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As filed with the Securities and Exchange Commission on November 5, 1997
Registration No. 333-___________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PATTERSON ENERGY, INC.
(Exact name of registrant as specified in charter)
Delaware 75-2504748
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4510 Lamesa Highway
Snyder, Texas 79549
(915) 573-1104
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
Cloyce A. Talbott
4510 Lamesa Highway
Snyder, Texas 79549
(915) 573-1104
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East Seventeenth Avenue
Suite 1100
Denver, Colorado 80203
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.[ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Proposed maximum
offering price Proposed maximum Amount of
Title of each class of Amount to be per aggregate offering registration
securities to be registered registered share(1) price(1) fee
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 600,000 Shares $ 56.25 $ 33,750,000 $ 10,228
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, on the
basis of the average of the high and low reported sale prices of the
Registrant's Common Stock on October 31, 1997, as reported on the Nasdaq
National Market.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
PROSPECTUS
600,000 Shares
PATTERSON ENERGY, INC.
COMMON STOCK
Patterson Energy, Inc., a Delaware corporation (the "Company"), is
registering for possible future resale, from time to time, by the holders
thereof (the "Selling Stockholders"), 600,000 shares (the "Shares") of the
Company's common stock, par value $0.01 per share (the "Common Stock"). See
"Selling Stockholders." The Company has granted registration rights to the
Selling Stockholders with regard to resale of the Shares. Pursuant to the
terms of these registration rights, the Company is obligated to pay all fees
and expenses incurred by it incident to this offering. It is estimated that
such fees and expenses will be approximately $ . The Company
will not receive any proceeds from the sale of the Shares.
The Common Stock is traded on the Nasdaq National Market under the
symbol "PTEN." On November , 1997, the closing sales price of the Common
Stock was $ per share.
_____________________________
PROSPECTIVE PURCHASERS OF COMMON STOCK SHOULD CONSIDER CAREFULLY THE MATTERS
SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 4.
_____________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_____________________________
The Selling Stockholders may offer the Shares offered hereby from time
to time to purchasers directly or through agents, brokers or dealers. The
Shares may be sold at market prices prevailing at the time of sale or at
negotiated prices. The agents, brokers or dealers through whom sales are made
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any amounts received by them in
exchange for their services in connection with such sales may be deemed to be
underwriting commissions. See "Plan of Distribution."
November , 1997
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
following regional offices: 7 World Trade Center, Suite 1300, New York, New
York 10048, and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained at prescribed
rates from the Public Reference Section of the Commission at Judiciary Plaza,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company's
Common Stock is traded on the Nasdaq National Market. The foregoing materials
can also be inspected at the National Association of Securities Dealers, Inc.,
1735 K. Street, N.W., Washington, D.C. 20006.
The Company has also filed with the Commission a Registration
Statement on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Shares
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information pertaining to the Company and the Shares offered hereby, reference
is made to the Registration Statement, copies of which may be inspected without
charge at the public reference facilities maintained by the Commission at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the Commission upon payment of the
prescribed fees.
In addition, the Commission maintains a web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission. The Company is such
a filer. The Commission's web site address is (http://www.sec.gov).
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997.
(c) The Company's Current Report on Form 8-K dated July
30, 1996, and filed with the Commission on August 2, 1996, as amended
by Form 8-K/A dated July 30, 1996, and filed with the Commission on
August 15, 1996, as further amended by Form 8-K/A dated July 30, 1996,
and filed with the Commission on September 27, 1996.
(d) The Company's Current Report on Form 8-K dated
January 3, 1997, and filed with the Commission on January 16, 1997.
(e) The Company's Current Report on Form 8-K dated
January 7, 1997, and filed with the Commission on January 8, 1997.
(f) The Company's Current Report on Form 8-K dated
January 27, 1997, and filed with the Commission on February 12, 1997.
(g) The Company's Current Report on Form 8-K dated May 7,
1997, and filed with the Commission on May 19, 1997.
(h) The Company's Current Report on Form 8-K dated June
3, 1997, and filed with the Commission on June 11, 1997.
(i) The Company's Current Report on Form 8-K dated June
12, 1997, and filed with the Commission on June 19, 1997, as amended
by Form 8-K/A dated June 12, 1997, and filed with the Commission on
August 12, 1997.
(j) The Company's Current Report on Form 8-K dated July
1, 1997, and filed with the Commission on July 15, 1997.
(k) The Company Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, and filed with the Commission on August
14, 1997.
(l) The Company's Current Report on Form 8-K dated July
24, 1997, and filed with the Commission on August 26, 1997.
(m) The Company's Current Report on Form 8-K dated August
5, 1997, and filed with the Commission on August 26, 1997.
(n) The description of the Company's Common Stock
contained in the Company's Registration Statement on Form 8-A filed
with the Commission under the Exchange Act.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to
the termination of the offering hereunder shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to James C. Brown, Vice President - Finance, Patterson
Energy, Inc., at the Company's principal executive offices located at 4510
Lamesa Highway, Snyder, Texas 79549. Telephone requests may be directed to Mr.
Brown at (915) 573-1104.
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<PAGE> 5
THE COMPANY
The Company is engaged in onshore contract drilling for oil and
natural gas, and, to a lesser extent in the exploration, development and
production of oil and natural gas. The Company owns 90 drilling rigs, 85 of
which are currently operable, and at June 30, 1997, owned leasehold interests
in approximately 59,750 gross (8,836 net) developed acres, 353 gross (88 net)
productive wells, and 122,029 gross (28,398 net) undeveloped acres. The
Company's operations are conducted in the Permian Basin in West Texas and
Southeastern New Mexico, in South and Southeast Texas, primarily in the Austin
Chalk Trend, and in the Hardeman Basin in North Texas. The Company was
organized as a Texas corporation in January 1978 and was reorganized as a
Delaware corporation in 1993.
RECENT ACQUISITIONS
Since December 31, 1996, the Company has acquired a total of 29
drilling rigs in three separate transactions. All of the rigs were fully
operable at the time of acquisition. The rigs are mechanical with depth
ratings from 7,000 to 15,000 feet. These acquisitions have expanded the
Company's drilling rig fleet from 60 drilling rigs to 90 drilling rigs (85 of
which are currently operable). The following subparagraphs set forth a brief
description of each of the transactions:
o Five drilling rigs, together with related equipment, two
rig-hauling trucks, an office, shop and a yard located in
Hobbs, New Mexico, were acquired in April 1997 from a
privately-held company based in Hobbs in consideration for a
total of $5.5 million in cash. These five rigs were added to
the Company's drilling rig fleet during April.
o Twenty-one drilling rigs, together with related equipment,
rig-hauling trucks and trailers and a yard and shop located in
Abilene, Texas, were acquired from Wes-Tex Drilling Company
("Wes-Tex") in June 1997 for a purchase price of approximately
$35.4, consisting of $25 million in cash, 566,000 shares of
Common Stock of the Company valued at $15.75 per share, and a
three-year stock purchase warrant valued at $3.12 per share to
purchase an additional 400,000 shares of the Company's Common
Stock exercisable at $16.00 per share and approximately
$190,000 of other direct costs incurred relative to the
transaction. These 21 rigs were added to the Company's
drilling rig fleet during June. Wes-Tex is a privately held
company based in Abilene, Texas.
o Three drilling rigs, together with related drilling equipment
and a vehicle were acquired in August 1997 from a privately
held company based in Midland, Texas in consideration for a
cash payment of $4.25 million. These rigs were added to the
Company's drilling rig fleet in August.
RISK FACTORS
In addition to the other information contained in, or incorporated by
reference into, this Prospectus, prospective purchasers in this offering should
carefully consider the following factors relating to the Company and its
businesses and the oil and natural gas industry when evaluating an investment
in the shares offered hereby.
VOLATILITY OF OIL AND NATURAL GAS PRICES. The Company's revenue,
profitability and future rate of growth are substantially dependent upon
prevailing prices for oil and natural gas, both with respect to its contract
drilling operations and its oil and natural gas operations. In recent years,
oil and natural gas prices and, therefore, the level of drilling, exploration,
development and production, have been extremely volatile. Prices are affected
by market supply and demand factors as well as actions of state and local
agencies, the U.S. and foreign governments and international cartels. All of
these factors are beyond the control of the Company. Any significant or
extended decline in oil and/or natural gas prices will have a material adverse
effect on the Company's financial condition and operations and could impair
access to sources of capital.
MARKET CONDITIONS FOR CONTRACT DRILLING SERVICES. The contract
drilling business has experienced increased demand for drilling services since
approximately 1995 due to stronger oil and natural gas prices. However, the
market for onshore contract drilling services was generally depressed between
mid-1982, when crude oil and natural gas prices began to weaken, and
approximately 1995. A particularly sharp decline in demand for contract
drilling services occurred in 1986
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because of the worldwide collapse in oil prices (to approximately $10.00 per
Bbl in April 1986 in the U.S.). Since this time and except during the
occasional upturns, there have been substantially more drilling rigs available
than necessary to meet demand in most operating and geographic segments of the
domestic 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 movement or
reactivation of onshore drilling rigs or new construction of drilling rigs
could adversely affect rig utilization rates and pricing, even in an
environment of stronger oil and natural gas prices and increased drilling
activity. The Company cannot predict either the future level of demand for its
contract drilling services or future conditions in the contract drilling
industry.
SEVERE SHORTAGE OF DRILL PIPE IN THE CONTRACT DRILLING INDUSTRY.
There continues to be a severe shortage of drill pipe in the contract drilling
industry in the U.S. This shortage has caused the price of drill pipe to
increase significantly over the past approximate 40 months and has required
orders for new drill pipe to be placed at least one year in advance of expected
use. The price increase and the delay in delivery has caused the Company to
substantially increase capital expenditures in its contract drilling segment
over the past approximate 40 months, primarily with respect to new drill pipe
purchases. In the event the shortage continues, the Company may be unable to
obtain the drill pipe required for its contract drilling operations.
RECENT RAPID GROWTH; ASSOCIATED RISKS. The Company has experienced
rapid and substantial growth over the past four years, particularly in its
contract drilling segment, and, if favorable opportunities arise in the future,
intends to further expand its drilling fleet through selected acquisitions.
Continued growth could strain the Company's management, operations, employees
and resources. There can be no assurance that the Company will be able to
manage growth effectively or that it will be successful in maintaining the
market share attributable to operable drilling rigs acquired by the Company.
If the Company is unable to manage its growth, its business, results of
operations or financial condition could be materially adversely affected.
NO ASSURANCE OF ADDITIONAL GROWTH THROUGH ACQUISITIONS. The Company's
growth has been enhanced materially by strategic acquisitions that have
substantially increased the Company's drilling rig fleet. One element of the
Company's strategy is to make acquisitions in markets in which it currently
operates. While the Company believes that the land drilling industry is highly
fragmented and that significant acquisition opportunities are available, there
can be no assurance that suitable acquisition candidates can be found, and the
Company is likely to face competition from other companies for available
acquisition opportunities. In addition, if the prices paid by buyers of
drilling rigs remain at current levels or continue to rise, the Company may
find fewer acceptable acquisition opportunities. There can be no assurance
that the Company will have sufficient capital resources to complete
acquisitions, that acquisitions can be completed on terms acceptable to the
Company or that any completed acquisition would improve the Company's financial
condition, results of operations, business or prospects in any material manner.
CURRENT SHORTAGES OF QUALIFIED DRILLING RIG PERSONNEL. Increases in
domestic drilling demand since mid-1995 and recent increases in contract
drilling activity have resulted in a shortage of qualified drilling rig
personnel in the industry. If the Company is unable to attract and retain
sufficient qualified personnel, its ability to market and operate its drilling
rigs will be restricted. Further, labor shortages could result in wage
increases, which could reduce the Company's operating margins.
RELIANCE ON KEY PERSONNEL. The Company is highly dependent upon its
executive officers and key employees. The unexpected loss of the services of
any of these individuals, particularly Cloyce A. Talbott or A. Glenn Patterson,
the Chief Executive Officer and the President of the Company, respectively,
could have a detrimental effect on the Company. The Company has no employment
agreements with any of its executive officers. The Company maintains key man
insurance on the lives of Messrs. Talbott and Patterson in the amount of $3
million each.
RISKS OF OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND PRODUCTION.
The search for oil and natural gas often results in unprofitable efforts, not
only from dry holes, but also from wells which, though productive, do not
produce oil or natural gas in sufficient quantities to return a profit on the
costs incurred. No assurance can be given that any oil or natural gas reserves
located by the Company in the future will be commercially productive. In
addition, the cost of drilling, completing and operating wells is often
uncertain, and drilling may be delayed or canceled as a result of many factors,
including unacceptably low oil and natural gas prices, oil and natural gas
property title problems, inclement weather conditions and financial instability
of well operators and working interest owners. Furthermore, the availability
of a ready market for the Company's oil and natural gas depends on numerous
factors beyond its control, including demand for and
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supply of oil and natural gas, general economic conditions, proximity of
natural gas reserves to pipelines, weather conditions and government
regulation.
COMPETITION. The Company encounters intense competition in its
contract drilling operations from other drilling contractors. The competitive
environment for contract drilling services involves such factors as drilling
rates, availability and condition of drilling rigs and equipment, reputation
and customer relations. The Company faces strong competition from major oil
companies, independent oil and natural gas companies and individual producers
and operators in acquiring oil and natural gas leases for exploration and
development. Many of the competitors in each of the Company's lines of
business have substantially greater financial and other resources than the
Company.
OPERATING HAZARDS AND UNINSURED RISKS. Contract drilling and oil and
natural gas activities are subject to a number of risks and hazards which could
cause serious injury or death to persons, suspension of drilling operations and
serious damage to equipment or property of others and, in addition to
environmental damage, could cause substantial damage to producing formations
and surrounding areas. Damages to the environment could result from the
Company's operations, particularly through oil spills, gas leaks, discharges of
toxic gases or extensive uncontrolled fires. In addition, the Company could
become subject to liability for reservoir damages. The occurrence of a
significant event, including pollution or environmental damage, could
materially affect the Company's operations and financial condition. Although
the Company believes that it is adequately insured against normal and
foreseeable risks in its operations in accordance with industry standards, such
insurance may not be adequate to protect the Company against liability from all
consequences of well disasters, extensive fire damage or damage to the
environment. No assurance can be given that the Company will be able to
maintain adequate insurance in the future at rates it considers reasonable or
that any particular types of coverage will be available. Furthermore, a
portion of the Company's contract drilling is done on a turnkey basis, which
involves substantial economic risks. Under turnkey drilling contracts, the
Company contracts to drill a well to a contract depth under specified
conditions for a fixed price. The risks to the Company under this type of
drilling contract are substantially greater than on a well drilled on a daywork
or footage basis since the Company assumes most of the risks associated with
the drilling operations generally assumed by the operator of the well in a
daywork or footage contract, including risk of blowout, machinery breakdowns
and abnormal drilling conditions. Accordingly, if severe drilling problems are
encountered in drilling wells under a turnkey contract, the Company could
suffer substantial losses associated with that contract. For the year ended
December 31, 1996, and six months ended June 30, 1997, the percentage of the
Company's contract drilling operation revenues attributable to turnkey
contracts was 8.0% and 5.6%, respectively.
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATION MATTERS. The
Company's operations are subject to numerous domestic laws and regulations that
relate directly or indirectly to the drilling of oil and natural gas wells,
including laws and regulations controlling the discharge of materials into the
environment, requiring removal and cleanup under certain circumstances or
otherwise relating to the protection of the environment. Laws and regulations
protecting the environment have generally become more stringent in recent
years, and may in certain circumstances impose strict liability, rendering a
person liable for environmental damage without regard to negligence or fault on
the part of such person. To date, the Company has not been required to expend
significant resources in order to comply with applicable environmental laws and
regulations nor has it incurred any fines or penalties for noncompliance.
However, compliance costs under existing legal requirements and under any new
requirements could become material, and the Company could incur liability in
the future for noncompliance. Additional matters subject to governmental
regulation include discharge permits for drilling operations, performance
bonds, reports concerning operations, spacing of wells, unitization and pooling
of properties, disposal of produced water and taxation. From time to time,
regulatory agencies have imposed price controls and limitations on production
by restricting the rate of flow of oil and natural gas wells below actual
production capacity in order to conserve supplies of oil and natural gas. In
addition, although the Company performed visual inspections on three yards
acquired by it during 1996, the Company did not obtain Phase I environmental
reports on any of the yards, which reports, if obtained, may have revealed
potential environmental liabilities not otherwise apparent from the Company's
visual inspection. The Company typically does not have indemnifications from
the respective sellers of the yards for preclosing environmental liabilities.
Accordingly, any loss resulting from environmental liabilities from any of
these yards, or from any other properties acquired or sold by the Company or
its predecessors in interest, may be borne by the Company.
UNCERTAINTY OF OIL AND NATURAL GAS RESERVE ESTIMATES. Estimates of
the Company's proved developed reserves and future net revenues are based on
engineering reports prepared by an independent petroleum engineer based upon a
review of production histories and other geologic, economic, ownership and
engineering data provided by the Company. These estimates are based on several
assumptions that the Securities and Exchange Commission requires oil and
natural gas
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companies to use, including for example, constant oil and natural gas prices.
Such estimates are inherently imprecise indications of future net revenues.
Actual future production, revenues, taxes, production costs and development
costs may vary substantially from those assumed in the estimates. Any
significant variance could materially affect the estimates. In addition, the
Company's reserves might be subject to upward or downward adjustment based on
future production, results of future exploration and development, prevailing
oil and natural gas prices and other factors.
CONFLICTS OF INTEREST. Certain of the Company's directors and
executive officers and their respective affiliates have participated and may
continue to participate from time to time in oil and natural gas prospects and
properties in which the Company has an interest. Conflicts of interest may
arise between such persons and the Company as to the advisability of conducting
drilling and recompletion activities on these properties. Of the 249 wells
operated by the Company at March 31, 1997, the Company's directors, officers
and/or their respective affiliates were working interest owners in
approximately 106 wells.
NO PAST DIVIDENDS. The Company has paid no cash dividends on the
Common Stock in the past and does not intend to do so in the foreseeable
future. The terms of an existing $30 million bank line of credit prohibit the
payment of dividends by the Company without the prior written consent of the
bank.
ANTI-TAKEOVER MEASURES. The Company, a Delaware corporation, is
subject to the General Corporation Law of the State of Delaware, including
Section 203, an anti-takeover law enacted in 1988. The Company has also
enacted certain anti-takeover measures, including a stockholder rights plan.
As a result of these provisions, potential acquirors of the Company may find it
more difficult or be discouraged from attempting to effect an acquisition
transaction with the Company, thereby possibly depriving holders of the
Company's securities of certain opportunities to sell or otherwise dispose of
such securities at above-market prices pursuant to such transactions. See
"Description of Capital Stock."
SUPERIOR RIGHTS OF PREFERRED STOCK. The Company has a class of
authorized Preferred Stock. The Board of Directors, without stockholder
approval, may issue shares of the Preferred Stock with rights and preferences
adverse to the voting power or other rights of the holders of the Common Stock.
No Preferred Stock has been issued. However, such number of shares of
Preferred Stock as is sufficient to permit the exercise in full of the Rights
(approximately 154,000 shares as of the date of this Prospectus) has been
reserved for issuance upon exercise of the Rights described under "Description
of Capital Stock - Stockholder Rights Plan."
SHARES ELIGIBLE FOR FUTURE SALE. As of the date of this Prospectus,
the Company had 15,407,266 shares of Common Stock outstanding, 14,104,765 of
which are freely tradable without substantial restriction or the requirement of
future registration under the Securities Act. Of the remaining 1,302,501
shares, 702,501 shares are held by "affiliates" of the Company, as that term is
defined in Rule 144 under the Securities Act, and may be sold subject to the
provisions of Rule 144, and 600,000 shares are eligible for sale under the
Registration Statement. Also, 250,368 shares of Common Stock issuable upon the
exercise of outstanding options that are vested are eligible for sale in the
public market and 396,336 shares of Common Stock issuable upon exercise of
outstanding options that are not vested will become eligible for sale in the
public market as such options become vested. Sales of substantial amounts of
Common Stock in the public market could adversely affect the prevailing market
price of the Common Stock.
No prediction can be made as to the effect, if any, that future sales
of shares or the availability of shares for sale will have on the market price
for Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock in the public market, or the perception of the availability of
shares for sale, could adversely affect the prevailing market price of the
Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares.
DIVIDEND POLICY
The Company has not paid cash dividends on the Common Stock in the
past and does not expect to pay any cash dividends on the Common Stock in the
foreseeable future. The Company instead intends to retain its earnings to
support the operations and growth of its businesses. Any future cash dividends
would depend on future earnings, capital requirements, the Company's financial
condition and other factors deemed relevant by the Board of Directors. In
addition, the terms of an existing $30 million bank line of credit prohibit
payment of dividends by the Company without the prior written consent of the
bank.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
Selling Stockholders and the beneficial ownership of Common Stock by each of
them before and after the offering being made hereby. Such information was
provided to the Company by the Selling Stockholders for inclusion in this
Prospectus. Additional information concerning the Selling Stockholders and the
Shares is set forth in the notes to the table.
<TABLE>
<CAPTION>
Shares Being
Shares Owned Offered Shares Owned
Name Before Offering in the Offering After Offering(1)
---- -------------------------- --------------- ---------------------
Number Percent Number Percent
------ ------- ------- -------
<S> <C> <C> <C> <C> <C>
Wes-Tex Drilling Company . . . . . . . . . . 400,000(2) 2.6% 400,000 -0- -0-
EFO Fund, Ltd. . . . . . . . . . . . . . . . 150,000(3) * 150,000 -0- -0-
E. Peter Hoffman, Jr. . . . . . . . . . . . . 50,000(4) * 50,000 -0- -0-
</TABLE>
_________________
* Less than 1%.
(1) Assumes all Shares offered hereby are sold.
(2) These shares were issued to Wes-Tex pursuant to exercise of warrants
granted to Wes-Tex in June 1997 as partial consideration for the
acquisition by the Company of 21 drilling rigs, related equipment and
rolling stock and a shop and a yard from Wes-Tex. The exercise price
of these warrants was $32.00 per share. The shares being offered
hereby are being sold pursuant to registration rights granted in the
acquisition. Wes-Tex has had no material relationship with the
Company or any of its affiliates in the past three years.
(3) These shares were issued to EFO Fund, Inc. ("EFO") pursuant to
exercise of warrants granted in May 1995 to Perry E. Esping, the
principal owner of EFO, as partial consideration for the acquisition
by the Company in May 1995 of three drilling rigs and related
equipment from Mr. Esping. The shares were transferred by Mr. Esping
to EFO in October 1996. and are being offered hereby pursuant to
registration rights granted in the acquisition. Neither EFO nor Mr.
Esping has had any material relationship with the Company or any of
its affiliates in the past three years.
(4) These Shares were issued to E. Peter Hoffman, Jr. upon exercise of
stock options granted to him as partial consideration for public
relation services rendered by him to the Company. Other than this
consulting relationship, Mr. Hoffman has had no relationship with the
Company in the past three years.
8
<PAGE> 10
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue (i) 18,000,000 shares of Common
Stock, $0.01 par value, of which 15,407,266 shares are issued and outstanding
as of the date of this Prospectus, and (ii) 1,000,000 shares of Preferred
Stock, $0.01 par value, of which no shares have been issued. Stockholders of
the Company will consider and vote upon a proposal at a special meeting of
stockholders to be held in December 1997 or January 1998 to amend the Restated
Certificate of Incorporation of the Company to increase the Company's Common
Stock from 18,000,000 shares to 50,000,000 shares.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of
Common Stock held of record on all matters submitted to a vote of stockholders.
Holders of a majority of the shares of Common Stock outstanding may authorize a
merger, consolidation, dissolution of the Company, the sale of all or
substantially all of the Company's assets if not made in the usual or ordinary
course of the Company's business, or an amendment of the Company's Restated
Certificate of Incorporation. In the event of liquidation, holders of Common
Stock are entitled to share pro rata in any distribution of the Company's
assets to holders of Common Stock after payment of liabilities and liquidation
preferences, if any, granted to holders of Preferred Stock. There are no
preemptive, subscription, conversion or redemption rights regarding the Common
Stock. Holders of Common Stock are entitled to receive such dividends as may
be declared on the Common Stock by the Board of Directors in its discretion out
of funds legally available for that purpose.
PREFERRED STOCK
Preferred Stock may be issued in series from time to time with such
designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions thereof, to the extent that such are not fixed in
the Company's Restated Certificate of Incorporation, as the Board of Directors
determines. The rights, preferences, limitations and restrictions of different
series of Preferred Stock may differ with respect to dividend rates, amounts
payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The Board of Directors
may authorize the issuance of Preferred Stock which ranks senior to the Common
Stock with respect to the payment of dividends and the distribution of assets
on liquidation. In addition, the Board of Directors is authorized to fix the
limitations and restrictions, if any, upon the payment of dividends on Common
Stock to be effective while any shares of Preferred Stock are outstanding. The
Board of Directors, without stockholder approval, can issue Preferred Stock
with voting and conversion rights which could adversely affect the voting power
of the holders of Common Stock. The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company has not issued any shares of Preferred Stock. However, such number
of shares of Preferred Stock as is sufficient to permit the exercise in full of
the Rights pursuant to the Rights Agreement (approximately 154,000 shares as of
the date of this Prospectus) has been reserved for issuance upon exercise of
the Rights described under "---Stockholder Rights Plan."
STOCKHOLDER RIGHTS PLAN
General. In January 1997, the Board of Directors of the Company
declared a dividend distribution of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock. The dividend was paid to
the stockholders of record on January 17, 1997 (the "Record Date"), and with
respect to Common Stock issued thereafter until the Distribution Date (as
defined below), and, in certain circumstances, with respect to Common Stock
issued after the Distribution Date. Except as set forth below, each Right,
when it becomes exercisable, entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Participating Preferred
Stock, $0.01 par value (the "Preferred Shares"), of the Company at a price of
$166 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and Continental
Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent"), dated as
of January 2, 1997. The following discussion is a summary of the material
terms of the Rights Agreement, a copy of which has been incorporated by
reference as an exhibit to the Registration Statement.
The Rights Agreement. Initially, the Rights will be attached to all
certificates representing Common Stock then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Common
Stock upon the earliest to occur of (i) a person or group of affiliated or
associated persons having acquired beneficial ownership of 15% or more of the
outstanding shares of Common Stock (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10
9
<PAGE> 11
days (or such later date as the Board of Directors may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (as hereinafter defined) (the earliest of such
dates being called the "Distribution Date"). A person or group whose
acquisition of Common Stock causes a Distribution Date pursuant to clause (i)
above is an "Acquiring Person." The date that a person or group becomes an
Acquiring Person is the "Shares Acquisition Date."
The Rights Agreements provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock outstanding as of the Record Date, even without such notation or a
copy of a summary of the Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Stock
issued after the Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 2, 2007, unless earlier redeemed by
the Company as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Stock at a price and on terms which a majority of certain members of the Board
of Directors determines to be adequate and in the best interests of the
Company, its stockholders and other relevant constituencies, other than such
Acquiring Person, its affiliates and associates (a "Permitted Offer")), each
holder of a Right will thereafter have the right (the "Flip-In Right") to
receive upon exercise the number of shares of Common Stock or, in the
discretion of the Board of Directors of the Company, of one one-hundredths of a
Preferred Share (or, in certain circumstances, other securities of the Company)
having a value (immediately prior to such triggering event) equal to two times
the Purchase Price. Notwithstanding the foregoing, following the occurrence of
the event described above, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person or any affiliate or associate thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Stock
immediately prior to the consummation of the transaction are not the holders of
all of the surviving company's voting power, or (ii) more than 50% of the
Company's assets or earning power is sold or transferred, in either case with
or to an Acquiring Person or any affiliate or associate or any other person in
which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Stock are not
treated alike, any other person, then each holder of a Right (excepts Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the Purchase Price. The
holder of a Right will continue to have the Flip-Over Right whether or not such
holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Preferred Shares, shares
of Common Stock or other securities issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
10
<PAGE> 12
Description of Preferred Shares. Preferred Shares purchasable upon
exercise of the Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of $0.01 per
share but, if greater, will be entitled to an aggregate dividend per share of
100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $1.00 per share; thereafter, and after the
holders of the Common Stock receive a liquidation payment of $0.01 per share,
the holders of the Preferred Shares and the holders of the Common Stock will
share the remaining assets in the ratio of 100 to 1 (as adjusted) for each
Preferred Share and share of Common Stock so held, respectively. Finally, in
the event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. In the event that the amount
of accrued and unpaid dividends on the Preferred Shares is equivalent to six
fully quarterly dividends or more, the holders of the Preferred Shares shall
have the right, voting as a class, to elect two directors in addition to the
directors elected by the holders of the Common Stock until all cumulative
dividends on the Preferred Shares have been paid through the last quarterly
dividend payment date or until noncumulative dividends have been paid regularly
for at least one year.
Redemption. At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, and under
certain other circumstances, the Company may redeem the Rights in whole, but
not in part, at a price of $0.01 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board of Directors.
Additionally, following the Shares Acquisition Date, the Company may redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
provided that such redemption is in connection with a merger or other business
combination transaction or series of transactions involving the Company in
which all holders of Common Stock are treated alike but not involving an
Acquiring Person or its affiliates or associates.
Anti-Takeover Effect. The distribution of the Rights may have the
effect of delaying, deferring or preventing a change in control of the Company
notwithstanding that a majority of the stockholders might benefit from such a
change in control.
OTHER PROVISIONS HAVING POSSIBLE ANTI-TAKEOVER EFFECT
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the corporate charter or bylaws or
otherwise, which, along with certain provisions of the Delaware General
Corporation Law (the "DGCL"), may have the effect of delaying or deterring any
unsolicited takeover attempts notwithstanding that a majority of the
stockholders might benefit from such a takeover or attempt. In connection with
the Company's reincorporation, the right of stockholders to cumulate votes in
the election of directors was eliminated. In addition, Section 203 of the
DGCL, which will apply to the Company since the Common Stock has been approved
for quotation on the Nasdaq National Market, restricts certain "business
combinations" with an "interested stockholder" for three years following the
date such person becomes an interested stockholder, unless the Board of
Directors approves the business combination. "Business combination" is defined
to include mergers, sale of assets and other similar transactions with an
"interested stockholder." An "interested stockholder" is defined as a person
who, together with affiliates and associates, owns (or, within the prior three
years, did own) 15% or more of the corporation's voting stock. By delaying or
deterring unsolicited takeover attempts, these provisions could adversely
affect prevailing market prices for the Company's Common Stock.
The Company's Restated Certificate of Incorporation and Bylaws contain
certain provisions that could discourage potential takeover attempts and make
more difficult attempts by stockholders to change management. The following
paragraphs set forth a summary of these provisions:
Special Meetings of Stockholders. The Restated Certificate of
Incorporation provides that special meetings of stockholders may be called only
by the Board of Directors (or a majority of the members thereof), the Chief
Executive Officer, the President or the holders of a majority of the
outstanding stock entitled to vote at such special meeting. This provision
will make it more difficult for stockholders to call a special meeting.
No Stockholder Action by Written Consent. The Restated Certificate of
Incorporation provides that stockholder action may be taken only at annual or
special meetings and not by written consent of the stockholders.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that
11
<PAGE> 13
stockholders seeking to bring business before an annual meeting of
stockholders, or to nominate candidates for election as directors at an annual
meeting of stockholders, must provide timely notice thereof in writing. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not less than 30 days nor more
than 60 days prior to the meeting as originally scheduled; provided that in the
event less than 40 days written notice is given to stockholders, notice by the
stockholder to be made timely must be received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed. These Bylaws also specify certain requirements
for a stockholder's notice to be in proper written form. These provisions may
preclude some stockholders from bringing matters before the stockholders at an
annual meeting or from making nominations for directors at an annual meeting.
Authorized Class of Preferred Stock. See "---Preferred Stock" for
information concerning the Company's Preferred Stock.
TRANSFER AGENT
The transfer agent for the Common Stock is Continental Stock Transfer
& Trust Company, New York, New York.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Stockholders may be
effected from time to time in one or more transactions (which may involve block
transactions) on the Nasdaq National Market or otherwise, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholders or purchasers of
Shares for whom they may act as agent (which compensation may be in excess of
customary commissions). Such brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any commissions received by them may be deemed to be underwriting
compensation.
In accordance with applicable rules and regulations promulgated under
the Exchange Act, any person engaged in the distribution of any of the Shares
may not simultaneously engage in market activities with respect to any of the
Common Stock for a period of nine business days prior to the commencement of
such distribution. In addition and without limiting the foregoing, the Selling
Stockholders may be subject to applicable provisions of the Exchange Act and
the rules and regulations promulgated thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases
and sales of Shares by the Selling Stockholders.
The Company and the Selling Stockholders have agreed to indemnify each
other against certain liabilities, including liabilities, under the Securities
Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Baker & Hostetler LLP, Denver, Colorado.
12
<PAGE> 14
EXPERTS
The consolidated balance sheets as of December 31, 1995 and 1996, and
the consolidated statements of income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996, incorporated by
reference in this Prospectus, have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the periods ended March 31,
1996 and 1997 and June 30, 1996 and 1997, incorporated by reference in this
Prospectus, the independent accountants have reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in the Company's
quarterly reports on Form 10-Q for the quarters ended March 31, 1997 and June
30, 1997, and incorporated by reference herein, states that they did not audit
and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their report on the unaudited interim financial
information because that report is not a "report" or a "part" of the
Registration Statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
The balance sheet of Patterson Drilling Company (formerly known as Tucker
Drilling Company, Inc.) as of March 31, 1996, and the related statements of
operations, changes in stockholders' equity and cash flows for each of the two
years in the period ended March 31, 1996, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
The statements of assets acquired as of December 31, 1996 and 1995 for Wes-Tex
Drilling Company and the related statements of direct drilling revenue and
direct operating expenses for each of the three years in the period ended
December 31, 1996, incorporated by reference to this Prospectus, have been
included herein in reliance on the report of Davis, Kinard & Co., P.C.,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. With respect to the unaudited interim financial
information as of March 31, 1997, and for the three-month periods ended March
31, 1997 and 1996, incorporated by reference in this Prospectus, Davis, Kinard
& Co., P.C. have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report included in the Company's Current Report on Form
8-K, as amended, dated June 12, 1997, and incorporated by reference herein,
states that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report of such information should be restricted in light of the limited nature
of review procedures applied. The accountants are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on the
unaudited financial information because that report is not a "report" or a
"part" of the Registration Statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.
13
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus included as part of this Registration
Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of Common Stock registered
hereby, all of which expenses, except for the Commission registration fee and
the NASD filing fee, are estimates:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- ------
<S> <C>
Securities and Exchange Commission registration fee . . . . . . . . . . . . . . . . . . . . . $
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
=============
</TABLE>
__________________
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The DGCL provides for indemnification by a corporation of costs
incurred by directors, employees and agents in connection with an action, suit
or proceeding brought by reason of their position as a director, employee or
agent. The person being indemnified must have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation. The DGCL provides that a corporation may advance payment of
expenses. The DGCL further provides that the indemnification and advancement
of expenses provisions of the DGCL will not be deemed exclusive of any other
rights to which these indemnifications or advancements of expenses may be
entitled under bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action under official capacity and as to
action in another capacity when holding such office.
In addition to the general indemnification section, Delaware law
provides further protection for directors under Section 102(b)(7) of the DGCL.
This section was enacted in June 1986 and allows a Delaware corporation to
include in its certificate of incorporation a provision that eliminates and
limits certain personal liability of a director for monetary damages for
certain breaches of the director's fiduciary duty of care, provided that any
such provision does not (in the words of the statute) do any of the following:
"eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of this Title [dealing with willful or negligent violation
of the statutory provision concerning dividends and stock purchases
and redemptions], or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall
eliminate or limit the liability of a director for any act or omission
occurring prior to the date when
II-1
<PAGE> 16
such provision becomes effective...."
The Board of Directors is empowered to make other indemnification as
authorized under any bylaw, agreement, the Restated Certificate of
Incorporation, Bylaws or corporate resolution so long as the indemnification is
consistent with the DGCL.
The Company's Restated Certificate of Incorporation provides that, to
the fullest extent permitted by the DGCL, a director of the Company will not be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. The Company's Bylaws provide that to the extent
that a director or officer of the Company is successful on the merits of
defense of a suit or proceeding brought against him by reason of the fact that
he is a director or officer of the Company, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with
such action. In other circumstances, a director or officer of the Company may
be indemnified against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in and not opposed to the best
interest of the Company, and, with respect to a criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful; however, in an
action or suit by or in the right of the Company to procure a judgment in its
favor, such person will not be indemnified if he has been adjudged to be liable
to the Company unless and only to the extent that the Delaware Court of
Chancery or the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
deems proper. A determination that indemnification of a director or officer is
proper will be made by a disinterested majority of the Company's Board of
Directors, by independent legal counsel or by the stockholders of the Company.
The Company's Bylaws also provide that the Company may advance the payment of
expenses and that the indemnification and advancement of expenses provisions of
the Bylaws are nonexclusive. The Company maintains director and officer
liability insurance covering director and officer indemnification.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
Exhibit Item 601 Cross
Number Reference Document as Form S-3 Exhibit
------ --------------- ----------------------------
<S> <C> <C>
2.1 2 Asset Purchase Agreement, dated April 22, 1997, among and between Patterson
Drilling Company and Ziadril, Inc. (1)
2.2 2 Asset Purchase Agreement, dated June 4, 1997, among Patterson Energy, Inc.,
Patterson Drilling Company and Wes-Tex Drilling Company.(2)
2.2.1 2 Amendment to Asset Purchase Agreement, dated June 4, 1997, among Patterson
Energy, Inc., Patterson Drilling Company and Wes-Tex Drilling Company.(2)
2.3 2 Agreement, dated June 4, 1997, among Patterson Energy, Inc., Patterson
Drilling Company, Greathouse Foundation and Myrle Greathouse, Trustee under
Agreement dated June 2, 1997.(2)
2.4 2 Asset Purchase Agreement, dated August 1, 1997, between Patterson Drilling
Company and McGee Drilling Corporation. (1)
4.1 4 Excerpt from Restated Certificate of Incorporation of Patterson Energy, Inc.
regarding authorized Common Stock and Preferred stock. (3)
4.2 4 Rights Agreement dated as of January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company, as Rights Agent.(4)
5.1 5 Opinion of Baker & Hostetler LLP regarding legality of the Shares to be
offered. (1)
15.1 15 Awareness Letter of Coopers & Lybrand L.L.P.
</TABLE>
II-2
<PAGE> 17
<TABLE>
<S> <C> <C>
15.2 15 Awareness Letter of Davis, Kinard & Co., P.C.
23.1 23 Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23.2 23 Consent of Independent Public Accountants, Arthur Andersen, LLP
23.3 23 Consent of M. Brian Wallace, independent petroleum engineer
23.4 23 Consent of Baker & Hostetler LLP (included in Exhibit 5.1.1)
23.5 23 Consent of Independent Accountants, Davis, Kinard & Co., P.C.
24.1 24 Powers of Attorney (included on the signature page of Form S-3 (Registration
Statement No. 333-29035)
</TABLE>
_________________
(1) Filed as an Exhibit to Amendment No. 1 to Form S-3 (Registration No.
333-29035) filed with the Commission on August 5, 1997.
(2) Incorporated by reference to Item 7, "Financial Statements and
Exhibits," to Form 8-K dated June 3, 1997, filed June 11, 1997.
(3) Filed as an Exhibit to Form S-3 (Registration No. 333-181123) filed
with the Commission on December 18, 1996.
(4) Incorporated by reference to Item 2, "Exhibits", to Form 8-A dated
January 10, 1997, and filed with the Commission on January 14, 1997.
II-3
<PAGE> 18
ITEM 17. UNDERTAKINGS.
1. The Company hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, unless the information
required to be included in such post-effective amendment is
contained in a periodic report filed by the Company pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 and incorporated herein by reference;
(ii) to reflect in the Prospectus any facts or
events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement, unless the information required to be
included in such post-effective amendment is contained in a
periodic report filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and
incorporated herein by reference; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (1)(a)(i) and
(1)(a)(ii) do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(b) That, for the purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(d) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Snyder, State of Texas on the 5th day of
November, 1997.
PATTERSON ENERGY, INC.
By: /s/ A. Glenn Patterson
---------------------------------------
A. Glenn Patterson, President
Each of the undersigned officers and directors of Patterson Energy,
Inc. hereby appoints Cloyce A. Talbott, as attorney and agent for the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933 any and all amendments (including
post-effective amendments) and exhibits to this Registration Statement and any
and all applications, instruments or documents to be filed with the Securities
and Exchange Commission pertaining to the registration of the securities
covered hereby, with full power and authority to do and perform any and all
acts and things whatsoever requisite and necessary or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed as of November 5, 1997, by the following
persons in the capacities indicated:
<TABLE>
<S> <C>
/s/ Cloyce A. Talbott Chairman of the Board, Director and Chief
- ----------------------------------------- Executive Officer
Cloyce A. Talbott
Principal Executive Officer
/s/ A. Glenn Patterson President, Chief Operating Officer and Director
- -----------------------------------------
A. Glenn Patterson
/s/ Robert C. Gist Director
- -----------------------------------------
Robert C. Gist
/s/ Kenneth E. Davis Director
- -----------------------------------------
Kenneth E. Davis
/s/ Vincent A. Rossi, Jr. Director
- ----------------------------------------
Vincent A. Rossi, Jr.
/s/ James C. Brown Vice President--Finance, Secretary and Treasurer
- ---------------------------------------- and Chief Financial Officer
James C. Brown
(Principal Accounting Officer)
</TABLE>
II-5
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Document as Form S-3 Exhibit Page No.
------- ---------------------------- --------
<S> <C>
2.1 Asset Purchase Agreement, dated April 22, 1997, among and between
Patterson Drilling Company and Ziadril, Inc. (1)
2.2 Asset Purchase Agreement, dated June 4, 1997, among Patterson
Energy, Inc., Patterson Drilling Company and Wes-Tex Drilling
Company.(2)
2.2.1 Amendment to Asset Purchase Agreement, dated June 4, 1997, among
Patterson Energy, Inc., Patterson Drilling Company and Wes-Tex
Drilling Company.(2)
2.3 Agreement, dated June 4, 1997, among Patterson Energy, Inc.,
Patterson Drilling Company, Greathouse Foundation and Myrle
Greathouse, Trustee under Agreement dated June 2, 1997.(2)
2.4 Asset Purchase Agreement, dated August 1, 1997, between Patterson
Drilling Company and McGee Drilling Corporation. (1)
4.1 Excerpt from Restated Certificate of Incorporation of Patterson
Energy, Inc. regarding authorized Common Stock and Preferred
Stock. (3)
4.2 Rights Agreement dated as of January 2, 1997, between Patterson
Energy, Inc. and Continental Stock Transfer & Trust Company, as
Rights Agent.(4)
5.1 Opinion of Baker & Hostetler LLP regarding legality of the Shares
to be offered.
15.1 Awareness Letter of Coopers & Lybrand L.L.P.
15.2 Awareness Letter of Davis, Kinard & Co., P.C.
23.1 Consent of Independent Accountants, Coopers & Lybrand L.L.P.
23.2 Consent of Independent Public Accountants, Arthur Andersen LLP
23.3 Consent of M. Brian Wallace, independent petroleum engineer
23.4 Consent of Baker & Hostetler LLP (included in Exhibit 5.1.1)
23.5 Consent of Independent Accountants, Davis, Kinard & Co., P.C.
24.1 Powers of Attorney (included on the signature page of Form S-3
(Registration Statement No. 333-29035)
</TABLE>
_________________
(1) Filed as an Exhibit to Amendment No. 1 to Form S-3 (Registration No.
333-29035) filed with the Commission on August 5, 1997.
(2) Incorporated by reference to Item 7, "Financial Statements and
Exhibits," to Form 8-K dated June 3, 1997, filed June 11, 1997.
(3) Filed as an Exhibit to Form S-3 (Registration No. 333-181123) filed
with the Commission on December 18, 1996.
(4) Incorporated by reference to Item 2, "Exhibits", to Form 8-A dated
January 10, 1997, and filed with the Commission on January 14, 1997.
<PAGE> 1
EXHIBIT 5.1
November 5, 1997
Patterson Energy, Inc.
4510 Lamesa Highway
Snyder, Texas 79549
Gentlemen:
We have acted as counsel for Patterson Energy, Inc. (the "Company") in
connection with the registration under the Securities Act of 1933 (the "Act")
on Form S-3 of a total of 600,000 (the "Shares") of the Company's issued and
outstanding Common Stock, $0.01 par value, to be sold by certain stockholders
of the Company. The Registration Statement on Form S-3 and exhibits thereto
filed with the Securities and Exchange Commission under the Act are referred to
herein as the "Registration Statement."
We have examined the Restated Certificate of Incorporation of the
Company, the Bylaws of the Company, the Minutes of the Board of Directors and
stockholders of the Company, the applicable laws of the State of Delaware and a
copy of the Registration Statement.
Based on the foregoing and having regard for such legal considerations
as we deem relevant, we are of the opinion that the Shares have been validly
issued and are fully paid and nonassessable.
We hereby consent to the use of this opinion as part of the
Registration Statement.
Very truly yours,
/s/ Baker & Hostetler LLP
BAKER & HOSTETLER LLP
<PAGE> 1
EXHIBIT 15.1
November 5, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Patterson Energy, Inc.
Registration on Form S-3
We are aware that our reports dated April 30, 1997 and July 24, 1997 on our
reviews of interim financial information of Patterson Energy, Inc. for the
periods ended March 31, 1997 and June 30, 1997 and included in the Company's
Quarterly Reports on Form 10-Q for the quarters then ended are incorporated by
reference in this registration statement. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
<PAGE> 1
EXHIBIT 15.2
November 5, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated July 7, 1997, on our review of interim
financial information of Wes-Tex Drilling Company for the periods ended March
31, 1997 and 1996, included in Patterson Energy, Inc.'s Current Report on Form
8-K, as amended, dated June 12, 1997, is incorporated by reference in Patterson
Energy, Inc.'s Registration Statement on Form S-3 (File No. 333-29035).
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the registration statement prepared or certified by
us within the meaning of Sections 7 and 11 of that Act.
/s/ Davis, Kinard & Co., P.C.
DAVIS, KINARD & CO., P.C.
Abilene, Texas
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of Patterson Energy, Inc. on Form S-3 of our report dated March 10, 1997, on
our audits of the consolidated financial statements of Patterson Energy, Inc.
as of December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, which is included in Patterson Energy, Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1996. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
November 5, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated May 16, 1996,
included in the Patterson Energy, Inc., Annual Report on Form 10-K for the year
ended December 31, 1996, and to all references to our firm included in this
Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Antonio, Texas
November 5, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEER
I hereby consent to the incorporation by reference in this registration
statement of Patterson Energy, Inc. on Form S-3 of certain information
contained in Patterson Energy, Inc.'s Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, which information is contained in my summary
reserve report dated February 5, 1997, relating to the oil and natural gas
reserves and revenues as of December 31, 1994, 1995 and 1996 of certain
properties owned by Patterson Energy, Inc. as of December 31, 1996.
/s/ M. Brian Wallace
M. Brian Wallace, P.E.
Dallas, Texas
November 5, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
Patterson Energy, Inc. on Form S-3 of our report dated July 7, 1997, on our
audits of the financial information of Wes-Tex Drilling Company as of December
31, 1996 and 1995, and for each of the three years in the period ended December
31, 1996, which is included in Patterson Energy, Inc.'s Current Report on Form
8-K, as amended, dated June 12, 1997. We also consent to the reference to our
firm under the caption "Experts."
/s/ Davis, Kinard & Co. P.C.
DAVIS, KINARD & CO. P.C.
Abilene, Texas
November 5, 1997
