation, and the rate or basis, time, manner, terms, and conditions of exchange or conversion or the method by which the same shall be determined; and
(h) the other special powers, preferences, or rights, if any, and the qualifications, limitations, or restrictions thereof, of the shares of such series.
The Board of Directors shall fix the terms of each such series by resolution or resolutions adopted at any time prior to the issuance of the shares thereof, and the terms of each such series may, subject only to restrictions, if any, imposed by this Certificate of Incorporation or by applicable law, vary from the terms of other series to the extent determined by the Board of Directors from time to time and provided in the resolution or resolutions fixing the terms of the respective series of the Preferred Stock.
1.2 Status of Certain Shares. Shares of any series of the Preferred Stock, whether provided for herein or by resolution or resolutions of the Board of Directors, which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes, or which have been purchased or otherwise acquired by the Corporation, shall have the status of authorized and unissued shares of the Preferred Stock of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of the Preferred Stock to be created by resolution or resolutions of the Board of Directors or as a part of any other series of the Preferred Stock, all subject to the conditions or restrictions on issuance set forth herein or in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of the Preferred Stock.
Section 2. COMMON STOCK
2.1 Issuance, Consideration, and Terms. Any unissued shares of the Common Stock may be issued from time to time for such consideration, having a value of not less than the par value thereof, as may be fixed from time to time by the Board of Directors. Any treasury shares may be disposed of for such consideration as may be determined from time to time by the Board of Directors. The Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof. Each share of Common Stock shall be of equal rank and shall be identical to every other share of Common Stock. Holders of Common Stock shall have such rights as are provided herein and by law.
2.2 Voting Rights. Except as expressly required by law or as provided in or fixed and determined pursuant to Section 1 of this Article FOURTH, the entire voting power and all voting rights shall be vested exclusively in the Common Stock. Each holder of shares of Common Stock shall be entitled to one (1) vote for each share standing in such holder's name on the books of the Corporation.
2.3 Dividends. Subject to Section 1 of this Article FOURTH, the holders of Common Stock shall be entitled to receive, and shall share equally share for share, when and as declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends or distributions payable in cash, in property, or in securities of the Corporation.
FIFTH: The Board of Directors is authorized to make, alter, or repeal the Bylaws of the Corporation.
SIXTH: Meetings of stockholders shall be held at such place, within or without the State of Delaware, as may be designated by or in the manner provided in the Bylaws, or, if not so designated, at the registered office of the Corporation in the State of Delaware. Elections of directors need not be by written ballot unless and to the extent that the Bylaws so provide.
SEVENTH: Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the Board of Directors (or a majority of the members thereof) of the Corporation by action at a meeting, a majority of the members of the Board of Directors of the Corporation acting without a meeting, the Chief Executive Officer of the Corporation, the President of the Corporation or the holders of a majority of the issued and outstanding stock of the Corporation entitled to be voted at such special meeting. Such special meetings may not be called by any other person or persons or in any other manner.
EIGHTH: The Corporation reserves the right to amend, alter, or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by statute, and all rights of stockholders herein are subject to this reservation.
NINTH: To the fullest extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.
TENTH: Any action required or permitted to be taken by the holders of the stock of the Corporation entitled to vote in the election of directors must be effected at a duly called annual meeting or special meeting of such holders and may not be effected by any consent in writing by such holders.
ELEVENTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.
This Restated Certificate of Incorporation of Patterson-UTI Energy, Inc. (i) was duly adopted by the Board of Directors of Patterson-UTI Energy, Inc., without a vote of the stockholders, in accordance with Section 245 of the Delaware General Corporation Law, (ii) only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of Patterson-UTI Energy, Inc., as heretofore amended; and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation.
Dated this 8th day of May, 2001.
/s/ A. Glenn Patterson ----------------------------- A. Glenn Patterson, President |
CERTIFICATE OF CORRECTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PATTERSON-UTI ENERGY, INC.
Pursuant to the provisions of Section 103(f) of the Delaware General Corporation Law, Patterson-UTI Energy, Inc., a Delaware corporation (the "Company"), adopts the following Certificate of Correction:
FIRST: On May 8, 2001, the Company filed with the Secretary of State of the State of Delaware a Restated Certificate of Incorporation dated May 8, 2001 (the "Restated Certificate of Incorporation"). The Restated Certificate of Incorporation is an inaccurate record of the corporate action therein referenced, as Section 1 of Article FOURTH thereof captioned "Preferred Stock" failed to include a reference to the Series A Participating Preferred Stock created by the Board of Directors of the Company through the filing of a Certificate of Designation of the Company with the Secretary of State of the State of Delaware on January 13, 1997.
SECOND: Subsection 1.1 of Section 1 of Article FOURTH is corrected by adding the following paragraph to the end of Subsection 1.1 thereof:
Pursuant to authority conferred by this Article FOURTH upon the board of directors of the Corporation, the board of directors created a series of 100,000 shares of preferred stock designated Series A Participating Preferred Stock by filing a Certificate of Designation of the Corporation with the Secretary of State of the State of Delaware (the "Secretary of State") on January 13, 1997, and the voting powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the Corporation's Series A Participating Preferred Stock are set forth on Annex A hereto and are incorporated herein by reference.
IN WITNESS WHEREOF, the Company has caused this Certificate of Correction to be signed by its duly authorized officer as of the 19th day of November, 2001.
PATTERSON-UTI ENERGY, INC.
By: /s/ Jonathan D. Nelson
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Jonathan D. Nelson
Vice President - Finance, Chief Financial
Officer, Secretary and Treasurer
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ANNEX A
Certificate of Designation
of
Restated Certificate of Incorporation
of
Patterson Energy, Inc.
It is hereby certified that:
1. The name of the corporation is Patterson Energy, Inc. (hereinafter called the "Corporation");
2. The Restated Certificate of Incorporation of the Corporation (the "Restated Certificate of Incorporation"), is hereby amended so that the designation and number of shares of the class and series acted upon in the following resolution and the relative rights, preferences and limitations of such class and series, are as stated in such resolution; and
3. The following resolution was duly adopted by the Board of Directors of the Corporation as required by Section 151 of the Delaware General Corporation Law at a meeting duly called and held on January 2, 1997;
RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Corporation in accordance with the provisions of the Restated Certificate of Incorporation, the Board of Directors hereby creates a series of Series A Preferred Stock, $.01 par value, of the Corporation and hereby states the designation and number of shares, and fixes the relative rights, preferences and limitations thereof (in addition to the provisions set forth in the Restated Certificate of Incorporation which are applicable to the Preferred Stock of all classes and series) as follows:
Section 1. Designation, Par Value and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock" (hereinafter referred to as "Series A Participating Preferred Stock"), the shares of such series shall be without par value, and the number of shares constituting such series shall be 100,000; provided, however, that, if more than a total of 100,000 shares of Series A Participating Preferred Stock shall be issuable upon the exercise of Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of January 2, 1997, between the Corporation and Continental Stock Transfer & Trust Company, a New York corporation, as Rights Agent (as amended from time to time) (the "Rights Agreement"), the Board of Directors of the Corporation, pursuant to Section 151 of the Delaware General Corporation Law, shall direct by resolution or resolutions that a certificate be properly executed, acknowledged and filed providing for the total number of shares of Series A Participating Preferred Stock authorized to be issued to be increased (to the extent that the Restated Certificate
of Incorporation then permits) to the largest number of whole shares (rounded up to the nearest whole number) issuable upon exercise of the Rights.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of assets legally available for the purpose, quarterly dividends payable in cash on the last business day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $.01 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock, par value $.01 per share, of the Corporation (the "Common Stock") or a subdivision of the outstanding shares of Common Stock by reclassification or otherwise) declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock.
(B) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 15 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights:
(A) Except as provided in paragraph C of this Section 3 and subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If, on the date used to determine stockholders of record for
any meeting of stockholders for the election of directors, a default in
preference dividends (as defined in subparagraph (v) below) on the Series A
Participating Preferred Stock shall exist, the holders of the Series A
Participating Preferred Stock shall have the right, voting as a class as
described in subparagraph (ii) below, to elect two directors (in addition to the
directors elected by holders of Common Stock of the Corporation). Such right may
be exercised (a) at any meeting of stockholders for the election of directors or
(b) at a meeting of the holders of shares of Voting Preferred Stock (as
hereinafter defined), called for the purpose in accordance with the By-laws of
the Corporation, until all such cumulative dividends (referred to above) shall
have been paid in full or until noncumulative dividends have been paid regularly
for at least one year.
(ii) The right of the holders of Series A Participating Preferred Stock to elect two directors, as described above, shall be exercised as a class concurrently with the rights of holders of any other series of Preferred Stock upon which voting rights to elect such directors have been conferred and are then exercisable. The Series A Participating Preferred Stock and any additional series of Preferred Stock which the Corporation may issue and which may provide for the right to vote with the foregoing series of Preferred Stock are collectively referred to herein as "Voting Preferred Stock."
(iii) Each director elected by the holders of shares of Voting Preferred Stock shall be referred to herein as a "Preferred Director." A Preferred Director so elected shall continue to serve as such director for a term of one year, except that upon any termination of the right of all of such holders to vote as a class for Preferred Directors, the term of office of such directors shall terminate. Any Preferred Director may be removed by, and shall not be removed except by the vote of the holders of record of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors. present (in person or by proxy) and voting together as a single class (a) at a meeting of the stockholders, or (b) at a meeting of the holders of shares of such Voting Preferred Stock, called for the purpose in accordance with the By-laws of the Corporation, or (c) by written consent signed by the holders of a majority of the then
outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, taken together as a single class.
(iv) So long as a default in any preference dividends on the Series A Participating Preferred Stock shall exist or the holders of any other series of Voting Preferred Stock shall be entitled to elect Preferred Directors, (a) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (b)) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation and (b) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote or written consent of the holders of a majority of the outstanding shares of Voting Preferred Stock then entitled to vote for the election of directors, present (in person or by proxy) and voting together as a single class, at such time as the removal shall be effected. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Whenever (x) no default in preference dividends on the Series A Participating Preferred Stock shall exist and (y) the holders of other series of Voting Preferred Stock shall go longer be entitled to elect such Preferred Directors, then the number of directors constituting the Board of Directors of the Corporation shall be reduced by two.
(v) For purposes hereof, a "default in preference dividends" on the Series A Participating Preferred Stock shall be deemed to have occurred whenever the amount of cumulative and unpaid dividends on the Series A Participating Preferred Stock shall be equivalent to six full quarterly dividends or more (whether or not consecutive), and, having so occurred, such default shall be deemed to exist thereafter until, but only until, all cumulative dividends on all shares of the Series A Participating Preferred Stock then outstanding shall have been paid through the last Quarterly Dividend Payment Date or until, but only until, non-cumulative dividends have been paid regularly for at least one year.
(E) Except as set forth herein (or as otherwise required by applicable law), holders of Series A Participating Preferred Stock shall have no general or special voting rights and their consent shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Participating Preferred Stock, except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration (except as provided in (iv) below) shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock;
(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall he retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Restated Certificate of Incorporation. in any other Certificate of Designation creating a series of Preferred Stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the prior and superior rights of holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to rights upon liquidation, dissolution or winding up (voluntary or otherwise), no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received $1.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Capital Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Capital Adjustment in respect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of Series A Participating Preferred Stock and the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Capital Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Participating Preferred Stock, voting separately as a class.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the Corporation by its Chairman of the Board and attested by its Secretary as of January 10, 1997.
/s/ Cloyce A. Talbott
--------------------------------
Cloyce A. Talbott, Chairman and
Chief Executive Officer
Attest:
/s/ James C. Brown
-----------------------------
James C. Brown
Vice President - Finance
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AMENDMENT TO CERTIFICATE OF DESIGNATION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
PATTERSON-UTI ENERGY, INC.
It is hereby certified that pursuant to authority granted to and vested in the Board of Directors of the Corporation by the provisions of the Restated Certificate of Incorporation of the Corporation, the Board of Directors of the Corporation has duly adopted the following resolutions relating to an amendment to the Certificate of Designation filed with the Delaware Secretary of State on January 13, 1997 and subsequently filed as Annex A to the Certificate of Correction of the Restated Certificate of Incorporation of the Corporation filed on November 20, 2001:
1. RESOLVED, that the Certificate of Designation of the Corporation filed by the Corporation with the Secretary of State of the State of Delaware on January 13, 1997 and attached as Annex A to the Certificate of Correction of the Restated Certificate of Incorporation filed on November 20, 2001, relating to the Series A Participating Preferred Stock of the Corporation is hereby amended as follows:
(A) The number "100" appearing in the tenth and eleventh lines of Section 2(A) is hereby changed in each instance to the number "1,000;"
(B) The number "100" appearing in the third line of Section 3(A) is hereby changed to the number "1,000;"
(C) The dollar number "$1.00" appearing in the seventh line of
Section 6(A) is hereby changed to the dollar number "$100" and the number "100"
appearing in the thirteenth line of Section 6(A) is hereby changed to the number
"1,000."
(D) The number "100" appearing in the sixth line of Section 7 is hereby changed to the number "1,000."
2. No shares of Series A Participating Preferred Stock of the Corporation have been issued or are outstanding.
FURTHER RESOLVED, that the Certificate of Designation filed on January 13, 1997, as amended pursuant to the foregoing resolution, is hereby ratified and approved;
AND BE IT FURTHER RESOLVED, that the proper officers of the
Corporation be and each of them hereby is authorized to execute an amendment to
the Certificate of Designation of Restated Certificate of Incorporation pursuant
to the applicable section of the General Corporation Law of the State of
Delaware and to take all appropriate action to cause that amendment to the
certificate to be filed, recorded and become effective in accordance with
Section 103 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Amendment to Certificate of Designation has been executed effective as of this 20th day of November, 2001.
/s/ Jonathan D. Nelson ------------------------------------------ Jonathan D. Nelson Vice President - Finance, Chief Financial Officer, Secretary and Treasurer |
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION OF
PATTERSON-UTI ENERGY, INC.
Patterson-UTI Energy, Inc., a Delaware corporation (the “Corporation”), does hereby certify:
FIRST: The name of the Corporation is PATTERSON-UTI ENERGY, INC.
SECOND: The following amendment to the Restated Certificate of Incorporation was duly adopted by a vote of the stockholders sufficient for approval effective June 29, 2004, in the manner prescribed by the General Corporation Law of the State of Delaware:
The first sentence of Article FOURTH of the Restated Certificate of Incorporation is amended to read in its entirety as follows:
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FOURTH: The total number of shares of stock that the Corporation shall have authority to issue is three hundred one million (301,000,000) shares, of which three hundred million (300,000,000) shares shall be Common Stock, having a par value of $0.01 per share, and one million (1,000,000) shares shall be Preferred Stock, having a par value of $0.01 per share. |
THIRD: The aforesaid amendment to the Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: The aforesaid amendment does not effect a change in the amount of stated capital.
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ATTEST:
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PATTERSON-UTI ENERGY, INC. | |
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/s/ JONATHAN D. NELSON
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/s/ A. GLENN PATTERSON | |
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Jonathan D. Nelson,
Secretary
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A. Glenn Patterson, President |
Dated: June 29, 2004
Each of the undersigned, A. Glenn Patterson, the President of the Corporation, and Jonathan D. Nelson, the Secretary of the Corporation, hereby affirms and acknowledges, under penalties of perjury, that the respective signature of the undersigned on the foregoing instrument is his respective act and deed or the act and deed of the Corporation, and that the facts stated in the foregoing instrument are true.
| /s/ A. GLENN PATTERSON | ||||
| A. Glenn Patterson, President | ||||
| /s/ JONATHAN D. NELSON | ||||
| Jonathan D. Nelson, Secretary | ||||
Exhibit 10.1
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), Mark S. Siegel (the “ Recipient ”) effective as of the 28 th day of April, 2004 (the “Grant Date ”), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. |
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 25,000 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository |
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. | ||||
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. | |||
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): | |||
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares | ||||
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). | ||||
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. | |||
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is | |||
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. | ||||
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or | |||
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. | ||||
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.1
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY
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| By: | /s/ Cloyce A. Talbott | |||
| Name: | Cloyce A. Talbott | |||
| Title: | Chief Executive Officer | |||
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RECIPIENT:
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| /s/ Mark S. Siegel | ||||
| Name: | Mark S. Siegel | |||
| Address: |
1801 Century Park East
Suite 1111 Los Angeles, CA 90067 |
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| Facsimile No.: |
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-6-
Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: Mark S. Siegel |
Exhibit 10.2
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), Cloyce A Talbott (the “ Recipient ”) effective as of the 28th day of April, 2004 (the “Grant Date” ), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. |
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 25,000 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository |
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. | ||||
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. | |||
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): | |||
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares | ||||
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). | ||||
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. | |||
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is | |||
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. |
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or | |||
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. |
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument. | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.2
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY, INC.
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| By: | /s/ A. Glenn Patterson | |||
| Name: | A. Glenn Patterson | |||
| Title: | President | |||
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RECIPIENT:
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| /s/ Cloyce A. Talbott | ||||
| Name: | Cloyce A Talbott | |||
| Address: |
4510 Lamesa Hwy.
Snyder, TX 79549 |
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Facsimile No.: |
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Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: Cloyce A Talbott |
Exhibit 10.3
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), Glenn Patterson (the “ Recipient ”) effective as of the 28 th day of April, 2004 (the “Grant Date“ ), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. |
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 25,000 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository |
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. |
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. |
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): |
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares | ||||
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). | ||||
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. | |||
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is | |||
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. |
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or | |||
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. |
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.3
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY
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| By: | /s/ Cloyce A. Talbott | |||
| Title: Chief Executive Officer | ||||
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RECIPIENT:
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| /s/ Glenn Patterson | ||||
| Name: | Glenn Patterson | |||
| Address: |
4510 Lamesa Hwy.
Snyder, TX 79549 |
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Facsimile No.: | ||||
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Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: Glenn Patterson |
Exhibit 10.4
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), Kenneth N. Berns (the “ Recipient ”) effective as of the 28 th day of April, 2004 (the “Grant Date“ ), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. | ||||
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 12,500 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository | |||
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. | ||||
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. | |||
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): | |||
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares | ||||
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). | ||||
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. | |||
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is | |||
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. |
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or |
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. |
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.4
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY
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| By: | /s/ Cloyce A. Talbott | |||
| Name: | Cloyce A. Talbott | |||
| Title: | Chief Executive Officer | |||
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RECIPIENT:
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| /s/ Kenneth N. Berns | ||||
| Name: | Kenneth N. Berns | |||
| Address: |
1801 Century Park East
Suite 1111 Los Angeles, CA 90067 |
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Facsimile No.: | |||
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-6-
Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: Kenneth N. Berns |
Exhibit 10.5
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), Jonathan D. Nelson (the “ Recipient ”) effective as of the 28 th day of April, 2004 (the “Grant Date ”), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. | ||||
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 12,500 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository | |||
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. | ||||
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. | |||
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): | |||
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares |
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). |
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. |
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is |
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. |
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or | |||
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. |
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.5
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY
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| By: | /s/ Cloyce A. Talbott | |||
| Name: | Cloyce A. Talbott | |||
| Title: | Chief Executive Officer | |||
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RECIPIENT:
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| /s/ Jonathan D. Nelson | ||||
| Name: | Jonathan D. Nelson | |||
| Address: |
4510 Lamesa Hwy.
Snyder, TX 79549 |
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Facsimile No.: | |||
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Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: Jonathan D. Nelson |
Exhibit 10.6
RESTRICTED STOCK AWARD AGREEMENT
This Restricted Stock Award Agreement (the “ Agreement ”) is made by and between Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), John E. Vollmer III (the “ Recipient ”) effective as of the 28 th day of April, 2004 (the “Grant Date ”), pursuant to Patterson-UTI Energy, Inc. 1997 Long-Term Incentive Plan, as amended (the “ Plan ”), which is incorporated by reference herein in its entirety.
Whereas , the Company desires to grant to the Recipient the shares of equity securities specified herein (the “ Shares ”), subject to the terms and conditions of this Agreement; and
Whereas , the Recipient desires to have the opportunity to hold Shares subject to the terms and conditions of this Agreement;
Now, therefore , in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
| 1. | Definitions . For purposes of this Agreement, the following terms shall have the meanings indicated: |
| (a) | “ Forfeiture Restrictions ” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Shares issued to the Recipient hereunder and the obligation to forfeit and surrender such shares to the Company. | |||
| (b) | “ Restricted Shares ” shall mean the Shares that are subject to the Forfeiture Restrictions under this Agreement. | |||
| Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan. | ||||
| 2. | Grant of Restricted Shares . Effective as of the Grant Date, the Company shall cause to be issued in the Recipient’s name the following Shares as Restricted Shares: 12,500 shares of the Company’s common stock, $.01 par value per share. The Company shall cause certificates evidencing the Restricted Shares to be issued in the Recipient’s name, and, subject to the Forfeiture Restrictions and other terms and conditions of this Agreement, the Recipient shall have all the rights of a stockholder with respect to such Restricted Shares. Regular, ordinary dividends paid with respect to the Restricted Shares in cash shall be paid to the Recipient currently. All other dividends and distributions, whether paid in cash, stock in the Company, rights to acquire stock in the Company or any other property shall be added to and become a part of the Restricted Shares. Upon issuance, the certificates shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee under the Plan as a depository | |||
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| for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse. Effective as of the Grant Date, the Recipient shall deliver to the Company all stock powers, endorsed in blank, relating to the Restricted Shares. In accepting this award of Shares the Recipient accepts and agrees to be bound by all the terms and conditions of the Plan. | ||||
| 3. | Transfer Restrictions . The Shares granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, to the extent then subject to the Forfeiture Restrictions. Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby. Further, the Shares granted hereby that are no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws, and the Recipient agrees (i) that the Company may refuse to cause the transfer of the Shares to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law, and (ii) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Shares. | |||
| 4. | Vesting . The Shares that are granted hereby shall be subject to the Forfeiture Restrictions. All of the Forfeiture Restrictions shall lapse and the Restricted Shares shall vest as follows (it being understood that the number of shares of Restricted Shares as to which all restrictions have lapsed and which have vested in the Recipient at any time shall be the greatest of the number of vested Shares specified in subparagraph (a), (b), (c) or (d) below): | |||
| (a) | The Recipient shall become vested as to the Restricted Shares pursuant to the following vesting schedule: |
| (i) | on the third anniversary of the Grant Date, 50% of the Restricted Shares subject to this Agreement shall vest; and | |||
| (ii) | on the fourth anniversary of the Grant Date, the remaining 50% of the Restricted Shares subject to this Agreement shall vest. | |||
| (b) | If the Recipient’s employment with the Company and all Subsidiaries is terminated for any reason other than death or disability, or for no reason at all, before all the Shares have vested, the Shares that have not vested shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares. | |||
| (c) | In the event of the termination of the Recipient’s employment with the Company and all Subsidiaries due to death or disability before all of the Share have vested, the Recipient shall become vested in the number of Restricted Shares equal to the sum of the following: | |||
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| (i) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1095, plus | |||
| (ii) | a number equal to the product of (A) 50% of the Restricted Shares that are granted hereby, multiplied by (B) a fraction, the numerator of which is the number of days in the period commencing on and including the Grant Date and ending on and including the date of the Recipient’s termination of employment due to death or disability, and the denominator of which is 1461. | |||
| (d) | Upon the occurrence of a Change of Control (as defined in Section 5.9 of the Plan), the Shares that have not vested as of the date of such Change of Control shall be 100% vested; provided, however , that this subparagraph (d) shall not apply if, within the meaning of the proviso in Section 3.1(c) of the Plan, the Recipient is the Person or forms part of the Person as specified in Section 5.9(1) of the Plan. |
| Shares that have not vested in accordance with subparagraphs (a), (b), (c) or (d) above shall be forfeited and the Recipient shall cease to have any rights of a stockholder with respect to such forfeited Shares | ||||
| Upon the lapse of the Forfeiture Restrictions with respect to Shares granted hereby, the Company shall cause to be delivered to the Recipient a stock certificate representing such Shares, and such Shares shall be transferable by the Recipient (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law). | ||||
| 5. | Capital Adjustments and Reorganizations . The existence of the Restricted Shares shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to this Agreement to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding. | |||
| 6. | Tax Withholding . To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in income to the Recipient for federal, state or local income, employment, excise or other tax purposes with respect to which the Company has a withholding obligation (including, but not limited to, any such withholding obligation resulting from an election described in Section 7 of this Agreement) the Recipient shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if the Recipient fails to do so, the Company is | |||
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| authorized to withhold from the Shares granted hereby or from any cash or stock remuneration then or thereafter payable to the Recipient in any capacity any tax required to be withheld by reason of such resulting income. |
| 7. | Section 83(b) Election . The Recipient shall not exercise the election permitted under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Shares without the prior written approval of the Chief Financial Officer of the Company. If the Chief Financial Officer of the Company permits the election, the Recipient shall timely comply with the Recipient’s obligations under, and the Company shall have all the rights under, Section 6 of this Agreement with respect to any tax withholding obligation relating to any such election. | |||
| 8. | No Fractional Shares . All provisions of this Agreement concern whole Shares. Notwithstanding anything contained in this Agreement to the contrary, if the application of any provision of this Agreement would yield a fractional share, such fractional share shall be rounded down to the next whole Share. | |||
| 9. | Not an Employment Agreement . This Agreement is not an employment agreement, and no provision of this Agreement shall be construed or interpreted to create an employment relationship between the Recipient and the Company or guarantee the right to remain an employee of the Company for any specified term. | |||
| 10. | Legend . The Recipient consents to the placing on the certificate for the Shares of an appropriate legend restricting resale or other transfer of the Shares except in accordance with all applicable securities laws and rules thereunder, as well as any legend under Section 3.1(b) of the Plan as determined by the Committee. | |||
| 11. | Notices . Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, by facsimile transmission or by courier or delivery service, to the Company at 4510 Lamesa Hwy., Snyder, Texas 79549, Attention: Restricted Stock, facsimile number (325) 574-6307, and to the Recipient at the Recipient’s address and facsimile number (if applicable) indicated beneath the Recipient’s signature on the execution page of this Agreement, or at such other address and facsimile number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. | |||
| 12. | Amendment and Waiver . Except as otherwise provided in Section 5.3 of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed by the Company and the Recipient. Only a written instrument executed and delivered by the party waiving compliance hereof shall make any waiver of the terms or | |||
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| conditions effective. Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party of any term or condition, or of any breach of any term or condition, contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other term or condition, or a waiver of any breach of any other term or condition. | ||||
| 13. | Governing Law and Severability . This Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law provisions. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect. | |||
| 14. | Successors and Assigns . Subject to the limitations which this Agreement imposes upon the transferability of the Shares granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Recipient, the Recipient’s permitted assigns, executors, administrators, agents, legal and personal representatives. | |||
| 15. | Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original for all purposes but all of which taken together shall constitute but one and the same instrument | |||
| 16. | Grant Subject to Terms of Plan and this Agreement. The Recipient acknowledges and agrees that the grant of the Restricted Shares hereunder is made pursuant to and governed by the terms of the Plan and this Agreement, ratifies and consents to any action taken by the Company, the Board of Directors or the Committee concerning the Plan and agrees that the grant of the Restricted Shares pursuant to this Agreement is subject in all respects to the more detailed provisions of the Plan and to the shareholders’ approval of the Plan. | |||
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Exhibit 10.6
In Witness Whereof , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Recipient has executed this Agreement, all effective as of the date first above written.
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PATTERSON-UTI ENERGY
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| By: | /s/ Cloyce A. Talbott | |||
| Name: | Cloyce A. Talbott | |||
| Title: | Chief Executive Officer | |||
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RECIPIENT:
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| /s/ John E. Vollmer III | ||||
| Name: | John E. Vollmer III | |||
| Address: |
5956 Sherry Lane, Suite 1365
Dallas, TX 75225 |
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Facsimile No.: | |||
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Irrevocable Stock Power
Know all men by these presents, That the undersigned, For Value Received , has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Patterson-UTI Energy, Inc., a Delaware corporation (the “ Company ”), the Shares transferred pursuant to the Restricted Stock Award Agreement dated effective as of April 28, 2004, between the Company and the undersigned; and subject to and in accordance with such Restricted Stock Award Agreement the undersigned does hereby constitute and appoint the Secretary of the Company the undersigned’s true and lawful attorney, IRREVOCABLY, to sell assign, transfer, hypothecate, pledge and make over all or any part of such Shares and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.
In Witness Whereof , the undersigned has executed this Irrevocable Stock Power effective the day of , 2004.
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Name: John E. Vollmer III |
Exhibit 10.7
AMENDMENT
THIS AGREEMENT is by Patterson-UTI Energy, Inc. (the “Sponsor”),
WITNESSETH:
WHEREAS, the Sponsor maintains the Plan known as the “Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term Incentive Plan” (the “Plan”); and
WHEREAS, the Sponsor retained the right in Section 5.3 of the Plan to amend the Plan from time to time; and
WHEREAS, the Board of Directors of the Sponsor approved resolutions on April 28, 2004 to amend the Plan;
NOW, THEREFORE, the Sponsor agrees that, effective upon the approval of a majority of the stockholders of the Sponsor entitled to vote thereon, the Plan is hereby amended, as follows:
| 1. The reference to “$500,000” in the third paragraph of Section 1.5 of the Plan is hereby deleted and replaced by “$2,000,000”. | |
| 2. The last sentence of Section 3.1(a) of the Plan is hereby deleted in its entirety and replaced by |
| “Performance objectives will be based on absolute and relative increases in share prices, operating income, net income, cash flow, cash margins and earnings before interest, income taxes and depreciation, depletion and amortization thresholds on a company wide, subsidiary, division or group basis, rig utilization, safety records, return on common equity or any combination of the foregoing.” |
| 3. The last sentence of Section 4.1(b) of the Plan is hereby deleted in its entirety and replaced by |
| “Such objectives, however, shall be based on absolute and relative increases in share prices, operating income, net income, cash flow, cash margins and earnings before interest, income taxes and depreciation, depletion and amortization thresholds on a company wide, subsidiary, division or group basis, rig utilization, safety records, return on common equity or any combination of the foregoing.” |
IN WITNESS WHEREOF, the Sponsor has executed this Agreement this 29th day of June 2004.
| PATTERSON-UTI ENERGY, INC. | |
| By /s/ JONATHAN D. NELSON | |
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| Name: Jonathan D. Nelson | |
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| Title: Chief Financial Officer | |
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Exhibit 31.1
CERTIFICATION
Date: August 9, 2004
I, Cloyce A. Talbott, certify that:
(1)
I have reviewed this Quarterly Report on Form 10-Q of Patterson-UTI
Energy, Inc.;
(2)
Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
(3)
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
(4)
The registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a)
designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b)
evaluated the effectiveness of the registrant’s disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such
evaluation; and
(c)
disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
(b)
any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant’s
internal control over financial reporting.
/s/ Cloyce A. Talbott
Cloyce A. Talbott
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
Date: August 9, 2004
I, Jonathan D. Nelson, certify that:
(1)
I have reviewed this Quarterly Report on Form 10-Q of Patterson-UTI
Energy, Inc.;
(2)
Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
(3)
Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
(4)
The registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a)
designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b)
evaluated the effectiveness of the registrant’s disclosure
controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such
evaluation; and
(c)
disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
(b)
any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant’s
internal control over financial reporting.
/s/ Jonathan D. Nelson
Jonathan D. Nelson
Vice President, Chief Financial Officer,
Secretary and Treasurer
Exhibit 32.1
CERTIFICATION PURSUANT TO
NOT FILED PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Quarterly Report of Patterson-UTI Energy, Inc. (the
“Company”) on Form 10-Q for the period ending June 30, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), Cloyce A.
Talbott, Chief Executive Officer, and Jonathan D. Nelson, Vice President, Chief
Financial Officer, Secretary and Treasurer, of the Company, each certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission upon request.
/s/ Cloyce A. Talbott
/s/ Jonathan D. Nelson
August 9, 2004
(1)
The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Chief Executive Officer
August 9, 2004
Vice President, Chief Financial Officer,
Secretary
and Treasurer