PATTERSON ENERGY INC, S-3/A, 1997-08-05

PATTERSON ENERGY INC
S-3/A, 1997-08-05
DRILLING OIL & GAS WELLS

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As filed with the Securities and Exchange Commission on August 5, 1997

Registration No. 333-29035

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 1
TO

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

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. [x]

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 Proposed maximum Amount of
Title of each class of Amount to be offering price per aggregate offering registration
securities to be registered registered share price fee
===================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per 566,000 $ -- $ -- $3,420(2)
share Shares(1)
===================================================================================================================
</TABLE>

(1) Gives effect to a two-for-one split of the Registrant's Common Stock,
with a record date of July 11, 1997, and a distribution date of July
25, 1997. A total of 283,000 pre-split shares of the Registrant's
common stock were registered at the time of the initial filing of the
Registration Statement on June 12, 1997
(2) A registration fee of $3,420 was paid at the time of the initial
filing of the Registration Statement on June 12, 1997.

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

566,000 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"), 566,000 shares (the "Shares") of the
Company's common stock, par value $0.01 per share (the "Common Stock"). See
"Selling Stockholders." As a part of the issuance of the Shares, the Company
granted registration rights to the Selling Stockholders. 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 $14,000. 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 August ___, 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."

August _____, 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).

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

All numerical information contained in this Prospectus relating to shares of
the Company's Common Stock gives affect to two-for-one split of the Common
Stock effective on July 25, 1997, with a record date of July 11, 1997.

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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.

(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 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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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 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 61 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 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 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 is currently experiencing increased demand for drilling services due
to stronger oil and natural gas prices. However, the market for onshore
contract drilling services has generally been depressed since mid-1982, when
crude oil and natural gas prices began to

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weaken. A particularly sharp decline in demand for contract drilling services
occurred in 1986 because of the world- wide 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 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 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 additional acquisition opportunities are
available, there can be no assurance that suitable acquisition candidates can
be found, and the Company is likely to continue 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 continue 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

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of a ready market for the Company's oil and natural gas depends on numerous
factors beyond its control, including demand for and 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 the 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

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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 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 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 prohibits 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, an aggregate of 100,000 shares of
Preferred Stock has been reserved for issuance upon the 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 14,760,914 shares of Common Stock outstanding, 12,451,672 of which
are freely tradeable without substantial restriction or the requirement of
future registration under the Securities Act. Of the remaining 2,309,242
shares, 863,242 shares will be 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, 566,000 are eligible for sale under the
Registration Statement, and 880,000 shares (all of which are "restricted
securities" under Rule 144) are held by third parties. Of these 880,000
shares, a total of 500,000 shares are entitled to certain registration rights
and also may be sold subject to the provisions of Rule 144. In addition, the
Company has reserved for issuance 550,000 shares of Common Stock pursuant to
the exercise of outstanding warrants held by one of the Selling Stockholders
(holding warrants exercisable for 400,000 shares of Common Stock) and by a
third party (holding warrants exercisable for 150,000 shares of Common Stock)
which are entitled to certain registration rights. Also, a total of 80,000
shares of Common Stock issuable upon exercise of outstanding options are
eligible for sale under a shelf registration statement, 153,008 shares of
Common Stock issuable upon the exercise of outstanding options that are vested
are eligible for sale in the public market and 194,640 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 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 . . . . . . . . . 620,000(2) 4.1% 220,000 400,000 2.6%

Greathouse Foundation . . . . . . . . . . . 222,000(2) 1.5% 222,000 -0- -0-

Greathouse Charitable Remainder Trust . . . 124,000(2) * 124,000 -0- -0-
</TABLE>

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

* Less than 1%.

(1) Assumes all Shares offered hereby are sold.

(2) The shares listed in the table were issued in June 1997 as partial
consideration for the acquisition of 21 drilling rigs, related equipment
and rolling stock and a shop and a yard from Wes-Tex Drilling Company
("Wes- Tex"). The 620,000 shares stated in the table as owned by Wes-Tex
include 400,000 shares underlying three-year warrants to purchase shares
of Common Stock at $16.00 per share issued to Wes-Tex as partial
consideration for the acquisition. The shares being offered are being
sold pursuant to registration rights granted in the acquisition. None of
the Selling Stockholders has had any material relationship with the
Company or any of its affiliates during 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 14,760,914 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.

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 (147,761 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 and the Rights Agreement and is qualified in its entirety
by reference to 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),

9
<PAGE> 11
or (ii) ten 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.

11
<PAGE> 13

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that 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 tenth 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, 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 report included in the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 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 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 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.

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 . . . . . . . . . . . . . . . . . . . . . $ 3,420

Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000

Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000
=========
</TABLE>

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.

2.2 2 Asset Purchase Agreement, dated June 4, 1997, among Patterson Energy, Inc.,
Patterson Drilling Company and Wes-Tex Drilling Company.(1)

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.(1)

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.(1)

2.4 2 Asset Purchase Agreement, dated August 1, 1997, between Patterson Drilling
Company and McGee Drilling Corporation

4.1 4 Excerpt from Restated Certificate of Incorporation of Patterson Energy, Inc.
regarding authorized Common Stock and Preferred Stock(2)

4.2 4 Rights Agreement dated as of January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company, as Rights Agent(3)
5.1.1 5 Opinion of Baker & Hostetler LLP regarding legality of the Shares to be
offered
</TABLE>

II-1
<PAGE> 16

<TABLE>
<CAPTION>
Exhibit Item 601 Cross
Number Reference Document as Form S-3 Exhibit
------ --------------- ----------------------------
<S> <C> <C>
15.1.1 15 Awareness Letter of Coopers & Lybrand L.L.P.
23.1.1 23 Consent of Independent Accountants

23.2.1 23 Consent of Independent Public Accountants

23.3.1 23 Consent of M. Brian Wallace, independent petroleum engineer
23.4.1 23 Consent of Baker & Hostetler LLP (included in Exhibit 5.1.1)

24.1 24 Powers of Attorney (included on the signature page of Form S-3 (Registration
Statement No. 333-29035) filed with the Commission on June 12, 1997)
</TABLE>

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

(1) Incorporated by reference to Item 7, "Financial Statements and Exhibits"
to Form 8-K, dated June 3, 1997, filed June 11, 1997.
(2) Filed as an Exhibit to Form S-3 (Registration No. 333-181123) filed with
the Commission on December 18, 1996.
(3) 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-2
<PAGE> 17
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 Amendment No. 1 to
the 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 August, 1997.

PATTERSON ENERGY, INC.

By: /s/ A. Glenn Patterson
------------------------------------
A. Glenn Patterson, President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed as of August 5,
1997, by the following persons in the capacities indicated:

<TABLE>
<S> <C>
/s/ Cloyce C. 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

* Director
---------------------------------------------------
Robert C. Gist

* Director
---------------------------------------------------
Kenneth E. Davis

* 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)

*By: /s/ Cloyce A. Talbott
-----------------------------------------------
Cloyce A. Talbott
Attorney-in-Fact
</TABLE>

II-3

<PAGE> 18

INDEX TO EXHIBITS

2.2 2 Asset Purchase Agreement, dated June 4, 1997, among Patterson Energy, Inc.,
Patterson Drilling Company and Wes-Tex Drilling Company.(1)

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.(1)

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.(1)

2.4 2 Asset Purchase Agreement, dated August 1, 1997, between Patterson Drilling
Company and McGee Drilling Corporation

4.1 4 Excerpt from Restated Certificate of Incorporation of Patterson Energy, Inc.
regarding authorized Common Stock and Preferred Stock(2)

4.2 4 Rights Agreement dated as of January 2, 1997, between Patterson Energy, Inc.
and Continental Stock Transfer & Trust Company, as Rights Agent(3)

5.1.1 5 Opinion of Baker & Hostetler LLP regarding legality of the Shares to be
offered

15.1.1 15 Awareness Letter of Coopers & Lybrand L.L.P.

23.1.1 23 Consent of Independent Accountants

23.2.1 23 Consent of Independent Public Accountants

23.3.1 23 Consent of M. Brian Wallace, independent petroleum engineer

23.4.1 23 Consent of Baker & Hostetler LLP (included in Exhibit 5.1.1)

24.1 24 Powers of Attorney (included on the signature page of Form S-3 (Registration
Statement No. 333-29035) filed with the Commission on June 12, 1997)
</TABLE>

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

<PAGE> 1
EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

BETWEEN

PATTERSON DRILLING COMPANY

AND

ZIADRIL, INC.
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I

THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.1 The Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ZIADRIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 3.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 3.2 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.3 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.4 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 3.5 Drilling Contracts and Other Agreements. . . . . . . . . . . . . . . . . . -5-
SECTION 3.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 3.7 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 3.8 Normal Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 3.9 Stock Ownership and Control. . . . . . . . . . . . . . . . . . . . . . . . . -5-

ARTICLE IV

ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.2 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.3 ZIADRIL Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.5 PDC Assumption of Drilling Contracts; ZIADRIL Invoicing of Direct Costs. . . -6-
SECTION 4.6 PDC Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.7 Sales and Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 4.8 Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
SECTION 5.1 Conditions to Each Party's Obligation to Effect the Asset Purchase . . . . . -7-
SECTION 5.2 Conditions to Obligation of ZIADRIL to Effect the Asset Purchase . . . . . . -7-
SECTION 5.3 Conditions to Obligations of PDC to Effect the Asset Purchase . . . . . . . . -8-

ARTICLE VI

GENERAL PROVISIONS . . . . . . . . . . . . . . -10-
SECTION 6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . -11-
SECTION 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 6.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 6.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
SECTION 6.8 Enforcement of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . -11-

ANNEX 1 Description of Drilling Rigs, Equipment and Vehicles
ANNEX 2 Description of Real Property
ANNEX 3 List of Drilling Contracts and Other Agreements
ANNEX 4 List of ZIADRIL Stockholders

EXHIBIT A(I) Non-Competition Agreement - ZIADRIL, Inc.
EXHIBIT A(II) Non-Competition Agreement - Joe Smith
EXHIBIT A(III) Non-Competition Agreement - Ken Bromley
EXHIBIT A(IV) Non-Competition Agreement - Billy Jensen
EXHIBIT A(V) Non-Competition Agreement - Lee Roberson
EXHIBIT B Bill of Sale and Assignment
EXHIBIT C(I) Warranty Deed - West County Road Property
EXHIBIT C(II) Warranty Deed - Marland Street Property
</TABLE>

ii
<PAGE> 4
ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of April 22, 1997 (this
"Agreement"), among PATTERSON DRILLING COMPANY ("PDC"), a Delaware corporation
and a wholly-owned subsidiary of Patterson Energy, Inc. ("PEC"), and ZIADRIL,
INC., a privately-held New Mexico corporation ("ZIADRIL").

WITNESSETH:

WHEREAS, ZIADRIL owns five drilling rigs, related drilling equipment
and office equipment and vehicles (collectively, the "Drilling Rigs, Equipment
and Vehicles"), and two parcels of real property owned by ZIADRIL on West
County Road (the "West County Road Property") and Marland Street (the "Marland
Street Property"), respectively, in Hobbs, New Mexico (collectively, the "Real
Property"), all as more particularly described on Annex 1, in the case of the
Drilling Rigs, Equipment and Vehicles and Annex 2, in the case of the Real
Property;

WHEREAS, PDC desires to purchase, and ZIADRIL desires to sell, all of
ZIADRIL's right, title and interest in and to the Drilling Rigs, Equipment and
Vehicles and in the Real Property (the "Asset Purchase") for the consideration
set forth and provided for herein; and

WHEREAS, PDC, on the one hand, and ZIADRIL, on the other, desire to
make certain representations, warranties and agreements in connection with the
Asset Purchase.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:

ARTICLE I

THE ASSET PURCHASE

SECTION 1.1 The Asset Purchase. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 1.3 below)
provided herein, PDC shall purchase from ZIADRIL and ZIADRIL shall sell to PDC,
all of ZIADRIL's right, title and interest in and to the Real Property and in
and to the Drilling Rigs, Equipment and Vehicles "as is, where is," with no
representation or warranty as to condition.
<PAGE> 5
SECTION 1.2 Purchase Price. PDC agrees to pay to ZIADRIL at the
Closing a total of $3,500,000 (the "Purchase Price") for all of ZIADRIL's
right, title and interest in and to the Drilling Rigs, Equipment and Vehicles
and in and to the Real Property. The Purchase Price shall be paid by cashier's
check.

SECTION 1.3 Closing. The closing of the Asset Purchase (the
"Closing") shall take place at 9:00 a.m., local time, on the date of this
Agreement at the offices of Patterson Energy, Inc., in Snyder, Texas or at such
other time and place as PDC and ZIADRIL shall agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC

PDC represents and warrants to ZIADRIL as follows:

SECTION 2.1 Organization, Standing and Power. PDC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted.

SECTION 2.2 Authority; Non-Contravention. PDC has all requisite
power and authority to enter into this Agreement and to consummate the Asset
Purchase. The execution and delivery by PDC of this Agreement and the
consummation by PDC of the Asset Purchase have been duly authorized by all
necessary corporate action on the part of PDC. This Agreement has been duly
executed and delivered by PDC and (assuming the valid authorization, execution
and delivery of this Agreement by ZIADRIL) constitutes a valid and binding
obligation of PDC enforceable against PDC in accordance with its terms, except
to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). No filing
or registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Agency") is
required by or with respect to PDC in connection with the execution and
delivery of this Agreement by PDC or is necessary for the consummation by PDC
of the Asset Purchase.

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<PAGE> 6
ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ZIADRIL

SECTION 3.1 Organization, Standing and Power. ZIADRIL is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New Mexico and has the requisite corporate power and
authority to carry on its business as now being conducted.

SECTION 3.2 Authority; Non-Contravention. ZIADRIL has all requisite
power and authority to enter into this Agreement and to consummate the Asset
Purchase. This Agreement has been duly executed and delivered by ZIADRIL and
(assuming the valid authorization, execution and delivery of this Agreement by
PDC) constitutes a valid and binding obligation of ZIADRIL enforceable against
it in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law). The execution and delivery of this Agreement
do not, and the consummation of the Asset Purchase and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice of lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation of any lien,
security interest, charges or encumbrances upon any of the properties or assets
of ZIADRIL under, any provision of (i) the Articles of Incorporation or Bylaws
of ZIADRIL (true and complete copies of which as of the date hereof have been
delivered to PDC), (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to ZIADRIL or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to ZIADRIL or any of its
respective properties or assets. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by
or with respect to ZIADRIL in connection with the execution and delivery of
this Agreement by ZIADRIL or is necessary for the consummation by ZIADRIL of
the Asset Purchase.

SECTION 3.3 Environmental Matters.

(a) Except to the extent that the inaccuracy of any of
the following, individually or in the aggregate, would not have a Material
Adverse Effect on ZIADRIL, to the actual knowledge of ZIADRIL:

(i) ZIADRIL holds, and is in compliance with and has been
in compliance with for the last three years, all Environmental
Permits, and is otherwise in substantial compliance and has been in
substantial compliance for the last three years with, all applicable
Environmental Laws and there is no condition that is reasonably likely
to prevent or materially interfere prior to the Effective Time with
compliance by ZIADRIL with Environmental Laws;

-3-
<PAGE> 7
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by,
or approval of, any third party of any Environmental Permit is
required in connection with the execution or delivery of this
Agreement or the consummation by ZIADRIL of the transactions
contemplated hereby or the operation of the business of ZIADRIL on the
date of the Closing;

(iii) Except with respect to the two storage tanks removed
from the Marland Street Property, ZIADRIL has not received any
Environmental Claim, nor has any Environmental Claim been threatened
against ZIADRIL;

(iv) ZIADRIL has not entered into, agreed to or is not
subject to any outstanding judgment, decree, order or consent
arrangement with any governmental authority under any Environmental
Laws, including without limitation those relating to compliance with
any Environmental Laws or to the investigation, cleanup, remediation
or removal of Hazardous Materials;

(v) there are no circumstances that are reasonably likely
to give rise to liability under any agreements with any person
pursuant to which ZIADRIL would be required to defend, indemnify, hold
harmless, or otherwise be responsible for any violation by or other
liability or expense of such person, or alleged violation by or other
liability or expense of such person, arising out of any Environmental
Law; and

(vi) there are no other circumstances or conditions that
are reasonably likely to give rise to liability of ZIADRIL under any
Environmental Laws.

(b) For purposes of this Agreement, the terms below shall
have the following meanings:

"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or arbitral
proceeding by any person to ZIADRIL asserting liability or potential
liability (including without limitation, liability or potential
liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Materials at any location, (ii)
circumstances forming the basis of any violation or alleged violation
of any Environmental Laws or Environmental Permits, or (iii) otherwise
relating to obligations or liabilities of ZIADRIL under any
Environmental Law.

"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations
required under Environmental Laws for ZIADRIL to conduct its
operations as presently conducted.

"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders,
decrees and common law relating in any manner to

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<PAGE> 8
pollution or protection of the environment, to the extent and in the
form that such exist at the date hereof.

"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-
containing materials, pollutants, contaminants and all other materials
and substances, including but not limited to radioactive materials,
regulated pursuant to any Environmental Laws.

"Material Adverse Effect" means any change or effect that is
or, as far as can reasonably be determined, is likely to be materially
adverse to the assets, properties, conditions (financial or
otherwise), business or results of operations of ZIADRIL.

SECTION 3.4 Title. Set forth in Annex 1 and Annex 2 is a description
of the Drilling Rigs, Equipment and Vehicles and of the Real Property,
respectively, which description is accurate and complete in all material
respects. ZIADRIL has good and, in the case of the Real Property, indefeasible
title to a 100% interest in the Drilling Rigs, Equipment and Vehicles and in
the Real Property, subject to no Liens except for (i) Liens for taxes not yet
delinquent or the validity of which is being contested in good faith, and (ii)
any Liens arising by operation of law securing obligations not yet overdue.
For purposes of this Agreement "Liens" means liens, mortgages, pledges,
security interests, encumbrances, claims or charges of any kind.

SECTION 3.5 Drilling Contracts and Other Agreements. Set forth in
Annex 3 is a true and complete list of all oral and written drilling contracts
(the "Drilling Contracts") and other agreements (the "Other Agreements")
relating to the Drilling Rigs, Equipment and Vehicles or the Real Property to
which ZIADRIL is a party. A complete copy of each of the Drilling Contracts
and Other Agreements has previously been delivered to PDC. Each of the
Drilling Contracts and the Other Agreements has been fully performed by ZIADRIL
to date, and is in good standing and in full force and effect. Except as set
forth on Annex 3, none of the Real Property or Drilling Rigs, Equipment and
Vehicles is subject to any written or oral contracts and agreements.

SECTION 3.6 Litigation. Other than possible workman's compensation
cases, there is no suit, action, investigation or proceeding pending or, to the
knowledge of ZIADRIL, threatened against ZIADRIL at law or in equity before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind.

SECTION 3.7 Brokers. No broker, investment banker or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of ZIADRIL.

SECTION 3.8 Normal Operations. All wells currently being drilled by
ZIADRIL under the Drilling Contracts are drilling under normal operations.

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<PAGE> 9
SECTION 3.9 Stock Ownership and Control. No person: (i) beneficially
owns 50 percent or more of the outstanding voting securities of ZIADRIL or (ii)
has the contractual power to designate 50 percent or more of the members of the
ZIADRIL Board of Directors. Annex 4 sets forth a true and correct list of the
holders of ZIADRIL's voting securities and the number of such securities filed
by each such holder.

ARTICLE IV

ADDITIONAL AGREEMENTS

SECTION 4.1 Fees and Expenses. All costs and expenses incurred by
PDC in connection with this Agreement and the transactions contemplated hereby
shall be paid by PDC; such costs and expenses incurred by ZIADRIL shall be paid
by ZIADRIL.

SECTION 4.2 Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Asset Purchase and the other
transactions contemplated by this Agreement and the prompt satisfaction of the
conditions hereto.

SECTION 4.3 ZIADRIL Indemnification. On and after the Closing Date,
ZIADRIL, and Joe Smith ("Smith"), Ken Bromley ("Bromley") and Billy Jensen
("Jensen"), each of whom is an officer, director or a stockholder of ZIADRIL,
and Lee Roberson, a consultant to ZIADRIL, shall jointly and severally
indemnify and hold PEC and PDC harmless against and in respect of all actions,
suits, demands, judgments, costs and expenses (including reasonably attorneys'
fees of PEC or PDC), relating to any misrepresentation, breach of any
representation or warranty or non-fulfillment of any agreement on the part of
ZIADRIL contained in this Agreement. This indemnification provided for in this
Section 4.3 shall terminate and be of no further force and effect one and
one-half years from the Closing Date, except as to any representation or
warranty as to which a written notice of claim for indemnification has been
given to ZIADRIL, Smith, Bromley, Jensen and Roberson prior to the expiration
of such one and one-half year period.

SECTION 4.4 Public Announcements. Unless otherwise required by law
or the rules and regulations of the Securities and Exchange Commission, neither
PDC, PEC nor ZIADRIL shall issue any press release or make any public statement
with respect to the Asset Purchase prior to Closing.

SECTION 4.5 PDC Assumption of Drilling Contracts; ZIADRIL Invoicing
of Direct Costs. Effective as of 7:00 a.m. Snyder, Texas time on the date of
this Agreement ("Effective Time of Assumption"), PDC shall assume all
obligations and rights and benefits of ZIADRIL under each of the Drilling
Contracts. In addition, within 30 days following Closing, ZIADRIL shall
invoice PDC for all direct costs (actual third-party charges and labor) plus a
daily proration of the salaries of

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<PAGE> 10
Jensen and Judy Streun and trucking expenses incurred by ZIADRIL under each of
the Drilling Contracts prior to the Effective Time of Assumption, which
invoices shall be paid to ZIADRIL by PDC within 30 days of receipt by PDC.

SECTION 4.6 PDC Indemnification. PDC shall indemnify and hold
ZIADRIL harmless from all costs and liabilities (including reasonable
attorney's fees) incurred by ZIADRIL under any of the Drilling Contracts for
events occurring after the Effective Time of Assumption.

SECTION 4.7 Sales and Transfer Taxes. ZIADRIL agrees to pay any and
all sales and/or transfer taxes due with respect to the Asset Purchase.

SECTION 4.8 Real Estate Taxes. ZIADRIL and PDC agree that general
real estate taxes based on the actual tax bill for the year of Closing and, if
such tax bill is not available, the most recent mill levy and assessment,
rents, water and service charges and any special assessments or other charges
on the Real Property shall be prorated between ZIADRIL and PDC to the date of
Closing. Such prorations shall be final.

ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE

SECTION 5.1 Conditions to Each Party's Obligation to Effect the Asset
Purchase. The respective obligations of each party to effect the Asset
Purchase shall be subject to the fulfillment or waiver (where permissible) at
or prior to the Closing Date of each of the following conditions:

(a) No Order. No Governmental Entity or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is then in effect and
has the effect of prohibiting the Asset Purchase or any of the other
transactions contemplated hereby; provided that, in the case of any such
decree, injunction or other order, each of the parties shall have used
reasonable best efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as practicable any decree, injunction or other
order that may be entered.

(b) Consents. ZIADRIL shall have received written
consents of the other party or parties to each of the Drilling Contracts for
the assumption thereof by PDC pursuant to the provisions of Section 4.5 of this
Agreement and delivered copies thereof to PDC.

(c) Non-Competition Agreements. A Non-Competition
Agreement in the respective forms attached hereto as Exhibits A(I), A(II),
A(III), A(IV) and A(V) shall have been executed and delivered by ZIADRIL,
Smith, Bromley, Jensen and Roberson, as the case may be.

SECTION 5.2 Conditions to Obligation of ZIADRIL to Effect the Asset
Purchase. The obligation of ZIADRIL to effect the Asset Purchase shall be
subject to the fulfillment at or prior to

-7-
<PAGE> 11
the Closing of the following additional conditions; provided that ZIADRIL may
waive any of such conditions in its sole discretion:

(a) Performance of Obligations; Representations and
Warranties. PDC shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing, each of the representations and warranties of PDC contained in
this Agreement shall be true and correct on and as of the Closing.

(b) Officers' Certificate. PDC shall have furnished to
ZIADRIL a certificate, dated the Closing, signed by the appropriate officers of
PDC, certifying to the effect that to the best of the knowledge and belief of
PDC, the conditions set forth in Section 5.1 and Section 5.2(a) have been
satisfied in full.

(c) Payment of Purchase Price. PDC shall have made
delivery of the Purchase Price as provided in Section 1.2 of this Agreement.

SECTION 5.3 Conditions to Obligations of PDC to Effect the Asset
Purchase. The obligations of PDC to effect the Asset Purchase shall be subject
to the fulfillment at or prior to the Closing of the following additional
conditions, provided that PDC may waive any such conditions in its sole
discretion:

(a) Performance of Obligations; Representations and
Warranties. ZIADRIL shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing, each of the respective representations and warranties of ZIADRIL
contained in this Agreement shall be true and correct on and as of the Closing
shall be true in all material respects on and as of the Closing.

(b) Officers' Certificate. ZIADRIL shall have furnished
to PDC a certificate, dated the Closing, certifying to the effect that to the
best of the knowledge and belief of ZIADRIL, the conditions set forth in
Section 5.1 and Section 5.3(a) have been satisfied.

(c) Opinion of Counsel. PDC shall have received an
opinion of counsel from Tommy D. Parker, Esq., Hobbs, New Mexico counsel to
ZIADRIL, dated the Closing, substantially to the effect that:

(i) The incorporation, existence and good standing of
ZIADRIL are as stated in this Agreement.

(ii) This Agreement has been duly authorized, executed and
delivered by ZIADRIL, and (assuming the due and valid authorization,
execution and delivery by PDC) constitutes the legal, valid and
binding agreement of ZIADRIL enforceable against ZIADRIL in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of
general

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<PAGE> 12
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).

(iii) The execution and performance by ZIADRIL of this
Agreement will not violate the Articles of Incorporation or Bylaws of
ZIADRIL and will not violate, result in a breach of, or constitute a
default under, any material lease, mortgage, contract, agreement,
instrument, law, rule, regulation, judgment, order or decree known to
such counsel to which ZIADRIL is a party or to which it or any of its
properties or assets may be bound.

(iv) To the knowledge of such counsel, there are no
actions, suits or proceedings, pending or threatened against or
affecting ZIADRIL by any Governmental Entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this
Agreement.

(v) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency
or body which has not been obtained is required on behalf of ZIADRIL
for consummation of the transactions contemplated by this Agreement.

(vi) Each Non-Competition Agreement between PDC and each
of ZIADRIL, Smith, Bromley, Jensen and Roberson constitutes the legal,
valid and binding agreement of it/him enforceable against it/him in
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).

In rendering such opinion, counsel for ZIADRIL may rely as to matters of fact
upon the representations of officers of ZIADRIL contained in any certificate
delivered to such counsel and certificates of public officials.

Such opinion shall be limited to the laws of the United States of
America and the State of New Mexico.

(d) Bill of Sale and Assignment. ZIADRIL shall have
executed and delivered the Bill of Sale and Assignment, in the form attached
hereto as Exhibit B, covering the Drilling Rigs, Equipment and Vehicles and
office equipment set forth on Annex 1 and the Drilling Contracts and Other
Agreements set forth on Annex 3.

(e) Warranty Deeds. ZIADRIL shall have executed and
delivered the respective Warranty Deeds covering the Real Property in the forms
attached hereto as Exhibits C(I) and C(II) relating to the West County Road
Property and the Marland Street Property, respectively.

(f) Title Insurance. PDC shall have obtained title
commitments for title insurance on the Real Property, the cost of which shall
be paid by PDC.

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<PAGE> 13
(g) Titles. ZIADRIL shall have endorsed and delivered
the title certificates to the motor vehicles described in Annex 1.

ARTICLE VI

GENERAL PROVISIONS

SECTION 6.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

(a) if to PDC, to:

Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550

Attention: A. Glenn Patterson
President and Chief Operating Officer

with copies to:

Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264

(b) if to ZIADRIL, to:

Joe Smith, President
ZIADRIL, Inc.
P.O. Box 1860
Hobbs, New Mexico 88240

with copies to:

Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88240

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<PAGE> 14
SECTION 6.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

SECTION 6.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.

SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for ZIADRIL hereto may rely upon the representations and
warranties of ZIADRIL contained herein and in the certificates delivered
pursuant to Section 5.3(b).

SECTION 6.5 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New Mexico, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.

SECTION 6.6 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

SECTION 6.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.

SECTION 6.8 Enforcement of This Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state

-11-
<PAGE> 15
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.

IN WITNESS WHEREOF, PDC and ZIADRIL have executed this Agreement as of
the date first written above.

PDC:

PATTERSON DRILLING COMPANY

By: /s/ A. Glenn Patterson
-------------------------------------

A. Glenn Patterson
President and Chief Operating Officer

Attest:

/s/ James C. Brown
- ------------------------------------

James C. Brown, Secretary

ZIADRIL:

ZIADRIL, INC.

By: /s/ Joe Smith
-------------------------------------

Joe Smith
President
Attest:

/s/ Nancy A. Shelley
- ------------------------------------
Nancy A. Shelley, Secretary

TO INDUCE PATTERSON ENERGY, INC. TO ENTER INTO THIS ASSET PURCHASE
AGREEMENT AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE UNDERSIGNED,

-12-
<PAGE> 16
BEING OFFICERS, DIRECTORS, STOCKHOLDERS OF ZIADRIL, INC. IN THE CASE OF JOE
SMITH, KEN BROMLEY AND BILLY JENSEN, OR A CONSULTANT TO ZIADRIL, INC. IN THE
CASE OF LEE ROBERSON, ACCEPT AND AGREE TO BE BOUND BY THE INDEMNIFICATION
PROVISIONS OF SECTION 4.3 OF THE ABOVE ASSET PURCHASE AGREEMENT.

/s/ Joe Smith /s/ Billy Jensen
- ------------------------------------ ------------------------------------

Joe Smith Billy Jensen

/s/ Ken Bromley /s/ Lee Roberson
- ------------------------------------ ------------------------------------

Ken Bromley Lee Roberson

-13-
<PAGE> 17
ANNEX 1
TO
ASSET PURCHASE AGREEMENT

DESCRIPTION OF DRILLING RIGS, EQUIPMENT
AND VEHICLES
PER WHEREAS CLAUSE

A. DRILLING RIGS AND EQUIPMENT.

<TABLE>
<CAPTION>
RIG NO. DRAWWORKS MANUFACTURER
------- ----------------------
<S> <C>
2 EMSCO GB-800
3 MID-CONTINENT V-712-A
6 SKYTOP BREWSTER N-75
7 BREWSTER N-75
10 MID CONTINENT V-36-A
</TABLE>

All related yard equipment, including engines, mud pumps, derricks and
substructives, rotary tables, forklift, sand blaster, BOP shafter and
drill bits and all tubular goods on the rigs and in the yard.

NOTE: For more specific information concerning the rigs and related
equipment, see Appendix I, to Bill of Sale and Assignment attached to
this Agreement as Exhibit B.

B. VEHICLES.

All vehicles owned by ZIADRIL on March 31, 1997, consisting of 11
pickups and two trucks and trailers.

NOTE: For more specific information concerning the vehicles, see
Appendix I, to Bill of Sale and Assignment attached to this Agreement
as Exhibit B.

C. OFFICE EQUIPMENT.

All office equipment owned by ZIADRIL.
<PAGE> 18
ANNEX 2
TO
ASSET PURCHASE AGREEMENT

DESCRIPTION OF REAL PROPERTY
PER WHEREAS CLAUSE

1. Building, shop and yard owned by ZIADRIL at 901 West Marland,
Hobbs, New Mexico, including all improvements.

2. The yard owned by ZIADRIL on West County Road, Hobbs, New
Mexico, including all improvements.

NOTE: The Real Property is more particularly described on the
respective General Warranty Deeds attached to this Agreement as Exhibits C(I)
and C(II).
<PAGE> 19
ANNEX 3
TO
ASSET PURCHASE AGREEMENT

LIST OF DRILLING CONTRACTS AND OTHER
AGREEMENTS PER SECTION 3.5

A. DRILLING CONTRACTS.

1. Drilling Contract dated March 12, 1997, between Penwell
Energy, Inc. and ZIADRIL, Inc.

2. Drilling Contract dated March 25, 1997, between Chesapeake
Operating, Inc. and ZIADRIL, Inc.

3. Drilling Contract dated March 26, 1997, between Penwell
Energy, Inc. and ZIADRIL, Inc.

4. Drilling Contract dated February 24, 1997, between John L. Fox
and ZIADRIL, Inc.

5. Drilling Contract dated February 28, 1997, between Amerlind
Oil Company, Ltd. and ZIADRIL, Inc.

B. OTHER AGREEMENTS.

1. Lease Agreement dated August 1, 1990, between ZIADRIL, Inc. as
lessor, and Wilson Industries, Inc. as lessee.

2. Commercial Lease and Deposit Receipt dated August 23, 1995,
from Bo Blackwood, agent for Crystal Clear Water Sales and
Services to ZIADRIL, Inc.

3. 1st Equity Realtors, Inc. Property Leasing Agreement dated
August 25, 1995, between ZIADRIL, Inc. and First Equity
Realtors, Inc.
<PAGE> 20
ANNEX 4
TO
ASSET PURCHASE AGREEMENT

LIST OF ZIADRIL STOCKHOLDERS
PER SECTION 3.9

ZIADRIL, INC. SHAREHOLDERS

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES PERCENTAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
Randy Allison . . . . . . . . . . . . . . . 122.73 0.001185

Ricky Alavardo . . . . . . . . . . . . . . 130.38 0.001259

Jackie Brantner . . . . . . . . . . . . . . 115.66 0.001116

Ken Bromley . . . . . . . . . . . . . . . . 10,934.89 0.105550

James Bullock . . . . . . . . . . . . . . . 8,213.34 0.079280

Latricia Quiroz . . . . . . . . . . . . . . 2,849.06 0.027501

Ronald Campbell . . . . . . . . . . . . . . 75.84 0.000732

Danny Compton . . . . . . . . . . . . . . . 190.94 0.001843

Richard Cortez . . . . . . . . . . . . . . 3.60 0.000035

Carlos Davila . . . . . . . . . . . . . . . 81.78 0.000789

Eric Davis . . . . . . . . . . . . . . . . 57.04 0.000551

Larry Fagan . . . . . . . . . . . . . . . . 234.80 0.002266

Joe Fixel . . . . . . . . . . . . . . . . . 296.20 0.002859

Jason Flowers . . . . . . . . . . . . . . . 50.13 0.000484

Samuel Freeman . . . . . . . . . . . . . . 56.44 0.000545

Paul Garner . . . . . . . . . . . . . . . . 59.33 0.000573

Tom Gilcrease . . . . . . . . . . . . . . . 1,272.65 0.012284

Kenneth Goldsmith . . . . . . . . . . . . . 429.80 0.004149

Melva Graham . . . . . . . . . . . . . . . 488.74 0.004718

Kirby Gray . . . . . . . . . . . . . . . . 97.97 0.000946

Kevin Griffin . . . . . . . . . . . . . . . 324.29 0.003130

Louis Grossman . . . . . . . . . . . . . . 333.39 0.003218
</TABLE>

AX-1
<PAGE> 21
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES PERCENTAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
George Herd . . . . . . . . . . . . . . . . 80.30 0.000775

Eloy Heredia . . . . . . . . . . . . . . . 1,570.18 0.015156

Scott Holm . . . . . . . . . . . . . . . . 108.84 0.001051

Joe Janica . . . . . . . . . . . . . . . . 100.00 0.000965

Billy Jensen . . . . . . . . . . . . . . . 9,022.63 0.087092

Keith Jernigan . . . . . . . . . . . . . . 2,263.30 0.021847

Douglas Keen . . . . . . . . . . . . . . . 64.45 0.000622

Paul Landrum . . . . . . . . . . . . . . . 135.76 0.001310

Roger Larmon . . . . . . . . . . . . . . . 111.92 0.001080

Russell Loven . . . . . . . . . . . . . . . 6,213.26 0.059974

Michael Malone . . . . . . . . . . . . . . 1,296.27 0.012512

Teddy Martin . . . . . . . . . . . . . . . 2.50 0.000024

Issicc Miller . . . . . . . . . . . . . . . 46.40 0.000448

Carl Morley . . . . . . . . . . . . . . . . 36.02 0.000348

Robert Northcutt . . . . . . . . . . . . . 732.01 0.007066

Charles Noseff . . . . . . . . . . . . . . 4,908.32 0.047378

Paul Noseff . . . . . . . . . . . . . . . . 68.37 0.000660

Shirrel Noseff . . . . . . . . . . . . . . 14,369.91 0.138708

Carroll Oldaker . . . . . . . . . . . . . . 516.03 0.004981

Roger Oldaker . . . . . . . . . . . . . . . 408.32 0.003941

Howard Perkins . . . . . . . . . . . . . . 3.52 0.000034

Virginia Perry . . . . . . . . . . . . . . 1,509.60 0.014572

James R. Rippy . . . . . . . . . . . . . . 2,403.59 0.023201

David Rodriquez . . . . . . . . . . . . . . 145.78 0.001407

Pete Rodriquez . . . . . . . . . . . . . . 53.43 0.000516

Larry Romero . . . . . . . . . . . . . . . 242.62 0.002342

James Scarborough . . . . . . . . . . . . . 74.08 0.000715

Joe Scott . . . . . . . . . . . . . . . . . 88.11 0.000850

Michael Sharp . . . . . . . . . . . . . . . 200.70 0.001937

Nancy Shelley . . . . . . . . . . . . . . . 15,856.41 0.153056

Howard Smith . . . . . . . . . . . . . . . 105.03 0.001014
</TABLE>

AX-2
<PAGE> 22
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES PERCENTAGE
- --------------------------------------------------------------------------------
<S> <C> <C>
Joe Smith . . . . . . . . . . . . . . . . . 10,931.78 0.105520

Judy Streun . . . . . . . . . . . . . . . . 30.16 0.000291

Bradley Tate . . . . . . . . . . . . . . . 49.58 0.000479

Clifford Thomas . . . . . . . . . . . . . . 68.23 0.000659

Chris Van Dorren . . . . . . . . . . . . . 911.48 0.008798

Charles Wegner, Jr. . . . . . . . . . . . . 56.70 0.000547

Delmar Ray White . . . . . . . . . . . . . 2,388.92 0.023059

Richard Woodall . . . . . . . . . . . . . . 5.17 0.000050
---------- --------

TOTALS 103,598.66 1.00
========== ========
</TABLE>

AX-3
<PAGE> 23
EXHIBIT A(I)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of April, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and ZIADRIL, INC., a New Mexico
corporation ("ZIADRIL").

RECITALS:

A. Simultaneously with the execution of this Agreement,
PDC and ZIADRIL have entered into that certain Asset Purchase Agreement, dated
of even date herewith (the "Asset Purchase Agreement"), providing for, among
other things, the purchase by PDC of the drilling rigs, related equipment,
rolling stock, office equipment and real property owned by ZIADRIL.

B. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound, hereby agree as follows:

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through May 1, 2002.

2. Covenant Not to Compete.

(a) ZIADRIL covenants and agrees that during the
Non-Compete Period, ZIADRIL shall not, without the prior written consent of
PDC, directly or indirectly, alone or in association with any other person,
carry on, be engaged, concerned, or take part in, render services to, or own,
share in the earnings of, or invest in the stock, bonds, or other securities
of, any person which is engaged in, the contract oil and gas well drilling
business within the Permian Basin of West Texas and Southeastern New Mexico
(the "Competitive Business"); provided, however, that ZIADRIL may invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock

Exh A(I) - 1
<PAGE> 24
of any one issuer, two percent (2%) of the issued and outstanding shares, or,
in the case of bonds or other securities of any one issuer, two percent (2%) of
the aggregate principal amount thereof issued and outstanding; and (C) such
investment would not prevent, directly or indirectly, the transaction of
business by PDC or any affiliate of PDC with any state, district, territory, or
possession of the United States or any governmental subdivision, agency, or
instrumentality thereof by virtue of any statute, law, regulation or
administrative practice. The period of time during which ZIADRIL is prohibited
from engaging in certain activities by this Section shall be extended by the
length of time during which ZIADRIL is in breach of the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by ZIADRIL not to enter into competition with PDC
as set forth in Section 2(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of ZIADRIL to
comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Asset Purchase Agreement. PDC and ZIADRIL have independently
consulted with their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenant, with specific
regard to the nature of the business conducted by PDC and its affiliates.
ZIADRIL agrees that such covenant is reasonable in scope, geographic area, and
duration, and that compliance with such covenant would not impose economic
hardship on ZIADRIL.

3. Restrictions on Soliciting Business of PDC.

ZIADRIL further covenants and agrees that during the
Non-Compete Period, ZIADRIL will not, either for itself or for any other person
or entity, directly or indirectly, engage in any of the following activities in
a Competitive Business without the express prior written consent of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 2 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

4. Specific Performance.

Without intending to limit the remedies available to PDC,
ZIADRIL acknowledges that PDC will have no adequate remedies at law if ZIADRIL
violates the terms of Section 3 or 4, hereof. In such event, ZIADRIL agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from ZIADRIL.

Exh A(I) - 2
<PAGE> 25
The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.

5. Attorneys Fees and Costs.

If an action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys fees, costs and necessary expenses in addition to any
other relief to which that party may be entitled. This provision is applicable
to this entire Agreement.

6. Representations and Warranties of PDC and ZIADRIL.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to ZIADRIL that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of ZIADRIL. ZIADRIL
hereby represents and warrants to PDC that: (i) ZIADRIL has the capacity and
power to enter into and perform obligations of ZIADRIL under this Agreement;
(ii) ZIADRIL has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of ZIADRIL hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of ZIADRIL.

7. General Provisions.

(a) Compliance with Laws. The parties agree that they
will comply with all applicable laws and regulations of government bodies or
agencies in their respective performance of their obligations under this
Agreement.

(b) Governing Law and Construction. This Agreement will
be governed by and construed in accordance with the laws of the State of New
Mexico without reference to its conflict-of-laws principles. This Agreement's
final form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.

(c) Forum for Dispute Resolution. If any dispute arises
among the parties concerning the interpretation or performance of any portion
of this Agreement which the parties are unable to resolve themselves, and any
party brings an action against any other party seeking a declaratory order,
specific performance, damages, or any other legal or equitable relief based on
this Agreement, the parties agree that the forum for any such action shall be
an appropriate federal or state court in New Mexico having jurisdiction, agree
that venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party

Exh A(I) - 3
<PAGE> 26
in any such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.

(d) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter contained herein and supersedes any previous oral or written
communications, representations, understandings or agreements with respect
thereto. The terms of this Agreement may be modified only in a writing, signed
by authorized representatives of both parties.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to a subsidiary or affiliate without the prior written consent of ZIADRIL, and
provided further that a transfer by PDC as a result of a merger or sale of all
or substantially all of the assets of PDC with or to a third party that assumes
PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(f) Waiver. A waiver of a breach or default under this
Agreement will not constitute a waiver of any other breach or default. Failure
or delay by either party to enforce compliance with any term or condition of
this Agreement will not constitute a waiver of such term or condition.

(g) Severability. If any provision of this Agreement is
declared to be invalid, the parties agree that such invalidity will not affect
the validity of the remaining provisions of this Agreement, and further agree,
to the extent possible, to substitute for the invalid provision a valid
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

(i) Notice. Any notice, request, consent, demand or
other communication required to be given under this Agreement will be in
writing and will be given personally, by facsimile or by mailing the same,
first-class, postage prepaid to the appropriate address and facsimile number
set forth below or to such other person or at such other address as may
hereafter be designated by like notice. Notices by mail will be considered
delivered and become effective three days after the mailing thereof. All
notices by facsimile will be considered delivered and become effective
immediately upon the confirmed (by answer back or other tangible printed
verification or successful receipt) sending thereof.

Exh A(I) - 4
<PAGE> 27
To PDC:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating
Officer

To ZIADRIL:
ZIADRIL, Inc.
P.O. Box 1860
Hobbs, New Mexico 88240

with copies to:
Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88740

(j) Counterparts. This Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.

IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
------------------------------------
A. Glenn Patterson
President

"ZIADRIL"

ZIADRIL, INC.

By:
-------------------------------------
Joe Smith
President

Exh A(I) - 5
<PAGE> 28
EXHIBIT A(II)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of April, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and JOE SMITH, an individual residing
in Hobbs, New Mexico ("J Smith").

RECITALS:

C. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and ZIADRIL, Inc.
("ZIADRIL"), providing for, among other things, the purchase by PDC of the
drilling rigs, related equipment, rolling stock and office equipment owned by
ZIADRIL.

D. J Smith is an officer, a director and a stockholder
of ZIADRIL.

E. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through May 1, 2002, unless sooner terminated as the
result of the death of J Smith (the "Non-Compete Period").

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid J Smith, by cashier's check, the amount of $675,000 as compensation for
entering into this Agreement.

Exh A(II)-1
<PAGE> 29
3. Covenant Not to Compete.

(a) J Smith covenants and agrees that during the
Non-Compete Period, J Smith shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or own, share in the earnings of, or invest in the stock, bonds,
or other securities of, any person which is engaged in, the contract oil and
gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that J
Smith may invest in stock, bonds, or other securities of any Competitive
Business (but without otherwise participating in the Competitive Business) if:
(A) such stock, bonds, or other securities are listed on any national
securities exchange or are registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended; (B) the investment does not exceed, in the
case of any class of capital stock of any one issuer, two percent (2%) of the
issued and outstanding shares, or, in the case of bonds or other securities of
any one issuer, two percent (2%) of the aggregate principal amount thereof
issued and outstanding; and (C) such investment would not prevent, directly or
indirectly, the transaction of business by PDC or any affiliate of PDC with any
state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time during
which J Smith is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which J Smith is in breach of
the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by J Smith not to enter into competition with PDC
as set forth in Section 3(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of J Smith to
comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Asset Purchase Agreement. PDC and J Smith have independently
consulted with their respective counsel and have been advised in all respects
concerning the reasonableness and propriety of such covenant, with specific
regard to the nature of the business conducted by PDC and its affiliates. J
Smith agrees that such covenant is reasonable in scope, geographic area, and
duration, and that compliance with such covenant would not impose economic or
professional hardship on J Smith.

4. Restrictions on Soliciting Business of PDC.

J Smith further covenants and agrees that during the
Non-Compete Period, J Smith will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

Exh A(II)-2
<PAGE> 30
(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, J
Smith acknowledges that PDC will have no adequate remedies at law if J Smith
violates the terms of Section 3 or 4, hereof. In such event, J Smith agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from J Smith.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and J Smith.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to J Smith that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of J Smith. J Smith
hereby represents and warrants to PDC that: (i) J Smith has the capacity and
power to enter into and perform obligations of J Smith under this Agreement;
(ii) J Smith has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of J Smith hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of J Smith.

8. General Provisions.

Exh A(II)-3
<PAGE> 31
(b) Governing Law and Construction. This Agreement will
be governed by and construed in accordance with the laws of the State of New
Mexico without reference to its conflict-of-laws principles. This Agreement's
final form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to a subsidiary or affiliate without the prior written consent of J Smith, and
provided further that a transfer by PDC as a result of a merger or sale of all
or substantially all of the assets of PDC with or to a third party that assumes
PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

Exh A(II)-4
<PAGE> 32
(i) Notice. Any notice, request, consent, demand or
other communication required to be given under this Agreement will be in
writing and will be given personally, by facsimile or by mailing the same,
first-class, postage prepaid to the appropriate address and facsimile number
set forth below or to such other person or at such other address as may
hereafter be designated by like notice. Notices by mail will be considered
delivered and become effective three days after the mailing thereof. All
notices by facsimile will be considered delivered and become effective
immediately upon the confirmed (by answer back or other tangible printed
verification or successful receipt) sending thereof.

To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating
Officer

To J Smith:

Joe Smith
1116 Jicarilla
Hobbs, New Mexico 88240

with copies to:

Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88240

Exh A(II)-5
<PAGE> 33
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
-------------------------------------
A. Glenn Patterson
President

"J SMITH"

----------------------------------------
Joe Smith

Exh A(II)-6
<PAGE> 34
EXHIBIT A(III)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of April, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and KEN BROMLEY, an individual
residing in Hobbs, New Mexico ("K Bromley").

RECITALS:

F. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and ZIADRIL, Inc.
("ZIADRIL"), providing for, among other things, the purchase by PDC of the
drilling rigs, related equipment, rolling stock and office equipment owned by
ZIADRIL.

G. Ken Bromley is an officer, a director and a
stockholder of ZIADRIL.

H. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through May 1, 2002, unless sooner terminated as the
result of the death of K Bromley (the "Non-Compete Period").

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid K Bromley, by cashier's check, the amount of $675,000 as compensation for
entering into this Agreement.

Exh A(III)-1
<PAGE> 35
3. Covenant Not to Compete.

(a) K Bromley covenants and agrees that during the
Non-Compete Period, K Bromley shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or own, share in the earnings of, or invest in the stock, bonds,
or other securities of, any person which is engaged in, the contract oil and
gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that K
Bromley may invest in stock, bonds, or other securities of any Competitive
Business (but without otherwise participating in the Competitive Business) if:
(A) such stock, bonds, or other securities are listed on any national
securities exchange or are registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended; (B) the investment does not exceed, in the
case of any class of capital stock of any one issuer, two percent (2%) of the
issued and outstanding shares, or, in the case of bonds or other securities of
any one issuer, two percent (2%) of the aggregate principal amount thereof
issued and outstanding; and (C) such investment would not prevent, directly or
indirectly, the transaction of business by PDC or any affiliate of PDC with any
state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time during
which K Bromley is prohibited from engaging in certain activities by this
Section shall be extended by the length of time during which K Bromley is in
breach of the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by K Bromley not to enter into competition with PDC
as set forth in Section 3(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of K Bromley
to comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Asset Purchase Agreement. PDC and K Bromley have
independently consulted with their respective counsel and have been advised in
all respects concerning the reasonableness and propriety of such covenant, with
specific regard to the nature of the business conducted by PDC and its
affiliates. K Bromley agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on K Bromley.

4. Restrictions on Soliciting Business of PDC.

K Bromley further covenants and agrees that during the
Non-Compete Period, K Bromley will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

Exh A(III)-2
<PAGE> 36
(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, K
Bromley acknowledges that PDC will have no adequate remedies at law if K
Bromley violates the terms of Section 3 or 4, hereof. In such event, K Bromley
agrees that PDC shall have the right, in addition to any other rights it may
have, to obtain in any court of competent jurisdiction specific performance of
such Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from K Bromley.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and K Bromley.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to K Bromley that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of K Bromley. K
Bromley hereby represents and warrants to PDC that: (i) K Bromley has the
capacity and power to enter into and perform obligations of K Bromley under
this Agreement; (ii) K Bromley has duly and validly executed this Agreement;
(iii) the execution of this Agreement and performance of obligations of K
Bromley hereunder do not require the consent or approval of any other party;
and (iv) this Agreement constitutes a valid and binding obligation of K
Bromley.

8. General Provisions.

Exh A(III)-3
<PAGE> 37
(b) Governing Law and Construction. This Agreement will
be governed by and construed in accordance with the laws of the State of New
Mexico without reference to its conflict-of-laws principles. This Agreement's
final form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to a subsidiary or affiliate without the prior written consent of K Bromley,
and provided further that a transfer by PDC as a result of a merger or sale of
all or substantially all of the assets of PDC with or to a third party that
assumes PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

Exh A(III)-4
<PAGE> 38
(i) Notice. Any notice, request, consent, demand or
other communication required to be given under this Agreement will be in
writing and will be given personally, by facsimile or by mailing the same,
first-class, postage prepaid to the appropriate address and facsimile number
set forth below or to such other person or at such other address as may
hereafter be designated by like notice. Notices by mail will be considered
delivered and become effective three days after the mailing thereof. All
notices by facsimile will be considered delivered and become effective
immediately upon the confirmed (by answer back or other tangible printed
verification or successful receipt) sending thereof.

To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating
Officer

To K Bromley:

Ken Bromley
1318 Paige
Hobbs, New Mexico 88240

with copies to:

Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88240

Exh A(III)-5
<PAGE> 39
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
-------------------------------------
A. Glenn Patterson
President

"K Bromley"

----------------------------------------
Ken Bromley

Exh A(III)-6
<PAGE> 40
EXHIBIT A(IV)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of April, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and BILLY JENSEN, an individual
residing in Hobbs, New Mexico ("B Jensen").

RECITALS:

I. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and ZIADRIL, Inc.
("ZIADRIL"), providing for, among other things, the purchase by PDC of the
drilling rigs, related equipment, rolling stock, office equipment and real
property owned by ZIADRIL.

J. Billy Jensen is an officer, a director and a
stockholder of ZIADRIL.

K. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

Unless sooner terminated as the result of the death of B
Jensen, the period of this Agreement shall commence on the date hereof and
remain in effect during the period of B Jensen's employment by PDC and shall
end on the first to occur of the following (the "Non-Compete Period"): (i) one
year following termination by PDC of B Jensen's employment if such termination
is without Cause (as defined below); (ii) three years following termination by
PDC of B Jensen's employment if such employment is for Cause (as defined
below); or (iii) three years following the date of termination by B Jensen of
his employment with PDC for any reason.

For purposes of this Agreement, termination for "Cause" means
termination because of:

A(IV)-1
<PAGE> 41
(a) The continued failure by B Jensen to substantially
perform or the gross negligence in the performance of his duties hereunder
after PDC has made a written demand for performance which specifically
identifies the manner in which it believed that B Jensen has not substantially
performed his duties.

(b) The commission by B Jensen of a willful act of
dishonesty or misconduct which is injurious to PDC or Patterson Energy, Inc.
("PEC") or any other subsidiary of PEC., or the breach of a fiduciary duty to
PDC or PEC.

(c) A conviction or a plea of guilty or nolo contendere
in connection with fraud or any crime that constitutes a felony in the
jurisdiction involved not subject to further appeal or review, if such
conviction or plea is injurious to PDC or PEC.

(d) The commission by B Jensen of repeated acts of
substance abuse which are injurious to PDC or PEC.

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid B Jensen, by cashier's check, the amount of $200,000 as compensation for
entering into this Agreement.

3. Covenant Not to Compete.

(a) B Jensen covenants and agrees that during the
Non-Compete Period, B Jensen shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or own, share in the earnings of, or invest in the stock, bonds,
or other securities of, any person which is engaged in, the contract oil and
gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that B
Jensen may invest in stock, bonds, or other securities of any Competitive
Business (but without otherwise participating in the Competitive Business) if:
(A) such stock, bonds, or other securities are listed on any national
securities exchange or are registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended; (B) the investment does not exceed, in the
case of any class of capital stock of any one issuer, two percent (2%) of the
issued and outstanding shares, or, in the case of bonds or other securities of
any one issuer, two percent (2%) of the aggregate principal amount thereof
issued and outstanding; and (C) such investment would not prevent, directly or
indirectly, the transaction of business by PDC or any affiliate of PDC with any
state, district, territory, or possession of the United States or any
governmental subdivision, agency, or instrumentality thereof by virtue of any
statute, law, regulation or administrative practice. The period of time during
which B Jensen is prohibited from engaging in certain activities by this
Section shall be extended by the length of time during which B Jensen is in
breach of the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by B Jensen not to enter into competition with PDC
as set forth in Section 3(a) hereof is an essential

A(IV)-2
<PAGE> 42
element of this Agreement and the Asset Purchase Agreement and that, but for
the agreement of B Jensen to comply with such covenant, PDC would not have
agreed to enter into this Agreement or the Asset Purchase Agreement. PDC and B
Jensen have independently consulted with their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenant, with specific regard to the nature of the business conducted by PDC
and its affiliates. B Jensen agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on B Jensen.

4. Restrictions on Soliciting Business of PDC.

B Jensen further covenants and agrees that during the
Non-Compete Period, B Jensen will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, B
Jensen acknowledges that PDC will have no adequate remedies at law if B Jensen
violates the terms of Section 3 or 4, hereof. In such event, B Jensen agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from B Jensen.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

A(IV)-3
<PAGE> 43
7. Representations and Warranties of PDC and B Jensen.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to B Jensen that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of B Jensen. B Jensen
hereby represents and warrants to PDC that: (i) B Jensen has the capacity and
power to enter into and perform obligations of B Jensen under this Agreement;
(ii) B Jensen has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of B Jensen hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of B Jensen.

8. General Provisions.

A(IV)-4
<PAGE> 44
(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to a subsidiary or affiliate without the prior written consent of B Jensen, and
provided further that a transfer by PDC as a result of a merger or sale of all
or substantially all of the assets of PDC with or to a third party that assumes
PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer

A(IV)-5
<PAGE> 45
To B Jensen:

Billy Jensen
1731 W. Alabama
Hobbs, New Mexico 88240

with copies to:

Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88740

IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
-------------------------------------
A. Glenn Patterson
President

"B JENSEN"

----------------------------------------
Billy Jensen

A(IV)-6
<PAGE> 46
EXHIBIT A(V)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of April, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and LEE ROBERSON, an individual
residing in Hobbs, New Mexico ("L Roberson").

RECITALS:

A. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and ZIADRIL, Inc.
("ZIADRIL"), providing for, among other things, the purchase by PDC of the
drilling rigs, related equipment, rolling stock and office equipment owned by
ZIADRIL.

B. L Roberson is a consultant to ZIADRIL.

C. The execution and delivery of this Agreement is a
condition to the consummation of the Asset Purchase contemplated by the Asset
Purchase Agreement, and the parties are entering into this Agreement in order
to fulfill such condition.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through May 1, 2002, unless sooner terminated as the
result of the death of L Roberson (the "Non-Compete Period").

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid L Roberson, by cashier's check, the amount of $450,000 as compensation for
entering into this Agreement.

Exh A(V)-1
<PAGE> 47
3. Covenant Not to Compete.

(a) L Roberson covenants and agrees that during the
Non-Compete Period, L Roberson shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or own, share in the earnings of, or invest in the stock, bonds,
or other securities of, any person which is engaged in, the contract oil and
gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that L
Roberson may (1) be employed by a Competitive Business as long as he is
employed in an accounting or similar role and does not have or attempt to have
contact with customers or potential customers of the Competitive Business and
does not otherwise act in a manner which would violate Section 4 hereof; and
(2) invest in stock, bonds, or other securities of any Competitive Business
(but without otherwise participating in the Competitive Business) if: (A) such
stock, bonds, or other securities are listed on any national securities
exchange or are registered under Section 12(g) of the Securities Exchange Act
of 1934, as amended; (B) the investment does not exceed, in the case of any
class of capital stock of any one issuer, two percent (2%) of the issued and
outstanding shares, or, in the case of bonds or other securities of any one
issuer, two percent (2%) of the aggregate principal amount thereof issued and
outstanding; and (C) such investment would not prevent, directly or indirectly,
the transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which L
Roberson is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which L Roberson is in breach of
the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by L Roberson not to enter into competition with
PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of L
Roberson to comply with such covenant, PDC would not have agreed to enter into
this Agreement or the Asset Purchase Agreement. PDC and L Roberson have
independently consulted with their respective counsel and have been advised in
all respects concerning the reasonableness and propriety of such covenant, with
specific regard to the nature of the business conducted by PDC and its
affiliates. L Roberson agrees that such covenant is reasonable in scope,
geographic area, and duration, and that compliance with such covenant would not
impose economic or professional hardship on L Roberson.

4. Restrictions on Soliciting Business of PDC.

L Roberson further covenants and agrees that during the
Non-Compete Period, L Roberson will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

Exh A(V)-2
<PAGE> 48
(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, L
Roberson acknowledges that PDC will have no adequate remedies at law if L
Roberson violates the terms of Section 3 or 4, hereof. In such event, L
Roberson agrees that PDC shall have the right, in addition to any other rights
it may have, to obtain in any court of competent jurisdiction specific
performance of such Sections of this Agreement or injunctive relief to restrain
any breach or threatened breach thereof. Nothing herein shall be construed as
prohibiting PDC from pursuing any other remedies available to PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from L Roberson.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and L Roberson.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to L Roberson that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of L Roberson. L
Roberson hereby represents and warrants to PDC that: (i) L Roberson has the
capacity and power to enter into and perform obligations of L Roberson under
this Agreement; (ii) L Roberson has duly and validly executed this Agreement;
(iii) the execution of this Agreement and performance of obligations of L
Roberson hereunder do not require the consent or approval of any other party;
and (iv) this Agreement constitutes a valid and binding obligation of L
Roberson.

Exh A(V)-3
<PAGE> 49
8. General Provisions.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to a subsidiary or affiliate without the prior written consent of L Roberson,
and provided further that a transfer by PDC as a result of a merger or sale of
all or substantially all of the assets of PDC with or to a third party that
assumes PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

Exh A(V)-4
<PAGE> 50
provision that approximates the intent and economic effect of the invalid
provision as closely as possible.

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer

To L Roberson:

Lee Roberson
3305 N. Grimes
Hobbs, New Mexico 88240

with copies to:

Tommy D. Parker, Esq.
206 West Snyder
Hobbs, New Mexico 88240

Exh A(V)-5
<PAGE> 51
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
-------------------------------------
A. Glenn Patterson
President

"L ROBERSON"

----------------------------------------
Lee Roberson

Exh A(V)-6
<PAGE> 52
EXHIBIT B

BILL OF SALE AND ASSIGNMENT

KNOW ALL MEN BY THESE PRESENTS, that, pursuant to that certain
Asset Purchase Agreement, dated of even date herewith ("Asset Purchase
Agreement") between PATTERSON DRILLING COMPANY ("PDC"), a Delaware corporation,
and ZIADRIL, Inc. ("ZIADRIL"), a New Mexico corporation (ZIADRIL is referred to
herein as the "Assignor"), the Assignor, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, hereby grants,
bargains, sells, conveys and transfers unto PDC (the "Assignee"), all of the
Assignor's right, title and interest in and to (i) the Drilling Rigs, Equipment
and Vehicles set forth in Appendix I attached hereto and incorporated herein by
this reference; and (ii) the Drilling Contracts and Other Agreements described
in Appendix II attached hereto and incorporated herein by this reference.

TO HAVE AND TO HOLD the same unto the Assignee and the
Assignee's successors and assigns forever. The Assignor hereby covenants and
agrees that it has the full right, power and authority to sell, convey and
transfer the foregoing property to the Assignee pursuant to this Bill of Sale
and Assignment.

IN WITNESS WHEREOF, the Assignor has caused this Bill of Sale
and Assignment to be duly executed by its duly authorized officer as of the
____ day of April, 1997.

ZIADRIL, INC.

By:
-------------------------------------
Joe Smith
President

Exh B-1
<PAGE> 53
APPENDIX I
TO
BILL OF SALE AND ASSIGNMENT
FROM
ZIADRIL, INC.
TO
PATTERSON DRILLING COMPANY
(LIST OF ASSETS ASSIGNED)

A. DRILLING RIGS AND EQUIPMENT

RIG NO. 2

DRAWWORKS

EMSCO GB-800 Single Drum Drawworks, S/N-13, 1000 HP, LEBUS Grooved
f/1-l/4" Line, Makeup & Breakout Catheads, Overrunning Clutch, Air
Driller's Console, Crown-O-Matic

COMPOUND

EMSCO 2-Engine Compound, S/N-N/A, w/Single Pedestal Pump Drive, (2)
QUINCY 325 Air Compressors, S/Ns-720033 & 231186, w/Covered Skid

BRAKE

PARKERSBURG 46" Double Hydromatic Brake, S/N-N/A

ENGINES

(2) CAT D379 610 HP Diesel Engines, S/Ns-68B0703 & N/A, w/Air
Starters, Radiators, Gauges, Air Clutches

MAST

1979 PYRAMID 136'H Cantilever Mast, S/N-DAM536791, 600,000# Static
Hook Load, Pin-Type, Crown Block w/(6) Sheaves, Fastline Sheave,
1-1/4" Line, 4" Standpipe, Crown Safety Platform, Racking Board, Tong
Counterweights, Ladder, Derrick Climber, Geronimo, Boom, Mast Stand,
Standpipe Manifold w/4" & 2" Gate Valves

SUBSTRUCTURE

15'H x 25'W x 58'L Box-On-Box Substructure w/Engine Stepdown, Rotary
Beams, V-Door Ramp, (4) Stairs, Safety Rails, Deadline Anchor, MISSION
1-1/2" x 2" Washdown Pump p/b Compound, Steel Windwalls w/Windwall
Box, QUINCY Air Compressor p/b LISTER ST3A Diesel Engine

Exh B-2
<PAGE> 54
RIG NO. 2

PUMPS

CONTINENTAL EMSCO DC-1000 Duplex Mud Pump. S/N-190, 1000 HP, Cast
Steel Fluid End w/Quick-Change Caps, HYDRIL K-20-5000 Pulsation
Dampener, S/N-N/A, CONTINENTAL EMSCO 2" Shear Relief Valve, Rod
Cooling Pump, Drive Assembly, Skidded, Compound Driven

CONTINENTAL EMSCO DA-850 Duplex Mud Pump, S/N-87, 850 HP, 7-1/2" x
16", MATTCO Forged Steel Fluid End w/Quick- Change Caps, HYDRIL
K-20-3000 Pulsation Dampener, CONTINENTAL EMSCO 2" Shear Relief Valve,
Rod Cooling Pump, Type D Rebuilt 3000 PSI Pressure Gauge, S/N-RH452,
Drive Assembly, Skidded w/Engine

PUMP POWER

CAT D379 610 HP Diesel Engine, S/N-N/A, Air Starter, Radiator, Gauges,
Air Clutch

ROTATING EQUIPMENT

GARDNER-DENVER 27-1/2 27-1/2" x 53-1/4" Rotary Table, S/N-N/A,
Pin-Type Master Bushing

OIL WELL PC-425 425-Ton Swivel, S/N-N/A

5-1/4" x 40'L Square Kelly

VARCO HD Kelly Drive Bushing, Pin-Type

Upper Kelly Valve

Lower Kelly Valve

Inside Blowout Preventer

TRAVELING EQUIPMENT

GARDNER-DENVER 300-Ton Block, S/N-N/A, w/(5) Sleaves, 1-1/4" Line

BJ Dynaplex 5350 350-Ton Hook, S/N-N/A

3-1/2" x 120" Elevator Links

WELL CONTROL EQUIPMENT

HYDRIL GK-12-900 13-5/8" 3000 PSI Annular Blowout Preventer, S/N-N/A

SHAFFER Type B 13-5/8" 3000 PSI Double Blowout Preventer w/4-1/2" Pipe
& Blind Rams, S/N-N/A

26"H x 13-5/8" 3000 PSI x 11" 3000 PSI, 10"H x 13-5/8" 3000 PSI x 11"
3000 PSI & 12"H x 13-5/8" 2000/3000 PSI x 11" 2000/3000 PSI Adapter
Spools, 13-5/8" 5000 PSI x 11" 5000 PSI DSA

KOOMEY T-20180-3S 6-Station Closing Unit, S/N-1452801, w/279.3-Gallon
Hydraulic Fluid Reservoir, Air-Operated Hydraulic Pump, Triplex
Hydraulic Pump w/Electric Motor, (18) 10-Gallon Bladder-Type
Separator/Accumulators, Skidded w/Lift Frame

(14) Approximately 20'L x 1"ID Hydraulic Lines w/Hammer Unions

Exh B-3
<PAGE> 55
RIG NO. 2

(6) Steel Flex Lines

W-K-M 5000 PSI Blowout Preventer Choke Manifold w/4-1/16" x 2-1/16"
Studded Cross, (4) 2-1/16" Gate Valves, 4- 1/16" Gate Valves, (2) 2"
Adjustable Chokes, Separate Buffer Chamber w/(4) DEMCO 4" Gate Valves,
(2) 2" Ball Valves, On Adjustable Support

RIG HOUSES

TETON HOMES 10'W x 40'L Toolpusher's House, S/N-N/A, Fully Furnished,
Skidded

10'W x 24'L Doghouse w/Knowledge Box, (5) Lockers, Bench Storage,
Cabinets, Parts Bins, Fluorescent Lights, Heater, Skidded

WIZARD Automatic Driller

7'W x 24'L Change House w/Round Top, (16) Lockers, Bench Storage,
Cabinets, Fluorescent Lights, Heaters, Skidded

7'6"W x 30'L Mud House w/Round Top, (3) Triangular Supports,
Fluorescent Lights, Skidded

UTILITY HOUSE/GENERATORS

CAT SR-4 210 KW AC Generator Set, S/N-5HA01491, w/CAT 3406 Diesel
Engine, S/N-90UI3488, Air Starter, Radiator, Gauges, Skidded

CAT SR-4 260 KW AC Generator Set, S/N-48BH3749, w/CAT 3406PC Diesel
Engine, S/N-90U5379, Electric Starter, Radiator, Gauges, Skidded

QUINCY 350 Air Compressor, S/N-184555, w/DYNA 10 HP Electric Motor,
Approximately 200-Gallon Air Receiver Tank

SQUARE D Electrical Controls

All Above Mounted in 9'8"W x 36'L Utility House w/Round Top, 11'L
Parts Room, Fluorescent Lights, Heater, Skidded

MUD SYSTEM

8'W x 6'H x 36'L Crimped-Steel Mud Suction Tank w/(2) Compartments,
Round Bottom, Internal Plumbing, Top & Side-Mounted Walkways, Stairs,
Safety Rails, Skidded

MISSION Magnum 5" x 6" Centrifugal Pump, S/N-N/A, w/50 HP Electric
Motor, Skidded

8'W x 6'H x 36'L Mud Slugging Tank w/Single-Compartment, Round Bottom.
Internal Plumbing, Top & Side-Mounted Walkways, Mud Hopper, Safety
Rails, Skidded

8'W x 6'H x 36'L Crimped-Steel Mud Volume Tank, Single-Compartment,
Round Bottom, Internal Plumbing, Top & Side-Mounted Walkways, Stairs,
Safety Rails, Skidded

8'W x 6'H x 36'L Crimped-Steel Mud Shaker Tank w/(3) Compartments,
Round Bottom, Internal Plumbing

Exh B-4
<PAGE> 56
RIG NO. 2

WATER/FUEL TANKS

(2) 10'6"Dia x 32'L 500-Barrel Water Tanks, Skidded, (1) w/REEDY
2" x 3" Centrifugal Pump p/b 25 HP Electric Motor

7'4"Dia x 8'H Freshwater Tank, Skidded

4'Dia x 13'L 4-Compartment Lubester, Skidded

HANDLING TOOLS

WOOLLEY B Tongs w/Heads

WOOLLEY 4-1/2"BN Drill Pipe Elevators

BJ MAA 8"SS Elevators

WILSON 7"SS Center Latch Drill Collar Elevators

WOOLLEY Long Drill Pipe Slips

WOOLLEY 10-Segment Drill Collar Slips

WOOLLEY 11-Segment Drill Collar Slips

Drill Collar Safety Clamp

(27) Drill Collar Lift Nubbins

INGERSOLL-RAND H5UL Air Hoist, S/N-RFH85167

Mud Bucket

AUXILIARY EQUIPMENT

TOTCO 100 800,000# Capacity Weight Indicator w/Pump Pressure, Tong
Line Pull & Rotary Torque Gauges

TOTCO 4 Mud Gauge, S/N-3474R

3-1/2"ID x 55'L Rotary Hose

(2) 10"ID x 5'L Suction Hoses

(2) 3"ID x 12'L Vibrator Hoses

42"H x 5'6"W x 56'L 2-Section Catwalk w/Steel Deck

30"H x 5'W x 10'L Junk Box w/Lift Frame

(7) 33"H to 36"H x 7'W to 7'6"W x 34'L Pipe Tubs

2 Sets (4) 42"H x 28'L Rectangular Pipe Racks

Exh B-5
<PAGE> 57
RIG NO. 2

2 Sets (4) 42"H x 28'L Triangular Pipe Racks

CEDCO Wireline Measuring Device

(16) Miscellaneous Drill Collar Subs

Rathole & Mousehole

Fluorescent Rig Lights w/Wiring

Approximately 6000' of 1-1/4" Drill Line w/Spool, Stand

Miscellaneous Spare Parts, Hand Tools, Valves, Fire Extinguishers, Etc

TOTAL RIG NO. 2 W/O TUBULARS:

DRILL PIPE

1023 (33 Joints) 4-1/2", Grade X-95, 22.82#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 6-1/8"OD to 6-1/4"OD

Approximately 4495' (145 Joints) 4-1/2", Grade X-95, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 5- 15/16"OD to 6-1/8"OD

Approximately 8990' (290 Joints) 4-1/2", Grade E, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 5-7/8"OD to 6"OD

DRILL COLLARS

(13) 5-3/4"OD to 5-13/16"OD x Approximately 29'L Drill Collars
w/4-1/2"H-90 Connections

(23) 6-15/16"OD to 6-3/8"OD x Approximately 29'L Drill Collars
w/5"H-90 Connections

(21) 7-3/4"OD x Approximately 29'L Drill Collars w/6-5/8"H-90
Connections

TOTAL RIG NO. 2 W/TUBULARS:

Exh B-6
<PAGE> 58
RIG NO. 3

RIG NO. 3

DRAWWORKS

MID-CONTINENT U-712-A Single Drum Drawworks, S/N-59, 1200 HP, LEBUS
Grooved f/1-1-4" Line, KELCO Makeup & Breakout Catheads, Overrunning
Clutch, Air Driller's Console, Crown-O-Matic

COMPOUND

UNIT RIG & EQUIPMENT 2-Engine Compound, S/N-57, w/Single Pedestal Pump
Drive, (2) QUINCY 325 Air Compressors, S/Ns-200921 & N/A

BRAKE

PARKERSBURG 46RC Double Hydromatic Brake, S/N-P20369

ENGINES

(2) CAT D379 610 HP Diesel Engines, S/Ns-N/A, (1) w/LISTER Pony
Start, (2) w/Air Starters, Radiators, Gauges, Air Clutches

MAST

LEE C. MOORE 131'H Cantilever Mast, S/n-T3424, 550,000# GNC, Pin-Type,
Crown Block w/(5) 42" Sheaves, 56" Fastline Sheave, 1-1/8" Line, 4"
Standpipe, Crown Safety Platform, Racking Board, Tong Counterweights,
Ladder, Derrick Climber, Geronimo, Boom, Mast Stand, Standpipe
Manifold w/4" & 2" Gate Valves

SUBSTRUCTURE

LEE C. MOORE 18'H x 20'W x 46'L Box-On-Box Substructure w/-4'W Folding
Side Extensions, Rotary Beams, V-Door Ramp, (4) Stairs, Safety Rails,
NATIONAL Deadline Anchor, Steel Windwalls w/Windwall Box, 5'W x 7'H x
5'L Stair Landing/Parts House

PUMPS

CONTINENTAL EMSCO DB-7OO Duplex Mud Pump, S/N241, 700 HP, 7-1/2" x
16", Cast Steel Fluid End w/Quick-Change Caps, HYDRIL K-20-3000
Pulsation Dampener CONTINENTAL EMSCO 2" Shear Relief Valve, Rod
Cooling Pump, Drive Assembly, Skidded, Compound Driven

EMSCO DB-550 Duplex Mud Pump, S\N-47, 550 HP, 7-1/2", MATTCO Forged
Steel Fluid End w/Quick-Change Caps, HYDRIL K-20-3000 Pulsation
Dampener, SN-N/A, DEMCO 2" Shear Relief Valve, Rod Cooling Pump,
CAMERON Type F 3000 PSI Pressure Gauge, S/N-67000, Drive Assembly,
Skidded, Master Skidded w/Engine

PUMP POWER

CAT D379 Diesel Engine, S/N-68B4510, Air Starter, Radiator, Gauges
w/Air Clutch

Exh B-7
<PAGE> 59
RIG NO. 3

ROTATING EQUIPMENT

OILWELL A27-1/2 27-1/2" x 53-1/4" Rotary Table, S/N-N/A, Split Master
Bushing

NATIONAL N-69 Swivel

4-1/2" x 40'L Square Kelly

3-1/2"x 40'L Square Kelly

VARCO HD Kelly Drive Bushing

Upper Kelly Valve

Lower Kelly Valve

Inside Blowout Preventer

TRAVELING EQUIPMENT

IDECO 360-Ton Block, S\N-N/A, w/(5) 50" Sheaves, 1-1/8 Line

WEB WILSON Hydra Hook 350-Ton Hook, S/N-N/A

3-1/2" x 132" Elevator Links

WELL CONTROL EQUIPMENT

SHAFFER SPH 5000 PSI Annular Blowout Preventer, S/N-N/A

SHAFFER LWS 11" 5000 PSI Double Blowout Preventer w/4-1/2" Pipe &
Blind Rams, S/N-N/A

24"H x 11"ID 5000 PSI Drilling Spool w/4-1/16" Outlets, (2) 4-1/16"
Manual Gate Valves, 2-1/16" Gate Valve, Check Valve

CAMERON 4-1/16" 5000 PSI Gate Valve, 21"H x 11" 5000 PSI x 11" 3000
PSI & 21"H x 11" 3000 PSI x 13-5/8" 3000 PSI Adapter Spools

KOOMEY '80 120-11SX 6-Station Closing Unit, S/N-2527, w/14"W x 36"H x
10'6"L Hydraulic Fluid Reservoir, (2) Air-Operated Hydraulic Pumps,
(12) 10-Gallon Bladder-Type Separator/Accumulators, Approximately 100'
of Control Cable, Skidded

(3) 10' Suitcase Sections w/(9) Lines Each of Hydraulic Lines

(9) Approximately 10'L Steel Flex Hoses

KOOMEY '80 A6GRB 6-Station Remote Closing Unit, S/N-2527

W-K-M 5000 PSI Blowout Preventer Choke Manifold w/4-1/16" x 2-1/16"
Flanged Cross, (4) 2-1/16" Gate Valves, (1) 4-1/16" Gate Valve, (2) 2"
Adjustable Chokes, On Adjustable Stand

Buffer Chamber w/(4) DEMCO 4" Gate Valves, (2) 2" Ball Valves, On
Adjustable Stand

Exh B-8
<PAGE> 60
RIG NO. 3

RIG HOUSES

TETON HOMES 10'W x 40'L Toolpusher's House, Fully Furnished

10'W x 24'L Doghouse w\Round Top, Knowledge Box, (6) Lockers, Bench
Storage, Cabinets, Parts Bins, Fluorescent Lights, Heater, Skidded

SATELLITE Apollo Automatic Driller, S/N-N/A

8'W x 24'L Crimped-Steel Change House w/Round Top, (16) Lockers, Bench
Storage, Cabinets, Fluorescent Lights, Heater, Skidded

7'6"W x 30'L Mud House w/Round Top, (3) Triangular Supports,
Fluorescent Lights, Skidded

GENERATORS/UTILITY HOUSE

CAT SR-4 155 KW AC Generator Set, S/N-5EA03043, w/CAT 3306PC Diesel
Engine, S/N-66D45979, w/Air Starter, Radiator, Gauges

CAT SR-4 155 KW AC Generator Set, S/N-5EA03040, w/CAT 3306 Diesel
Engine, S/N-N/A, w/Electric Starter, Radiator, Gauges

QUINCY 390 Air Compressor, S/N-212458, w/BALDOR Electric Motor, Air
Receiver Tank

QUINCY 5120 Air Compressor, S/N-213663, w/BALDOR Electric Motor

Electrical Controls

All Above Mounted in 9'10"W x 35'L Utility House w/round Top,
Fluorescent Lights, Heater, Skidded

MUD SYSTEM

7'6"W x 6'H x 36'L Mud Suction Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

HARRISBURG 6" x 8" Centrifugal Pump, S/N-N/A, w/GE 50 HP Electric
Motor, Skidded

7'6"W x 5'H x 34'L Mud Slugging Tank w/Single-Compartment, Round
Bottom, Internal Plumbing, Top & Side-Mounted Walkways, Safety Rails,
Skidded

7'6"W x 6'H x 36'L Mud Volume Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

7'6"W x 6'H x 36'L Mud Shaker Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

WATER/FUEL TANKS

(2) 10'6"Dia x 32'L Water Tanks, Skidded, (1) w/2" x 3"
Centrifugal Pump p/b Electric Motor

7'4" Dia x 8'H Water Tank, Skidded

4' Dia x 13'L 4-Compartment Lubester, Skidded

Exh B-9
<PAGE> 61
RIG NO. 3

HANDLING TOOLS

WOOLLEY B Tongs w/Heads

WOOLLEY 4-1/2"BN Drill Pipe Elevators

WILSON 7"SS Center Latch Elevators

WTM SS150 7" Center Latch Drill Collar Elevators

WOOLLEY Long 4-1/2" Drill Pipe Slips

WOOLLEY 10-Segment Drill Collar Slips

WOOLLEY 11-Segment Drill Collar Slips

Drill Collar Safety Clamp

(25) Drill Collar Lift Nubbins

INGERSOLL-RAND K5UL Air Hoist, S/N-RCM86901

Mud Bucket

AUXILIARY EQUIPMENT

TOTCO 75 600,000# Capacity Weight Indicator w/Pump Pressure, Tong
Line Pull & Rotary Torque Gauges

TOTCO 4 Mud Gauge, S/N-43219

3-1/2"ID x 55'L Rotary Hose

(2) 10"ID x 6'L Suction Hoses

CEDCO 275A Wireline Measuring Device, S/N-435

(2) 3"ID x 12'L Vibrator Hoses

42"H x 6'W x 58'L 2-Section Catwalk w/Steel Deck

28"H x 7'6"W x 11'8"L Junk Box

(10) 33"H to 36"H x 7'W to 7'6"W x 34'L Pipe Tubs

4 Sets (8) 42"H x 28'L Triangular Pipe Racks

(12) Miscellaneous Drill Collar Subs, (1) Junk Sub

Rathole & Mousehole

Fluorescent & Mercury-Vapor Rig Lights w/Wiring

Approximately 2500' of 1-1/4" Drill Line w/Spool, Stand

Exh B-10
<PAGE> 62
RIG NO. 3

BRANDT B150 Bug Blower, S/N-8235

(4) 6'W x 24'6"L Steel-Framed Wood Rig Mats f/Substructure

Miscellaneous Spare Parts, Hand Tools, Valves, Fire Extinguisher, Etc

TOTAL RIG NO. 3 W/O TUBULARS:

DRILL PIPE

1550' (50 Joints) 4-1/2", Grade X-95, 22.82#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 6-1/8"OD to 6-1/4"OD

Approximately 13,640' (440 Joints) 4-1/2", Grade E, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 6- 3/16"OD to 6"OD

Approximately 13,900' (448 Jts) 3-1/2", Grade E, 13.30# Range 2 Drill
Pipe w/3-1/2"IF Tool Joints, 4-11/16"OD to 4-5/8"OD

DRILL COLLARS

(28) 6"OD to 6-11/16"OD x Approximately 29.50'L Drill Collars
w/4-1/2"XH Connections

(15) 7-9/16"OD to 7-3/4"OD x Approximately 29'L Drill Collars
w/6-5/8"H-90 Connections

(35) 4-13/16"OD to 4-7/8"OD x Approximately 29.25'L Drill Collars
w/3-1/2"IF Connections

TOTAL RIG NO. 3 W/TUBULARS:

Exh B-11
<PAGE> 63
RIG NO. 6

RIG NO. 6

DRAWWORKS

SKYTOP BREWSTER N-75 Single Drum Drawworks, S/N-750026, 750 HP, LEBUS
Grooved f/1-1/4" Line, FOSTER, Catheads, Overrunning Clutch, Air
Driller's Console Controls, Crown-O-Matic

COMPOUND

3-Engine In-Line Compound w/Single Pedestal Pump Drive, (2) QUINCY 370
Air Compressors, Covered Skid

BRAKE

PARMAC 342 34" Double Hydromatic Brake, S/N-N/A

ENGINES

(3) CAT D-353E 410 HP Diesel Engines, S/Ns-46B7963, 46B8328 & 46B8138,
(1) w/LISTER Pony Start w/TWIN DISC Torque Converter, S/N-15506, (2)
w/Air Starters, Radiators, Gauges, Air Clutches

MAST

TRI-STAR 133'H Cantilever Mast, S/N-N/A, 550,000# GNC, Pin-Type, Crown
Block w(4) Sheaves, (1) Fastline Sheave, 1-1/8" Line, 4" Standpipe,
Crown Safety Platform, Racking Board, Tong Counterweights, Ladder,
Derrick Climber, Geronimo, Boom, Mast Stand, Standpipe Manifold w/4" &
2" Gate Valves

SUBSTRUCTURE

TRI-STAR 17'H x 24'8"W x 42'L Box-On-Box Substructure W/Rotary Beams,
V-Door Ramp, Stairs, Safety Rails, Deadline Anchor, 5'W x 7'H x 5'L
Stair Landing/Parts House, Steel Windwalls

PUMPS

CONTINENTAL EMSCO DC-700 Duplex Mud Pump), S/N-271, 700 HP, 7-1/2" x
16". Forged Steel Fluid End w/Quick- Change Caps, GM MATTCO Pulsation
Dampener, S/N-200507, CONTINENTAL EMSCO 2" Shear Relief Valve, Rod
Cooling Pump, Drive Assembly, Skidded, Compound Driven

EMSCO DC-700 Duplex Mud Pump, S/N-N/A, 700 HP, 7-1/2" x 14", Cast
Steel Fluid End w/Quick-Change Caps, CONTINENTAL EMSCO PD-53 Pulsation
Dampener, S/N-N/A, DEMCO 2" Shear Relief Valve, Rod Cooling Pump,
Drive Assembly, Master Skidded w/Engine

PUMP POWER

CAT D379 600 HP Diesel Engine, S/N-N/A, Air Starter, Radiator, Gauges
w/Air Clutch

ROTATING EQUIPMENT

OILWELL A20-1/2 20-1/2" x 53-1/4" Rotary Table, S/N-N/A, Split Master
Bushing

NATIONAL N-47 200-Ton Swivel

Exh B-12
<PAGE> 64
RIG NO. 6

4-1/4" x 40'L Square Kelly

VARCO HD Kelly Drive Bushing

Upper Kelly Valve

Lower Kelly Valve

Inside Blowout Preventer

TRAVELLING EQUIPMENT

BREWSTER Block/Hook Combination w/BJ 5250 Unimatic Hook

3-1/2" x 120" Elevator Links

WELL CONTROL EQUIPMENT

SHAFFER SPH 11" 5000 PSI Annular Blowout Preventer, S/N-N/A

SHAFFER LWS 11" 5000 PSI Double Blowout Preventer w/4-1/2" Pipe &
Blind Rams, S/N-N/A

24"H x 11"ID 5000 PSI Drilling Spool w/(2) 4-1/16" Outlets, (3)
4-1/16" Gate Valves

15"H x 11" Adapter Spool

1972 KOOMEY G26160-3B 6-Station Closing Unit, S/N-5002, w/375-Gallon
Hydraulic Fluid Reservoir, (2) Air- Operated Hydraulic Pumps, Triplex
Hydraulic Pump w/Electric Motor, (2) 80-Gallon Spherical Accumulators,
Skidded

(18) 1"ID x Approximately 20'L Steel Hydraulic Lines w/Hammer
Unions

KOOMEY 6-Station Remote Closing Unit, S/N-N/A, Mounted on Doghouse
Porch

BARTON 5000 PSI Blowout Preventer Choke Manifold w/4-1/16" x 2-1/16"
Studded Cross, (1) 4-1/16" Gate Valve, (5) 2-1/16" Gate Valves, 2"
Positive Choke, 2" Adjustable Choke, On Adjustable Stand, Buffer
Chamber w/(4) DEMCO 4" Gate Valves, (2) DEMCO 2" Gate Valves, On
Adjustable Stand

RIG HOUSES

TETON HOMES 10'W x 40'L Toolpusher's House, Fully Furnished, Skidded

10'W 24'L Doghouse w/Round Top, Knowledge Box, (6) Lockers, Bench
Storage, Cabinets, Part Bins, Fluorescent Lights, Heater, Skidded

SATELLITE Apollo Automatic Driller, S/N-N/A

7'6"W x 24'L Change House w/Round Top, (16) Lockers, Bench Storage,
Cabinets, Roof-Mounted Doghouse Supports, Fluorescent Lights, Heater,
Skidded

7'6"W x 26'L Mud House w/Round Top, Fluorescent Lights, Skidded

Exh B-13
<PAGE> 65
RIG NO. 6

GENERATORS/UTILITY HOUSE

CAT 135 KW AC Generator Set, S/N-N/A, w/CAT 3306 Diesel Engine,
S/N-N/A, Electric Starter, Radiator, Gauges

CONDEC 135 KW AC Generator Set, S/N-BA11511CF, w/CAT D333 Diesel
Engine, S/N-66D7587, Air Starter, Radiator, Gauges

QUINCY 350 Air Compressor, S/N-N/A, w/Electric Motor, Air Receiver
Tank

All Above Mounted in 10'W x 25'L Utility House w/Round Top,
Fluorescent Lights, Skidded

MUD SYSTEM

7'6"W x 6'H x 36'L Mud Suction Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

REEDY 6" x 8" Centrifugal Pump, S/N-N/A, p/b 60 HP Electric Motor

7'W x 5'8"H x 30'L Mud Slugging Tank w/Single-Compartment, Round
Bottom, Internal Plumbing, Mud Hopper, Top & Side-Mounted Walkways,
Stairs, Safety Rails, Skidded

7'6"W x 6'H x 36'L Mud Volume Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

7'W x 6'H x 36'L Mud Shaker Tank, (2) Compartments, Mud Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

WATER/FUEL TANKS

(2) 10'Dia x 32'L Water Tanks, Skidded, 7'4"Dia x 8'H Water Tank,
Skidded, (1) w/2" x 3" Centrifugal Pump, Electric Motor

10'6"Dia x 32'L Brine Tank, Skidded

4'Dia x 13'L 4-Compartment Lubester, Skidded

HANDLING TOOLS

BJ Type B Tongs w/Heads

WTM 4-1/2"BN Drill Pipe Elevators

WOOLLEY Long 4-1/2" Drill Pipe Slips

WOOLEY 11-Segment Drill Collar Slips

WILSON Center Latch Drill Collar Elevators

Drill Collar Safety Clamp

(17) Drill Collar Lift Nubbins

Exh B-14
<PAGE> 66
RIG NO. 6

INGERSOLL-RAND H5UL Air Hoist, S/N-35500

Mud Bucket

AUXILIARY EQUIPMENT

TOTCO 50 400,000# Capacity Weight Indicator w/Pump Pressure, Tong Line
Pull & Rotary Torque Gauges

TOTCO 4 Mud Gauge, S/N-11062R

3-1/2"ID x 55'L Rotary Hose

10"ID x 5'L Suction Hose

8"ID x 5'L Suction Hose

(2) 3-1/2"ID x 12'L Vibrator Hoses

42"H x 6'W x 60'L 2-Section Catwalk w/Steel Deck

24"H x 6'W x 10'L Junk Box, Skidded

(5) 33"H x 7'6"W x 34'L Pipe Tubs

3 Sets (6) 42"H x 28'L Triangular Pipe Racks

(13) Miscellaneous Drill Collar Subs, (2) Junk Subs

Rathole & Mousehole

Fluorescent Rig Lights w/Wiring

Approximately 7000' of 1-1/4" Drill Line w/Spool, Stand

Miscellaneous Spare Parts, Hand Tools, Valves, Fire Extinguishers,
Etc.

TOTAL RIG NO. 6 W/O TUBULARS:

DRILL PIPE

1550' (50 Joints) 4-1/2", Grade X-95, 22.82#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 6-1/8"OD to 6-1/4"OD

1550' (50 Joints) 4-1/2", Grade G, 22.82#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 6"OD to 6-1/4"OD, HB, PC

11.935' (385 Joints) 4-1/2", Grade E, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 5-7/8"OD to 6-1/8"OD

DRILL COLLARS

(5) 6-3/8"OD x Approximately 29'L Drill Collars w/5"H-90
Connections

Exh B-15
<PAGE> 67
RIG NO. 6

(21) 5-7/8"OD to 6-1/8"OD x Approximately 29'L Drill Collars
w/4-1/2"XH Connections

(21) 7-1/2"OD to 7-13/16"OD x Approximately 29.50'L Drill Collars
w/6-5/8"H-90 Connections

TOTAL RIG NO. 6 W/TUBULARS:

Exh B-16
<PAGE> 68
RIG NO. 7

RIG NO. 7

DRAWWORKS

BREWSTER N-75 Single Drum Drawworks, S/N-2W25S, 1000 HP, LEBUS Grooved
f/1-1/4" Line, FOSTER Makeup & Breakout Catheads, Overrunning Clutch,
Air Driller's Console, Crown-O-Matic, Drawworks/Compound Shed Cover

COMPOUND

BREWSTER 2-Engine In-Line Compound w/Single Pedestal Pump Drive, (2)
QUINCY 325 Air Compressors, S/Ns-481589 & N/A

BRAKE

PARKERSBURG 46RC Double Hydromatic Brake, S/N-P17449, w/Overrunning
Clutch, Shifting Collar & Linkage

ENGINES

(2) CAT D379 Diesel Engines, S/Ns-68B6044 & 68B6611, Air Starters,
Radiators, Gauges, Air Clutches

MAST

LEE C. MOORE 131'H x 18'W Cantilever Mast, S/N-T3359, Approximately
475,000# Static Hook Load, Pin-Type, LEE C. MOORE Crown Block w/(5)
42" Sheaves, 56" Fastline Sheave, 1-1/4" Line, 3-1/2" Standpipe, Crown
Safety Platform, Racking Board, Tong Counterweights, Ladder, Derrick
Climber, Geronimo, Boom, Mast Stand, Standpipe Manifold w/4" Gate
Valve

SUBSTRUCTURE

15'6"H 21'10"W x 38'L Box-On-Box Substructure w/Rotary Beams, V-Door
Ramp, Air Volume Tank, (3) Stairs, Safety Rails, NATIONAL EB Deadline
Anchor, MISSION 2" X 3" Centrifugal Pump, Belt-Driven

PUMPS

CONTINENTAL EMSCO DB-700 Duplex Mud Pump, S/N-N/A, SOUTHWEST
Cast/Forged Steel Fluid End w/Quick-Change Caps, HYDRIL K-20 Pulsation
Dampener, DEMCO 2" Shear Relief Valve, Suction Screen, Rod Cooling
Pump, OTECO 4" Gate Valve, Belt Drive Assembly, Master Skidded,
Compound Driven

CONTINENTAL EMSCO DB-550 Duplex Mud Pump, S/N-551, 550 HP, MATTCO
Forged Steel Fluid End w/Quick-Change Caps, CONTINENTAL EMSCO PD-53
Pulsation Dampener, S/N-413, CONTINENTAL EMSCO 2" Shear Relief Valve,
Rod Cooling Pump, 3000 PSI Pressure Gauge, Belt Drive Assembly,
Skidded & Master Skidded w/Engine

PUMP POWER

CAT D379 Diesel Engine, S/N-68B07032, Air Starter, Radiator, Gauges,
Air Clutch

ROTATING EQUIPMENT

Exh B-17
<PAGE> 69
RIG NO. 7

CONTINENTAL EMSCO 27-1/2 27-1/2" x 53-1/4" Rotary Table,
S/N-MDLDL2750, Split Master Bushing

NATIONAL N-69 400-Ton Swivel

4-1/4" x 41'L Square Kelly w/Shuck

VARCO Type HD Kelly Drive Bushing, Square Drive.

Upper & Lower Kelly Valves

TRAVELING EQUIPMENT

IDEAL Approximately 300-Ton Block w/(5) 46" Sheaves, 1-1/4" Line w/BJ
4300 300-Ton Hook

(2) 3-3/4" x 120" Elevator Links

WELL CONTROL EQUIPMENT

HYDRIL GK 11" 5000 PSI Annular Blowout Preventer w/Studded Top,
Flanged Bottom

NL SHAFFER LWS 11" 5000 PSI Double Blowout Preventer w/4-1/2" Pipe &
Blind Rams, Flanged Top & Bottom, (4) 4- 1/16" 5000 PSI Flanged
Outlets

CAMERON 24"H x 11"ID 5000 PSI Drilling Spool w/(2) 4-1/16" Flanged
Outlets, W-K-M 4-1/16" 5000 PSI Gate Valve, BARTON 4-1/16" 5000 PSI
Gate Valve, (7) Blowout Preventer Hand Wheels w/Shafts, Hydraulic Gate
Valve

(2) 20"H x 11"ID, (2) 12"H x 11"ID & (1) 8"H x 11"ID 3000 PSI Spacer
Spools

KOOMEY Type 80 090-11SX 5-Station Closing Unit, S/N-1570, Triplex
Hydraulic Pump p/b 15 HP Electric Motor, (2) Pneumatic Pumps,
Separator/Accumulators, Hydraulic Reservoir, Skidded w/Lifting Frame

KOOMEY GARC-5 Remote Control Unit, S/N-5048

CEDCO LDW-20 Wireline Measuring Unit, S/N-613, Mounted w/Closing Unit

5000 PSI Blowout Preventer Choke Manifold w/CAMERON 4-1/16" 5000 PSI
Gate Valve, (2) CAMERON 2-1/16" 5000 PSI Gate Valves, (2) W-K-M
2-1/16" 5000 PSI Gate Valves, (1) 2" Gate Valve, 4-1/16" x 2-1/16"
5000 PSI 4-Way Flanged Cross, (1) 2-1/16" Manual Adjustable Choke, All
Mounted on Adjustable-Height Skid

RIG HOUSES

10'W x 24'L Doghouse, Round Top, Knowledge Box, (5) Lockers, Bench
Storage, Lights, Skidded

7'5"W x 20'L Change House w/Round Top, (16) Lockers, Bench Storage,
Cabinets, Top-Mounted Doghouse Supports, Fluorescent Lights, Heater,
Skidded

7'7"W x 30'L Mud House w/Round Top, Mud Hopper, Fluorescent Lights,
Skidded

SATELLITE Automatic Driller, S/N-N/A

TETON HOMES 10'W x 40'L Toolpusher's House, Furnished, Skidded

Exh B-18
<PAGE> 70
RIG NO. 7

GENERATORS/UTILITY HOUSE

(2) 135 KW AC Generators, S/Ns-N/A, Each p/b CAT 3306 Diesel
Engine, S/Ns-66D16919 & 66D14473, (1) w/Air & (1) w/Electric
Starter, Radiator, Gauges, Skidded

QUINCY 350 Air Compressor p/b 10 HP Electric Motor

SQUARE D Electric Control Panel

10'W x 33'L Crimped-Steel Utility House w/Round Top, Fluorescent
Lights

MUD SYSTEM

7'6"W x 6'H x 32'L 259-Barrel Premix Tank w/Round Bottom,
Single-Compartment, Internal Plumbing, Side-Mounted Walkways, Skidded

7'6"W x 6'H x 36'L Crimped-Steel 292-Barrel Mud Suction Tank w/(2)
Compartments, Round Bottom, Internal Plumbing, Top & Side-Mounted
Walkways, Stairs, Safety Rails, Skidded

7'6"W x 6'H x 36'L Crimped-Steel 292-Barrel Mud Volume Tank w/(2)
Compartments, Round Bottom, Internal Plumbing, Top & Side-Mounted
Walkways, Stairs, Safety Rails, Skidded

7'6"W x 6'H x 36'L Crimped-Steel 292-Barrel Mud Shaker Tank w/(2)
Compartments, Round Bottom, Internal Plumbing, Top & Side-Mounted
Walkways, Stairs, Safety Rails, Skidded

MCM 6" x 8" Centrifugal Pump p/b CAT D333 Diesel Engine w/Air Starter,
Radiator, Gauges, Skidded

30"Dia x 10'L Atmospheric Degasser, On Stand w/(2) 2" Gate Valves

WATER/FUEL TANKS

(2) J & J STEEL & SUPPLY CO. 10'6"Dia x 32'L 500-Barrel Water
Tanks, Skidded

MISSION 3" x 4" Centrifugal Pump p.b 25 HP Electric Motor

7'4"Dia x 8'L Potable Water Tank, Skidded

48"Dia x 12'L 4-Compartment Lubester, Skidded

HANDLING TOOLS

(2) WOOLLEY Type C Tongs w/Heads

WOOLLEY 4-1/2"BN 225-Ton Center Latch Drill Pipe Elevators

WEB WILSON 8" Side Latch Drill Collar Elevators

WOOLLEY Center Latch Drill Collar Elevators

WOOLLEY 4-1/2" Drill Pipe Slips

11-Segment Drill Collar Slips

Exh B-19
<PAGE> 71
RIG NO. 7

10-Segment Drill Collar Slips

Drill Collar Safety Clamp

(8) Drill Collar Lift Nubbins

INGERSOLL-RAND HU 4000# Capacity Air Hoist, S/N-N/A

4-1/2" Mud Bucket

AUXILIARY EQUIPMENT

3-1/2"ID x 55'L Rotary Hose

(2) 3-1/2"ID x 15'L Vibrator Hoses, 3-1/2"ID x 11'L Vibrator Hose

40"H x 6'8"W x 56'L 2-Section Catwalk w/Steel Deck

2 Sets (4) 42"H x 28'L Triangular Pipe Racks

(7) 36"H x 8'W x 37'L Pipe Tubs

6'W x 2'H x 8'L Junk Box

(20) Miscellaneous Drill Collar Subs

Rathole & Mousehole

Type D Mud Gauge, S/N-162301

Fluorescent & Mercury-Vapor Rig Lights w/Wiring

Approximately 3500' of 1-1/4" Drill Line w/Wood Spool, Stand

QUINCY 350 Air Compressor p/b LISTER ST2A Diesel Engine w/Electric
Starter, Air Receiver Tank

Miscellaneous Spare Parts, Hand Tools, Valves, Fire Extinguishers, Etc

TOTAL RIG NO. 7 W/O TUBULARS:

DRILL PIPE

1550' (50 Joints) 4-1/2", Grade X-95, 22.82#, Range 2 Drill Pipe
w/4-1/2"XH Tool Joints, 6-1/8"OD to 6-1/4"OD

Approximately 2170' (70 Joints) 4-1/2", Grade E, 20.00#, Range 2 Drill
Pipe w/4-1/2"XH Tool Joints, 5-7/8"OD to 6"OD, PC

Approximately 9920' (320 Joints) 4-1/2", Grade E, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 6-1/4"OD, PC

Approximately 620' (20 Joints) 4-1/2", Grade S-135, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 6- 1/4"OD, PC

Exh B-20
<PAGE> 72
RIG NO. 7

Approximately 1860' (60 Joints) 4-1/2", Grade X-95, 16.60#, Range 2
Drill Pipe w/4-1/2"XH Tool Joints, 6- 1/4"OD, PC

DRILL COLLARS

(26) 5-7/8"OD to 6-1/4"OD x Approximately 29.50'L Drill Collars
w/4-1/2"XH Connections @ $200.00/Each

(20) 7-1/2"OD to 7-7/8"OD x Approximately 29.50'L Drill Collars
w/6-5/8"H-90 Connections @ $800.00/Each

TOTAL RIG NO. 7 W/TUBULARS:

Exh B-21
<PAGE> 73
RIG NO. 10

RIG NO. 10

DRAWWORKS

MID-CONTINENT U-36A Single Drum Drawworks, S/N-137, 600 HP, LEBUS
Grooved f/1-1/8" Line, FOSTER Makeup & Breakout Catheads, Overrunning
Clutch, Air Driller's Console, Crown-O-Matic

COMPOUND

MID-CONTINENT 2-Engine Compound, S/N-N/A, QUINCY 390 Air Compressor,
S/N-N/A, Covered Skid

BRAKE

PARMAC V-80 Double Hydromatic Brake, S/N-56607

ENGINES

(2) CAT D353 410 HP Diesel Engines, S/Ns-46B09311 & 46B09465,
w/Air Starters, Radiators, Gauges, TWIN DISC F-10030-80-3
Torque Converters, S/Ns-N/A & 819472

MAST

LEE C. MOORE 127'H Cantilever Mast, S/N-T2884, 450,000# GNC, Pin-Type,
Crown Block w/(4) Sheaves, Fastline Sheave, 1-1/8" Line, 4" Standpipe,
Crown Safety Platform, Racking Board, Tong Counterweights, Ladder,
Derrick Climber, Geronimo, Boom, Mast Stand, Standpipe Manifold w/4" &
2" Gate Valves

SUBSTRUCTURE

LEE C. MOORE 14'H x 19'W x 45'L Box-On-Box Substructure w/Rotary
Beams, V-Door Ramp, Air Volume Tank, (4) Stairs, Safety Rails,
Deadline Anchor, Steel Windwalls w/Windwall Skid

PUMP

MID-CONTINENT DB-550 Duplex Mud Pump, S/N-N/A, 550 HP, 5-1/2" x 16",
MATTCO Forged Steel Fluid End w/Quick- Change Caps, HYDRIL K-20-3000
Pulsation Dampener, S/N-31042, CONTINENTAL EMSCO Shear Relief Valve,
Rod Cooling Pump, Drive Assembly, Skidded, Master Skidded w/Engine
(Note: Located in Hobbs Yard)

PUMP POWER

CAT D379 TC Diesel Engine, S/N-68B4650, Air Starter, Radiator, Gauges,
Air Clutch (Engine In Main Yard)

PUMP

MID-CONTINENT DA-500 Duplex Mud Pump, S/N-N/A, Forged Steel Fluid End
w/Quick-Change Caps, CONTINENTAL EMSCO PD-53 Pulsation Dampener, Rod
Cooling Pump, TOTCO 3000 PSI Pressure Gauge, Drive Assembly, Skidded &
Master Skidded

Exh B-22
<PAGE> 74
RIG NO. 10

PUMP POWER

CAT D353 Diesel Engine, S/N-46B8397, Air Starter, Radiator, Gauges,
Air Clutch

ROTATING EQUIPMENT

OILWELL A20-1/2 20-1/2" x 53-1/4" Rotary Table, S/N-N/A, Split Master
Bushing

NATIONAL N-47 200-Ton Swivel, S/N-N/A

4-1/4 x 40'L Square Kelly

VARCO HD Kelly Drive Bushing, Square Drive

Upper Kelly Valve

Lower Kelly Valve

Inside Blowout Preventer

TRAVELING EQUIPMENT

SOWA 300-Ton Block/Hook Combination, S/N-N/A, w/(5) Sheaves, 1-1/8"
Line

3-1/2" x 120" Elevator Links

WELL CONTROL EQUIPMENT

NL SHAFFER SPH 11" 5000 PSI Annular Blowout Preventer, S/N-N/A,
w/Studded Top & Flanged Bottom

NL SHAFFER Type LWS 11" 5000 PSI Double Blowout Preventer w/4-1/2"
Pipe & Blind Rams

24"H x 11"ID 5000 PSI Drilling Spool w/(2) 4-1/16" Outlets w/(1) 2"
3000 PSI Gate Valve

KOOMEY ET-10160-3B 6-Station Closing Unit, S/N-5048, w/244-Gallon
Hydraulic Fluid Reservoir, (2) Air-Operated Hydraulic Pumps, Triplex
Pump p/b Electric Motor, (2) 80-Gallon Spherical Accumulators, Skidded

KOOMEY GARC-5 5-Station Remote Closing Unit, S/N-5048, Mounted on
Doghouse Porch

(2) 6"H x 5'W x 21'L Suitcases w/Enclosed Hydraulic Lines

CAMERON/OTECO 3000 PSI Blowout Preventer Choke Manifold w/4-1/16" x
2-1/16" Cross, 4-1/16" Gate Valve, (4) 2- 1/16" Gate Valves, (2)
Adjustable Chokes, On Adjustable Support, Buffer Chamber, On Separate
Adjustable Support

RIG HOUSES

TETON HOMES 10'W x 40'L Toolpusher's House, Fully Furnished, Skidded

10'W x 24'L Doghouse w/Round Top, Knowledge Box, (6) Lockers, Bench
Storage, Cabinets, Parts Bins, Fluorescent Lights, Heater, Skidded

SATELLITE Apollo Automatic Driller

Exh B-23
<PAGE> 75
RIG NO. 10

8'W x 30'L Mud House w/Round Top, 5'L Pump Parts Room, (3) Triangular
Supports, Fluorescent Lights, Skidded

GENERATORS/UTILITY HOUSE

(2) 135 KW AC Generators, S/Ns-5CA05776 & 5CA05775, Each p/b CAT
3306 Diesel Engine, Each w/Air Starter, Radiator, Gauges
(Note: Located in Hobbs Yard)

QUINCY 350 Air Compressor, S/N-150088, w/BALDOR Electric Motor, Air
Receiver Tank

SQUARE D & SYLVANIA Electric Controls

All Above Mounted in 11'6"W x 38'L Utility/Change House w/Round Top,
(13) Lockers, Fluorescent Lights, Heater, Skidded

MUD SYSTEM

7'6"W x 6'H x 36'L Mud Suction Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

REED AMERICAN 6" x 8" Centrifugal Pump, S/N-N/A, p/b 100 HP Electric
Motor

7'6"W x 6'H x 36'L Mud Volume Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

7'6"W x 5'H x 30'L Mud Mixing Tank w/Single-Compartment, Round Bottom,
Top & Side-Mounted Walkways, Stairs, Safety Rails, Skidded

7'6"W x 6'H x 36'L Mud Shaker Tank w/(2) Compartments, Round Bottom,
Internal Plumbing, Top & Side-Mounted Walkways, Stairs, Safety Rails,
Skidded

WATER TANKS

(2) 10'6"Dia x 32'L Water Tanks, Skidded, (1) w/MISSION 2" x 3"
Centrifugal Pump, Electric Motor

4'Dia x 13'L 4-Compartment Lubester, Skidded

HANDLING TOOLS

WOOLLEY Type B Tongs w/Heads

WOOLLEY 4-1/2"BN Drill Pipe Elevators

WOOLLEY 8"SS Center Latch Elevators

WOOLLEY 7"SS Center Latch Elevators

WOOLLEY 4-1/2" Drill Pipe Slips

WOOLLEY 10-Segment Drill Collar Slips

WOOLLEY 11-Segment Drill Collar Slips

Exh B-24
<PAGE> 76
RIG NO. 10

Drill Collar Safety Clamp

(19) Drill Collar Lift Nubbins

INGERSOLL-RAND HU40 Air Hoist, S/N-RFM89763

Mud Bucket

AUXILIARY EQUIPMENT

TOTCO 50 400,000# Capacity Weight Indicator w/Pump Pressure, Tong Line
Pull & Rotary Torque Gauges

TOTCO 4 Mud Gauge

3-1/2"ID x 55'L Rotary Hose

10"ID x 5'L Suction Hose

8"ID x 5'L Suction Hose

(2) 3"ID x 12'L Vibrator Hoses

42"H x 5'W x 56'L 2-Section Catwalk w/Steel Deck

24"H x 7'W x 12'L Junk Box

(5) 33"H to 36"H x 7'W to 7'6"W x 34'L Pipe Tubs

3 Sets (6) 42"H x 28'L Triangular Pipe Racks

CEDCO Hydraulic Measuring Device, Approximately 10,000' of .072"
Wireline (At Yard)

(13) Miscellaneous Drill Collar Subs

Rathole & Mousehole

Fluorescent & Mercury-Vapor Rig Lights w/Wiring

Approximately 5000' of 1-1/8" Drill Line w/Spool, Stand

Miscellaneous Spare Parts, Hand Tools, Valves, Fire Extinguishers, Etc

TOTAL RIG NO. 10 W/O TUBULARS:

DRILL PIPE

Approximately 7750' (250 Jts) 4-1/2", Grade E, 16.60#, Range 2 Drill
Pipe w/4-1/2"XH Tool Joints, 5-3/4"OD to 6"OD

DRILL COLLARS

(35) 6"OD x Approximately 29.00'L Drill Collars w/4-1/2"H-90
Connections

Exh B-25
<PAGE> 77
RIG NO. 10

6-1/2"OD x Approximately 29.50'L Drill Collar w/5"H-90 Connections

(20) 7-1/2"OD to 7-3/4"OD x Approximately 29.50'L Drill Collars
w/6-5/8" H-90 Connections

TOTAL RIG NO. 10 W/TUBULARS:

Exh B-26
<PAGE> 78
RELATED YARD EQUIPMENT

RELATED YARD EQUIPMENT

BRAKES

PARMAC 342 34" Double Hydromatic Brake, S/N-51765

(3) PARKERSBURG 40SR Hydromatic Brakes, S/Ns-P13958, N/A & N/A

(2) PARKERSBURG 46" Double Hydromatic Brakes, S/Ns-35464 & 179

ENGINES ON YARD

CAT D353 Diesel Engine, S/N-N/A, w/Radiator & Gauges (Rebuilt)

CAT D379 Diesel Engine, S/N-N/A, w//Radiator & Gauges (Rebuilt)

CAT D379 Diesel Engine, S/N-N/A, w/Radiator & Gauges (Rebuilt)

CAT D379 Diesel Engine, S/N-N/A, Air Starter, Radiator, Gauges (Being
Rebuilt)

MUD PUMPS/PUMP PARTS

(2) CONTINENTAL EMSCO DB-700 Duplex Mud Pumps, S/Ns-185 & 248,
Each 700 HP, 7-1/2" x 16", Cast Steel Fluid End w/Quick-Change
Caps, HYDRIL K-20-3000 Pulsation Dampener, Rod Cooling Pump,
Bull Wheel, Compound Driven, Skidded

MID-CONTINENT DB-500 Duplex Mud Pump, S/N-57 (Gear End Only)

(2) CONTINENTAL EMSCO DB-550 Duplex Mud Pumps, Skidded (Gear End &
1/2 of Fluid End Only)

EMSCO D-700 Duplex Mud Pump, S/N-104, Skidded & Master Skidded (Gear
End Only)

(4) MATTCO Forged Steel Fluid Ends

Reconditioned Forced Steel Fluid End

(4) Cast Steel Fluid Ends

CONTINENTAL EMSCO PD-53 Pulsation Dampener, S/N-339, w/DEMCO 2" Shear
Relief Valve, Pressure Gauge

CONTINENTAL EMSCO PD-53 Pulsation Dampener, HYDRIL K-20 Pulsation
Dampener

MISSION 2" X 3" Centrifugal Pump

MAST/SUBSTRUCTURE (WEST YARD)

LEE C. MOORE 18'W x 131'H Mast, S/N-N/A. Pin-Type, Crown Block w/(5)
42" Sheaves, Safety Platform. Grooved f/1-1/4" Line, Tong
Counterweights, Racking Board

Exh B-27
<PAGE> 79
RELATED YARD EQUIPMENT

10'H x 22'W x 48'L Substructure w/Rotary Beams, Spreader Beams, 5'6"W
x 8'H x 5'6"L Parts House, 18"Dia x 20'L Air Volume Tank, (2) 36'W x
48'L Side-Mounted Folding Walkways, Skidded

ROTATING EQUIPMENT

(2) 5-1/4" x 40'L Hex Kellys

4-1/4' x 40'L Square Kelly (Unused)

(8) 4-1/4" x 40'L Square Kellys

(3) 3-1/2 x 40'L Square Kellys

4-1/4" x 40'L Square Kelly

VARCO 4KRP Pin-Type Kelly Drive Bushing

(2) OILWELL PC-300 Swivels

TRAVELING EQUIPMENT

OILWELL Approximately 500-Ton Traveling Block w/(6) 48" Sheaves

EMSCO 300-Ton Traveling Block w/(5) Sheaves

OILWELL 300 Traveling, Block w/(5) 42" Sheaves

IDEAL Approximately 400-Ton Traveling Block w/(5) 48" Sheaves

OILWELL 66 Block w/BJ Dynaplex 250-Ton Hook

BJ Dynaplex 5500 500-Ton Hook, S/N-675

BJ 4300 300-Ton Hook

BJ 4200 200-Ton Hook

(2) 3" x 132" Elevator Links

(2) 2-1/2" x 132" Elevator Links

(2) 3" x 96" Elevator Links

(2) 3-3/4" x 144" Elevator Links

WELL CONTROL EQUIPMENT

SHAFFER SPH 11" 5000 PSI Annular Blowout Preventer

NL SHAFFER SL 13-5/8" Double Blowout Preventer, S/N-D4687, w/Studded
Top & Bottom, (4) 4-1/16" 5000 PSI Flanged Outlets, 23"H x 13-5/8"ID
5000 PSI Drilling Spool w/(2) 4-1/16" 5000 PSI Flanged Outlets

Exh B-28
<PAGE> 80
RELATED YARD EQUIPMENT

NL SHAFFER LWS 11" Double Blowout Preventer w/Studded Top & Bottom,
(4) 4-1/16" 3000 PSI Flanged Outlets, 19- 1/2"H x 10"ID 3000 PSI
Drilling, Spool w/(2) 4-1/16" 3000 PSI Flanged Outlets

SHAFFER LWS 11" 5000 PSI Double Blowout Preventer w/4-1/16" Outlets

SHAFFER Type B 11" 3000 PSI Double Blowout Preventer w/Studded Top &
Bottom

(2) CAMERON QRC 11" 3000 PSI Single Blowout Preventers

SHAFFER Type B 13-5/8" 3000 PSI Double Blowout Preventer w/4-1/2" Pipe
& Blind Rams, 12" 3000 PSI Spool, 4- 1/16" & 2-1/16" Outlets, 12"Dia x
35'L 3000 PSI Spool

SHAFFER 11" 5000 PSI Annular Blowout Preventer, Studded Top, Flanged
Bottom

SHAFFER LWS 11" 3000 PSI Single Blowout Preventer

HYDRIL GK 13-5/8" 3000 PSI Annular Blowout Preventer, Studded Top,
Flanged Bottom

SHAFFER Type B 13-5/8" 3000 PSI Double Blowout Preventer w/4-1/2" Pipe
& Blind Rams, 12"Dia x 62"L Spool, 4- 1/16" & 2-1/16" Flanged Outlets

PAYNE 4-Station Closing Unit w/80-Gallon Spherical Accumulator
(Incomplete), PAYNE 4-Station Closing Unit w/(2) 40-Gallon Spherical
Accumulators

VETCO 10,000 PSI Choke Manifold w/5-Way Cross, (1) 4-1/16" & (5)
2-1/16" Gate Valves, Adjustable Choke, Buffer Chamber, Mounted on
Adjustable Skid

(3) 4" 5000 PSI Hydraulic Gate Valves (2 Rebuilt, In Shop)

(2) CAMERON Type F 4-1/16" Gate Valves (In Shop)

SHAFFER 4" Gate Valve (In Shop)

(4) Lower Kelly Valves (In Shop)

RIG HOUSES

TETON HOMES 10'W x 40'L Toolpusher's House, Furnished, Skidded

7'6"W x 37'L Generator/Parts House w/Round Top, (4) 1" Hydraulic Flex
Hoses, Skidded (Storage)

7'W x 26'L Change House w/Round Top, (16) Lockers. Skidded

7'W x 15'L Doghouse w/Round Top, Skidded (Storage)

7'W x 12'L Doghouse w/V-Top, Skidded (Storage)

7'6"W x 17'L Welded-Steel House w/Round Top, Skidded, 7'W x 18'L
Welded Steel House w/Round Top, Skidded, 7'W x 12'L Welded Steel House
w/Flat Top, Skidded (Parts Storage)

AIR COMPRESSORS (MAIN YARD)

SULLAIR 185 Air Compressor, S/N-004119146, p/b JOHN DEERE Diesel
Engine, On Single Axle Trailer

Exh B-29
<PAGE> 81
RELATED YARD EQUIPMENT

INGERSOLL-RAND Air Compressor, S/N-N/A, p/b 4-Cylinder Diesel Engine,
On Single Axle Trailer

(5) QUIINCY 325 Air Compressors

(2) QUINCY 390 Air Compressors

QUINCY 350 Air Compressor

QUINCY 340 Air Compressor

DRIVE BUSHINGS (MAIN YARD)

VARCO 4KRP Hex Kelly Drive Bushing

(2) VARCO 4KRBS Square Kelly Drive Bushings

VARCO 4KRS Hex Kelly Drive Bushing

MISCELLANEOUS EQUIPMENT

(4) Sets of Steel Windwalls w/Windwall Boxes

7550' of 1-1/4" Drill Line w/Spool (Unused)

(6) Bull\wheels

(8) Assorted & Partial Crown Blocks

(9) 7'W x 36"H x 35'L Pipe Tubs

Approximately (300) Miscellaneous Drill Collar Subs

Approximately (100) Miscellaneous Lift Nubbins

Flanges, Tees, Ells, Spools, Adapters, Mud Buckets

7'6"W x 3'H x 12'L Junk Box w/Storage Boxes, Skidded

10'H x 8'W x 40'L Truck Ramp w/Wood Deck, 15'H x 8'W x 10'L Extension

(2) 3-Compartment Lubesters, Skidded

(4) Approximately 8' x 8' Steel-Framed Wood Rig Mats

(3) LIGHTNIN Mud Agitators p/b 5 HP Electric Motors

9 Sets (18) 42"H x 28'L Triangular Pipe Racks

3 Sets (6) 42"H x 28'L T-Type Pipe Racks

(4) Miscellaneous Lift Frames

Exh B-30
<PAGE> 82
RELATED YARD EQUIPMENT

HANDLING TOOLS

(8) WOOLLEY Type B Tongs w/Heads

BJ Type G 5"BN Drill Pipe Elevators

WOOLLEY 5"BN 225-Ton Drill Pipe Elevators

(3) WOOLEY 4-1/2"BN 225-Ton Drill Pipe Elevators

BJ 3-1/2"BN Drill Pipe Elevators

BJ MGG 4-1/2"BN Drill Pipe Elevators

WEB WILSON 7-1/2" Center Latch Drill Collar Elevators

WTM 4-1/2" 225-Ton Center Latch Drill Pipe Elevators

WILSON 8" Side Door Elevators

WILSON 9" Side Door Elevators

(4) Drill Collar Slips

FORKLIFT

TROJAN 2000 Model 1900 Articulating Forklift, S/N-192383, p/b DETROIT
4-Cylinder Engine, 6'L Forks, 17.50x25 L- 3) Tires

WELDER

LINCOLN SA-200 Arc Welder, S/N-775588, p/b RED SEAL 4-Cylinder Gas
Engine, Mounted on Tandem Axle Trailer w/Cutting Torch

TOTAL RELATED YARD EQUIPMENT:

Exh B-31
<PAGE> 83
TUBULAR GOODS (Hobbs, New Mexico)

TUBULAR GOODS (HOBBS, NEW MEXICO)

DRILL PIPE

2170' (70 Joints) 4-1/2", Grade G, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH, BN, HUGHES Tool Joints, 6-1/4"OD

1767' (57 Joints) 4-1/2", Grade E, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH, BN HB Tool Joints, 5-15/16"OD to 6- 3/16"OD, Some PC
w/Double White Band

1674' (54 Joints) 4-1/2" Grade E, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH, BN, HB Tool Joints, 5-7/8" OD to 6"OD, PC w/Double White
Band

899' (29 Joints) 4-1/2", Grade X-95, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH, BN, HB Tool Joints, 6"OD to 6- 1/8"OD, PC

3689' (119 Joints) 4-1/2", Grade E, 16.60#, Range 2 Drill Pipe
w/4-1/2"XH, BN, Some HB Tool Joints, 5-3/4"OD to 6-1/8"OD, PC w/Yellow
Band

2821' (91 Joints), 4-1/2", Grade G, 20.00#, Range 2 Drill Pipe
w/4-1/2"XH, BN, Most HB Tool Joints, Some PC

DRILL COLLARS (ALL LENGTHS ARE APPROXIMATE)

(5) 8"OD x 31'L Drill Collars w/6-5/8"H-90 Connections

(3) 8-7/8"OD x 28'L Drill Collars w/7-5/8"Reg Connections

6-3/4"OD x 29'L Drill Collar w/4-1/2"XH Connections

(42) 5-13/16"OD to 6-1/16"OD x 29.50'L Drill Collars w/4-1/2"H-90
Connections

(9) 6-1/2"OD x 31'L Drill Collars w/4-1/2"XH Connections

(52) 5-7/8" to 6-1/16"OD x 28'L Drill Collars w/4-1/2"H-90
Connections

(28) 5-11/16"OD to 5-7/8"OD x 29'L Drill Collars w/4-1/2"XH
Connections

(2) 6-3/4"OD x 30'L Drill Collars w/5"H-90 Connections

(5) 7-15/16"OD x 29'L Drill Collars w/6-5/8"H-90 Connections

DRILL COLLARS (AT SHOP)

(18) 5-13/16"OD to 6-3/16"OD x 28'L Drill Collars w/4-1/2"XH
Connections

(19) 7-3/4"OD x 29'L Drill Collars w/6-5/8"H-90 Connections

(13) 5-7/8"OD x 29'L Drill Collars w/4-1/2"H-90 Connections

(15) 5-13/16"OD x 29'L Drill Collars w/4"H-90 Connections

Exh B-32
<PAGE> 84
TUBULAR GOODS (Hobbs, New Mexico)

<TABLE>
<CAPTION>
TOTAL TUBULAR GOODS:
<S> <C> <C> <C> <C> <C>
B. VEHICLES
--------

1. 1996 Ford F350 Crewcab (Z*DRL 1)
ID No. 1FTJW35F6TEA02425
1997 Sticker #079565 Billy

2. 1997 Ford X150 Pickup (Z*DRL 6)
ID No. 1FTDX17W9VNB60627
1997 Sticker #12077171

3. 1991 Chev Pickup (584 HGH)
ID No. 2GCEC19K2M1166330
1997 Sticker #079574 Yard

4. 1995 Ford F150 Supercab Pickup (Z*DRL 3)
ID No. 1FTEX15N5SKA93035
1997 Sticker #079564 George

5. 1995 Chev GM4 Pickup (Z*DRL 4)
ID No. 2GCEC19H8S1172828
1997 Sticker #079566 Wesley

6. 1984 Ford F600 (*DRL21)
ID No. FDNF60H1EVA34290
1997 Sticker #079583 Shop

7. 1996 Ford F150 Pickup (Z*DRL 2)
ID No. 1FTEX15N5TKA25223
1997 Sticker #079582 Ricky

8. 1997 Ford F150 Pickup (969DPL)
ID No. 1FTDX1768VNB03335
1997 Sticker #079580 Howard

9. 1994 Chev Pickup (447GAW)
ID No. 2GCEC19ZOR1272389
1997 Stick No. 079571 Ty

10. 1989 Ford Truck - Welding (037JGR)
ID No. 1FDKF37G6KKA14113
1997 Sticker No. 079568 Carl

11. 1985 International Truck NO.102
ID No. 2HSTGJUT7FCA16310
1997 Sticker No. CC04966 (IRA1822)

12. 1995 International Truck NO. 105
ID No. 2HSFMAHR1SC027573
1997 Sticker No. CC04963
</TABLE>

Exh B-33
<PAGE> 85
<TABLE>
<S> <C> <C> <C> <C> <C>
13. 1997 1997 Ford Pickup (368JWR)
ID No. 1FTJW35F4VEB17687
1997 Sticker No. 12078807 Shirrel

C. OFFICE EQUIPMENT
----------------

All office equipment owned by ZIADRIL, Inc.
</TABLE>

Exh B-34
<PAGE> 86
APPENDIX II
TO
BILL OF SALE AND ASSIGNMENT
FROM
ZIADRIL, INC.
TO
PATTERSON DRILLING COMPANY
(List of Drilling Contracts and Other Agreements Assigned)

D. DRILLING CONTRACTS.

1. Drilling Contract dated March 12, 1997, between Penwell
Energy, Inc. and ZIADRIL, Inc.

2. Drilling Contract dated March 25, 1997, between Chesapeake
Operating, Inc. and ZIADRIL, Inc.

3. Drilling Contract dated March 26, 1997, between Penwell
Energy, Inc. and ZIADRIL, Inc.

4. Drilling Contract dated February 24, 1997, between John L. Fox
and ZIADRIL, Inc.

5. Drilling Contract dated February 28, 1997, between Amerlind
Oil Company, Ltd. and ZIADRIL, Inc.

E. OTHER AGREEMENTS.

1. Lease Agreement dated August 1, 1990, between ZIADRIL, Inc. as
lessor, and Wilson Industries, Inc. as lessee.

2. Commercial Lease and Deposit Receipt dated August 23, 1995,
from Bo Blackwood, agent for Crystal Clear Water Sales and
Services to ZIADRIL, Inc.

3. 1st Equity Realtors, Inc. Property Leasing Agreement dated
August 25, 1995, between ZIADRIL, Inc. and First Equity
Realtors, Inc.

Exh B-35
<PAGE> 87
EXHIBIT C(I)

WARRANTY DEED
[West County Road Property]

ZIADRIL, INC. f/k/a MORANCO DRILLING, INC., a New Mexico Corporation,
for consideration paid, grants to PATTERSON DRILLING COMPANY, a Delaware
corporation, whose address is Post Office Drawer 1416, Snyder, Texas 79550, the
following described real estate situated in Lea County, New Mexico to wit:

THE SURFACE ONLY TO:

A tract of land located in the Northwest Quarter of Section
32, Township 18 South, Range 38 East, N.M.P.M., Lea County, New
Mexico, and more particularly described as follows:

Beginning at a point located in the East right-of-way line of
county highway No. C-66 (West County By- Pass road) said point being
located North 89 degrees 47'30" East 1078.6 feet and South
0 degrees 44'30" East 1162.0 feet from the Northwest corner of said
Section 32; thence North 89 degrees 47'30" East 660.0 feet; thence
South 0 degrees 44'30" East 495.0 feet; thence South 89 degrees 47'30"
West 660.0 feet to the East right-of-way line of said county highway
No. C-66; thence North 0 degrees 44'30" West along the East
right-of-way line of said county highway No. C-66 495.0 feet to the
point of beginning, containing 7.5 acres, more or less, excepting,
however, all minerals therein and thereunder.

with warranty covenants.

WITNESS my hand this _______ day of April, 1997.

ZIADRIL, INC. f/k/a MORANCO DRILLING,
INC., a New Mexico Corporation

By:
-------------------------------------
JOE SMITH, President

STATE OF NEW MEXICO )
) ss
COUNTY OF LEA )

On this _____ day of April, 1997, before me personally appeared JOE
SMITH, as President of ZIADRIL, INC. f/k/a MORANCO DRILLING, INC., a New Mexico
corporation, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same as his free
act and deed.

WITNESS my hand and seal the day and year last above written.

----------------------------------------
NOTARY PUBLIC

My Commission Expires:

================================================================================
STATE OF NEW MEXICO )
) ss.
COUNTY OF LEA )

I hereby certify that this instrument was filed for record on the
_____ day of __________, 1997, at _____ o'clock __.m. and duly recorded in Book
_____ Page _____ of the deed Records of said County.

----------------------------------------
County Clerk

By:
-------------------------------------
(Deputy Clerk)

RETURN TO: TOMMY D. PARKER
POST OFFICE BOX 1094
HOBBS, NEW MEXICO 88241-1094
<PAGE> 88
EXHIBIT C(II)

WARRANTY DEED
[Marland Street Property]

THE SURFACE ONLY TO:

Parcel 1: The North 26 feet of Lot Twenty (20), Lots Twenty-One
(21), Twenty-two (22) and Twenty-Three (23), Block One (1), Byers
Heights Addition to the City of Hobbs, Lea County, New Mexico.

Parcel 2: A tract of land located in the Northeast Quarter
(NE/4) of Section 4, Township 19 South, Range 38 East, N.M.P.M., Lea
County, New Mexico, more particularly described as follows:

Beginning at a point which lies West 430 feet and South
0 degrees 4' West 50 feet from the Northeast corner of said
Section 4; Thence West 670 feet to the Northwest corner of
said tract; Thence South 0 degrees 4' West 520 feet to the
Southwest corner of this tract; Thence East 670 feet to the
Southeast corner of this tract; Thence North 0 degrees 4' East
520 feet to the point of beginning.

with warranty covenants.

WITNESS my hand this _______ day of April, 1997.

ZIADRIL, INC. f/k/a MORANCO DRILLING,
INC., a New Mexico Corporation

By:
-------------------------------------
JOE SMITH, President

STATE OF NEW MEXICO )
) ss
COUNTY OF LEA )

WITNESS my hand and seal the day and year last above written.

----------------------------------------
NOTARY PUBLIC
My Commission Expires:

================================================================================
STATE OF NEW MEXICO )
) ss.
COUNTY OF LEA )

I hereby certify that this instrument was filed for record on the
_____ day of __________, 1997, at _____ o'clock __.m. and duly recorded in Book
_____ Page _____ of the deed Records of said County.

----------------------------------------
County Clerk

By:
-------------------------------------
(Deputy Clerk)
RETURN TO: TOMMY D. PARKER
POST OFFICE BOX 1094
HOBBS NEW MEXICO 88241-1094

<PAGE> 1
EXHIBIT 2.4

ASSET PURCHASE AGREEMENT

BETWEEN

PATTERSON DRILLING COMPANY

AND

MCGEE DRILLING CORPORATION
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I

THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.1 The Asset Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
SECTION 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.1 Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.2 Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
SECTION 2.3 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MCGEE DRILLING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.1 Organization, Standing and Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.2 Authority; Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.3 Title. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
SECTION 3.4 Drilling Contracts and Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.6 Drilling Rigs, Equipment and Vehicle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.7 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.8 Normal Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
SECTION 3.9 Stock Ownership and Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-

ARTICLE IV

ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.2 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.3 McGee Drilling Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.5 PDC Assumption of Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
SECTION 4.6 PDC Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.7 Sales and Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 4.8 No Implied Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
</TABLE>

<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
SECTION 5.1 Conditions to Each Party's Obligation to Effect the Asset Purchase . . . . . . . . . . . . . . -6-
SECTION 5.2 Conditions to Obligation of McGee Drilling to Effect the Asset Purchase . . . . . . . . . . . . -7-
SECTION 5.3 Conditions to Obligations of PDC to Effect the Asset Purchase . . . . . . . . . . . . . . . . . -8-

ARTICLE VI

GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
SECTION 6.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
SECTION 6.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
SECTION 6.8 Enforcement of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
</TABLE>

ANNEX 1 Description of Drilling Rigs, Equipment and Vehicle
ANNEX 2 List of Drilling Contracts and Other Agreements
ANNEX 3 List of McGee Drilling Stockholders

EXHIBIT A(I) Non-Competition Agreement - McGee Drilling Corporation
EXHIBIT A(II) Non-Competition Agreement - G.H. McGee
EXHIBIT A(III) Non-Competition Agreement - David Essex
EXHIBIT B Bill of Sale and Assignment

ii
<PAGE> 4
ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of August 1, 1997 (this
"Agreement"), among PATTERSON DRILLING COMPANY ("PDC"), a Delaware corporation
and a wholly-owned subsidiary of Patterson Energy, Inc. ("PEC"), and MCGEE
DRILLING CORPORATION, a privately-held Texas corporation ("McGee Drilling").

WITNESSETH:

WHEREAS, McGee Drilling owns three drilling rigs, related
drilling equipment and vehicle (collectively, the "Drilling Rigs, Equipment and
Vehicle"), and leases certain vehicles (the "Leased Vehicles"), all as more
particularly described on Annex 1 in the case of the Drilling Rigs, Equipment
and Vehicle, and Annex 2 in the case of the Leased Vehicles.

WHEREAS, PDC desires to purchase, and McGee Drilling desires
to sell, all of McGee Drilling's right, title and interest in and to the
Drilling Rigs, Equipment and Vehicle and the Leased Vehicles (the "Asset
Purchase") for the consideration set forth and provided for herein; and

WHEREAS, PDC, on the one hand, and McGee Drilling, on the
other, desire to make certain representations, warranties and agreements in
connection with the Asset Purchase.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:

ARTICLE I

THE ASSET PURCHASE

<PAGE> 5
SECTION 1.2 Purchase Price. PDC agrees to pay to McGee
Drilling at the Closing a total of $3,500,000 (the "Purchase Price") for all of
McGee Drilling's right, title and interest in and to the Drilling Rigs,
Equipment and Vehicle and the Leased Vehicles. The Purchase Price shall be
paid by cashier's check.

SECTION 1.3 Closing. The closing of the Asset Purchase (the
"Closing") shall take place at 9:00 a.m., local time, on the date of this
Agreement at the offices of PEC in Snyder, Texas or at such other time and
place as PDC and McGee Drilling shall agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF PDC

PDC represents and warrants to McGee Drilling as follows:

SECTION 2.1 Organization, Standing and Power. PDC is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted.

SECTION 2.2 Authority; Non-Contravention. PDC has all
requisite power and authority to enter into this Agreement and to consummate
the Asset Purchase. The execution and delivery by PDC of this Agreement and
the consummation by PDC of the Asset Purchase have been duly authorized by all
necessary corporate action on the part of PDC. This Agreement has been duly
executed and delivered by PDC and (assuming the valid authorization, execution
and delivery of this Agreement by McGee Drilling) constitutes a valid and
binding obligation of PDC enforceable against PDC in accordance with its terms,
except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of
general applicability relating to or affecting the enforcement of creditors'
rights and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). No filing
or registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Agency") is
required by or with respect to PDC in connection with the execution and
delivery of this Agreement by PDC or is necessary for the consummation by PDC
of the Asset Purchase.

SECTION 2.3 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions

-2-
<PAGE> 6
contemplated by this Agreement based upon arrangements made by or on behalf of
PDC or Patterson Energy, Inc ("PEC"), the sole stockholder of PDC.

The representations and warranties of PDC under this Article
II shall survive the Closing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MCGEE DRILLING

McGee Drilling represents and warrants as follows:

SECTION 3.1 Organization, Standing and Power. McGee Drilling
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Texas and has the requisite corporate power and
authority to carry on its business as now being conducted.

SECTION 3.2 Authority; Non-Contravention. McGee Drilling has
all requisite power and authority to enter into this Agreement and to
consummate the Asset Purchase. This Agreement has been duly executed and
delivered by McGee Drilling and (assuming the valid authorization, execution
and delivery of this Agreement by PDC) constitutes a valid and binding
obligation of McGee Drilling enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
The execution and delivery of this Agreement do not, and the consummation of
the Asset Purchase and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice of
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a material
benefit under, or result in the creation of any lien, security interest,
charges or encumbrances upon any of the properties or assets of McGee Drilling
under, any provision of (i) the Articles of Incorporation or Bylaws of McGee
Drilling (true and complete copies of which as of the date hereof have been
delivered to PDC), (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to McGee Drilling or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to McGee Drilling or any
of its respective properties or assets. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by
or with respect to McGee Drilling in connection with the execution and delivery

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<PAGE> 7
of this Agreement by McGee Drilling or is necessary for the consummation by
McGee Drilling of the Asset Purchase.

SECTION 3.3 Title. Set forth in Annex 1 is a description of
the Drilling Rigs, Equipment and Vehicle which description is accurate and
complete in all material respects. McGee Drilling has good title to a 100%
interest in the Drilling Rigs, Equipment and Vehicle and a valid leasehold
interest in the Leased Vehicles, subject to no Liens. For purposes of this
Agreement "Liens" means liens, mortgages, pledges, security interests,
encumbrances, claims or charges of any kind.

SECTION 3.4 Drilling Contracts and Other Agreements. Set
forth in Annex 2 is a true and complete list and description of all oral and
written drilling contracts (the "Drilling Contracts") and lease agreements
relating to the Leased Vehicles (collectively, the "Leased Vehicles Lease
Agreements") to which McGee Drilling is a party. A complete copy of each of
the Drilling Contracts and the Leased Vehicles Lease Agreements has previously
been delivered to PDC. McGee Drilling has performed all of its obligations
arising to date under the Drilling Contracts and Leased Vehicles Lease
Agreements, and each of the Drilling Contracts and Agreements, and is in good
standing and in full force and effect. Also set forth on Annex 2 is a
description of the outstanding purchase orders of McGee Drilling ("Purchase
Orders") relating to drill pipe and certain other executory contracts of McGee
Drilling (all contracts and agreements listed on Annex 2 being hereinafter
collectively referred to as the "Subject Contracts"). Except as set forth on
Annex 2, none of the Drilling Rigs, Equipment and Vehicle or the Leased
Vehicles is subject to any written or oral contracts and agreements.

SECTION 3.5 Litigation. Other than possible workman's
compensation cases, there is no suit, action, investigation or proceeding
pending or, to the knowledge of McGee Drilling, threatened against McGee
Drilling at law or in equity before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind,
that would impair the ability of McGee Drilling to perform its obligations
hereunder or to consummate the transactions contemplated hereby, and there is
no judgment, decree, injunction, rule or order of any court, governmental
department, commission, board, bureau, agency, instrumentality or arbitrator to
which McGee Drilling is subject that would impair the ability of McGee Drilling
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.

SECTION 3.6 Drilling Rigs, Equipment and Vehicle. Appendix 1
to Exhibit B sets forth or incorporates by reference a list of all drilling
rigs and related drilling equipment and vehicle owned by McGee Drilling, which
list is true, correct and complete in all materials respects.

-4-
<PAGE> 8
SECTION 3.7 Brokers. No broker, investment banker or other
person is entitled to any broker's, finder's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of McGee Drilling.

SECTION 3.8 Normal Operations. Any wells currently being
drilled by McGee Drilling under the Drilling Contracts are drilling under
normal operations.

SECTION 3.9 Stock Ownership and Control. Annex 3 sets forth
a true and correct list of the holders of McGee Drilling's voting securities
and the number of such securities owned by each such holder.

The representations and warranties of McGee Drilling set forth
in this Article III shall survive Closing for a period of one year, except as
to any representation or warranty as to which PDC has given McGee Drilling a
written notice of breach within such one-year period.

ARTICLE IV

ADDITIONAL AGREEMENTS

SECTION 4.1 Fees and Expenses. All costs and expenses
incurred by PDC in connection with this Agreement and the transactions
contemplated hereby shall be paid by PDC; such costs and expenses incurred by
McGee Drilling shall be paid by McGee Drilling.

SECTION 4.2 Reasonable Efforts. Upon the terms and subject
to the conditions set forth in this Agreement, each of the parties agrees to
use all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Asset Purchase and
the other transactions contemplated by this Agreement and the prompt
satisfaction of the conditions hereto.

SECTION 4.3 McGee Drilling Indemnification. On and after the
Closing Date, McGee Drilling and G.H. McGee ("McGee"), an officer, director and
stockholder of McGee Drilling, shall jointly and severally indemnify and hold
PEC and PDC harmless against and in respect of all actions, suits, demands,
judgments, costs and expenses (including reasonably attorneys' fees of PEC or
PDC), relating to any misrepresentation, breach of any representation or
warranty or non-fulfillment of any agreement on the part of McGee Drilling
contained in this Agreement. This indemnification provided for in this Section
4.3 shall

-5-
<PAGE> 9
terminate and be of no further force and effect one year from the Closing Date,
except as to any representation or warranty as to which a written notice of
claim for indemnification has been given to McGee Drilling and McGee prior to
the expiration of such one-year period.

SECTION 4.4 Public Announcements. Unless otherwise required
by law or the rules and regulations of the Securities and Exchange Commission,
neither PDC, PEC nor McGee Drilling shall issue any press release or make any
public statement with respect to the Asset Purchase prior to Closing.

SECTION 4.5 PDC Assumption of Contracts. Effective as of
7:00 a.m. Snyder, Texas time on the date of this Agreement ("Effective Time of
Assumption"), PDC hereby assumes all obligations and rights and benefits of
McGee Drilling under the Purchase Orders and all obligations and rights and
benefits of McGee Drilling under all of the other Subject Contracts. McGee
Drilling shall be responsible for and shall have the benefit of all obligations
and rights and benefits under each of the Drilling Contracts and Leased
Vehicles Lease Agreements with respect to periods prior to the Effective Time
of Assumption. McGee Drilling shall bill applicable third parties for all
services and materials supplied or furnished under the Drilling Contracts for
periods through the Effective Time of Assumption, and PDC shall bill for all
services and materials thereafter supplied or furnished under the Drilling
Contracts. Within ten (10) days following the receipt by PDC of any revenues
under the Drilling Contracts attributable to periods prior to the Effective
Time of Assumption, PDC shall pay such revenues to McGee Drilling.

SECTION 4.6 PDC Indemnification. PDC shall indemnify and
hold McGee Drilling harmless from all costs and liabilities (including
reasonable attorney's fees) incurred by McGee Drilling under any of the Subject
Contracts for events occurring after the Effective Time of Assumption.

SECTION 4.7 Sales and Transfer Taxes. PDC agrees to pay any
and all sales and/or transfer taxes due with respect to the Asset Purchase.

SECTION 4.8 No Implied Warranties. It is understood and
agreed that McGee Drilling is not making and has not made any representation or
warranty of any kind, express or implied, to PDC except for those specifically
provided in this Agreement. Except for the matters covered by such
representations and warranties, PDC is relying on its own investigation and
analysis in entering into this Agreement and consummating the transaction
contemplated hereby. Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made by
McGee Drilling in this Agreement, McGee Drilling makes no representation or
warranty to PDC regarding any projections, estimates, or budgets heretofore
delivered or made available to PDC of past or future revenues, expenses, or
expenditures, results of operations (or any component thereof),

-6-
<PAGE> 10
cash flows or financial conditions of McGee Drilling, PDC, or the Drilling
Rigs, Equipment and Vehicle or the future operations of PDC.

The provisions of this Article IV shall survive the Closing.

ARTICLE V

CONDITIONS PRECEDENT TO THE ASSET PURCHASE

SECTION 5.1 Conditions to Each Party's Obligation to Effect
the Asset Purchase. The respective obligations of each party to effect the
Asset Purchase shall be subject to the fulfillment or waiver (where
permissible) at or prior to the Closing Date of each of the following
conditions:

(b) Consents. McGee Drilling shall have received written
consents of the other party or parties to each of the Drilling Contracts, the
Leased Vehicles Lease Agreements and the Purchase Orders for the assumption
thereof by PDC pursuant to the provisions of Section 4.4 of this Agreement and
delivered copies thereof to PDC.

(c) Non-Competition Agreements. A Non-Competition
Agreement in the respective forms attached hereto as Exhibits A(I), A(II) and
A(III) shall have been executed and delivered by McGee Drilling, McGee and
David Essex ("Essex"), as the case may be, and the cash compensation due under
Section 2 of the [respective agreements with McGee and Essex] shall have been
paid by PDC.

SECTION 5.2 Conditions to Obligation of McGee Drilling to
Effect the Asset Purchase. The obligation of McGee Drilling to effect the
Asset Purchase shall be subject to the fulfillment at or prior to the Closing
of the following additional conditions; provided that McGee Drilling may waive
any of such conditions in its sole discretion:

-7-
<PAGE> 11
(a) Performance of Obligations; Representations and
Warranties. PDC shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Closing, and each of the representations and warranties of PDC contained in
this Agreement shall be true and correct on and as of the Closing.

(b) Officers' Certificate. PDC shall have furnished to
McGee Drilling a certificate, dated the Closing, signed by the appropriate
officers of PDC, certifying to the effect that to the best of the knowledge and
belief of PDC, the conditions set forth in Section 5.1 and Section 5.2(a) have
been satisfied in full.

(c) Payment of Purchase Price. PDC shall have made
delivery of the Purchase Price as provided in Section 1.2 of this Agreement.

(d) Bill of Sale and Assignment. PDC shall have executed
and delivered the Bill of Sale and Assignment, in the form attached hereto as
Exhibit B, covering the Drilling Rigs, Equipment and Vehicle set forth on Annex
1 and the Drilling Contracts, Leased Vehicles Lease Agreements and Purchase
Orders set forth on Annex 2.

SECTION 5.3 Conditions to Obligations of PDC to Effect the
Asset Purchase. The obligations of PDC to effect the Asset Purchase shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions, provided that PDC may waive any such conditions in its
sole discretion:

(a) Performance of Obligations; Representations and
Warranties. McGee Drilling shall have performed in all material respects each
of its agreements contained in this Agreement required to be performed on or
prior to the Closing, and each of the respective representations and warranties
of McGee Drilling contained in this Agreement shall be true and correct in all
material respects on and as of the Closing.

(b) Officers' Certificate. McGee Drilling shall have
furnished to PDC a certificate, dated the Closing, certifying to the effect
that to the best of the knowledge and belief of McGee Drilling, the conditions
set forth in Section 5.1 and Section 5.3(a) have been satisfied.

(c) Opinion of Counsel. PDC shall have received an
opinion of Kerr & Ward, L.L.P., Midland, Texas, counsel to McGee Drilling,
dated the Closing, substantially identical in form and substance to that
attached hereto as Exhibit C.

(d) Bill of Sale and Assignment. McGee Drilling shall
have executed and delivered the Bill of Sale and Assignment, in the form
attached hereto as Exhibit B, covering

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<PAGE> 12
the Drilling Rigs, Equipment and Vehicle set forth on Annex 1 and the Drilling
Contracts, Leased Vehicles Lease Agreements and Purchase Orders set forth on
Annex 2.

(e) Title. McGee Drilling shall have endorsed and
delivered the title certificate to the motor vehicle described in Annex 1.

ARTICLE VI

GENERAL PROVISIONS

SECTION 6.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, sent by overnight courier or telecopied (with a confirmatory copy
sent by overnight courier) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

(a) if to PDC, to:

Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Drawer 1416
Snyder, Texas 79550
Attention: A. Glenn Patterson
President and Chief Operating Officer

with copies to:

Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264

(b) if to McGee Drilling, to:

G.H. McGee, President
McGee Drilling Corporation
P.O. Box 2471
Midland, Texas 79701
Facsimile: (915) 683-1715
Telephone: (915) 683-2507

-9-
<PAGE> 13
with copies to:

William M. Kerr, Jr., Esq.
Kerr & Ward, L.L.P.
500 West Texas, Suite 1310
Midland, Texas 79701
Facsimile: (915) 684-9997
Telephone: (915) 684-9990

SECTION 6.2 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated, and the words "hereof', "herein" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement, unless the context otherwise requires. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

SECTION 6.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including the documents and instruments referred to herein, (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties any rights or remedies hereunder; provided, however, that
legal counsel for McGee Drilling hereto may rely upon the representations and
warranties of McGee Drilling contained herein and in the certificates delivered
pursuant to Section 5.3(b).

SECTION 6.5 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.

SECTION 6.6 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.

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<PAGE> 14
SECTION 6.7 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions be consummated as originally
contemplated to the fullest extent possible.

SECTION 6.8 Enforcement of This Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.

IN WITNESS WHEREOF, PDC and McGee Drilling have executed this
Agreement as of the date first written above.

PDC:

PATTERSON DRILLING COMPANY

By: /s/ James C. Brown
-----------------------------------
James C. Brown

Vice President-Finance and Chief
Financial Officer

Attest:

/s/ Neva Bufkin
- ------------------------------------

Neva Bufkin, Assistant Secretary

-11-
<PAGE> 15

MCGEE DRILLING:

MCGEE DRILLING CORPORATION

By: /s/ G.H. McGee
----------------------------------

G.H. McGee
President

Attest:

/s/ G.H. McGee
- -------------------------------
G.H. McGee, Secretary

TO INDUCE PATTERSON DRILLING COMPANY TO ENTER INTO THIS ASSET PURCHASE
AGREEMENT AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE UNDERSIGNED, BEING AN
OFFICER, DIRECTOR AND STOCKHOLDER OF MCGEE DRILLING CORPORATION, ACCEPTS AND
AGREES TO BE BOUND BY THE INDEMNIFICATION PROVISIONS OF SECTION 4.3 OF THE
ABOVE ASSET PURCHASE AGREEMENT.

/s/ G.H. McGee
--------------------------------------
G.H. McGee

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<PAGE> 16
ANNEX 1
TO
ASSET PURCHASE AGREEMENT

DESCRIPTION OF DRILLING RIGS, EQUIPMENT
AND VEHICLE
PER WHEREAS CLAUSE

A. Drilling Rigs and Equipment.

<TABLE>
<CAPTION>
Rig No. Drawworks Manufacturer
------- ----------------------
<S> <C>
1 N-42 Brewster
2 U-36-Mid Continent
3 Skytop Brewster N-75
</TABLE>

All related parts and equipment, including engines, mud pumps, hooks
and blocks, derricks, substructives, rotary tables, blow-out
prevention equipment, drill bits and all tubular goods on the rigs and
in the yard leased by McGee Drilling, all of which are set forth on
Appendix I to the Bill of Sale and Assignment attached to this
Agreement as Exhibit B, less the parts and related equipment sold or
disposed of since April 13, 1997, and plus the parts and related
equipment acquired by McGee Drilling since April 13, 1997, in each
case in the ordinary course of business, consistent with past
practice.

NOTE: For more specific information concerning the rigs and related
equipment, see Appendix I, to Bill of Sale and Assignment attached to
this Agreement as Exhibit B.

B. Vehicle.

1995 Chevrolet Pickup
ID No. 2GCEC19K7S1103026
1997 Sticker No. 12075676

AX 1-1
<PAGE> 17
ANNEX 2
TO
ASSET PURCHASE AGREEMENT

LIST OF DRILLING CONTRACTS AND OTHER AGREEMENTS
PER SECTION 3.4

A. Drilling Contracts.

1. Master Drilling Contract dated as of June 30, 1997, between
Burlington Resources Oil & Gas Co., as Operator, and McGee
Drilling Corporation, as Contractor, as supplemented by Bid
Sheet and Drilling Order of even date, between Coastal
Management Corporation, as Agent for Burlington Resources, and
McGee Drilling Corporation, which Bid Sheet and Drilling Order
specifically relates to the drilling of the W.N. Waddell No.
1226 Well in Section 10, Block B-23, PSL Survey, Crane County,
Texas (Rig #2 - Currently Drilling).

2. IADC Drilling Bid Proposal and Daywork Drilling Contract
effective as of June 16, 1997, between Petroleum Development
Corporation, as Operator, and McGee Drilling Corporation, as
Contractor, governing the drilling of the Warren-State #1 Well
in Section 35, T-15-S, R-37-E, Lea County, New Mexico (Rig #3
-Currently Drilling).

3. IADC Drilling Bid Proposal and Footage Drilling Contract
effective as of July 1, 1997, between John H. Hendrix
Corporation, as Operator, and McGee Drilling Corporation, as
Contractor, governing the drilling of the Thomas Long A-3 Well
in Section 11, T-22-S, R-37-E, Lea County, New Mexico (Rig
#1).

4. IADC Drilling Bid Proposal and Footage Drilling Contract
effective as of June 12, 1997, between David H. Arrington Oil
& Gas, Inc., as Operator, and McGee Drilling Corporation, as
Contractor, governing the drilling of the Royal Trude #1 Well
in Section 22,T-19-S, R-36-E, Lea County, New Mexico (Rig #1).

5. IADC Drilling Bid Proposal and Daywork Drilling Contract
effective as of June 19, 1997, between Mallon Oil Company, as
Operator, and McGee Drilling Corporation, as Contractor,
governing the drilling of the Mallon "33" Federal #6 Well in
Section 33, T-19-S, R-34-E, Lea County, New Mexico (Rig #3).

AX 2-1
<PAGE> 18
6. Miscellaneous Master Drilling Contracts respectively between
the following named Operators and McGee Drilling Corporation:

Operator

Amerada Hess Corporation

Bass Enterprises Production Company

Burlington Resources

John Hendrix Corporation

Marathon Oil Company

Parker & Parsley

Pogo Producing Company

Santa Fe Energy Resources

B. Leased Vehicles Lease Agreements.

1. GMAC Lease Agreement dated January 20, 1997, between Jack
Sherman Chevrolet Buick, as Lessor, and McGee Drilling Corp.,
as Lessee, covering a 1997 Chevrolet K1500 Pickup Truck (VIN
2GCEK19R5V1163567).

2. Vehicle Lease Agreement dated November 1, 1994, between LAI
Trust, as Lessor, and McGee Drilling, Inc., as Lessee, as
supplemented by Lease Supplement between the same parties,
covering a 1996 Chevrolet C- 1500 Pickup Truck (VIN
1GCEC19MITE260441).

C. Purchase Orders.

1. Tubular Goods Order No. 34440-00 to Grant Prideco, Inc. in the
amount of $503,452.95 for approximately 15,000 feet of drill
pipe and related tubular goods as therein described.

AX 2-2
<PAGE> 19
2. Tubular Goods Order No. 34441-00 to Grant Prideco, Inc. in the
amount of $108,432.68 for approximately 3,000 feet of drill
pipe and related tubular goods as therein described.

D. Other Agreements

1. Service Agreement dated February 25, 1997, between Cellular
One and McGee Drilling Corp., relating to cellular phone ESN
No. 21216642980.

2. Service Agreement dated February 4, 1997, between Cellular One
and McGee Drilling Corp., relating to cellular phone ESN Nos.
21216729212, 21216640239, and 2l2l6640241.

3. Service Agreement dated January 23, 1997, between Cellular One
and McGee Drilling Corp,, relating to cellular phone ESN Nos.
21216621678 and C3121ECC.

AX 2-3
<PAGE> 20
ANNEX 3
TO
ASSET PURCHASE AGREEMENT

LIST OF MCGEE DRILLING STOCKHOLDERS
PER SECTION 3.9

MCGEE DRILLING CORPORATION STOCKHOLDERS

<TABLE>
<CAPTION>
Name Number of Shares Percentage
---- ------
<S> <C> <C>
David Essex . . . . . . . . . . . 5,667 56.67%
G.H. McGee . . . . . . . . . . . 4,333 43.33%
------ ------
Total . . . . . . . . . 10,000 100.00%
====== ======
</TABLE>

AX 3-1
<PAGE> 21
EXHIBIT A(I)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and MCGEE DRILLING CORPORATION, a
Texas corporation ("McGee Drilling").

RECITALS:

A. Simultaneously with the execution of this Agreement,
PDC and McGee Drilling have entered into that certain Asset Purchase Agreement,
dated of even date herewith (the "Asset Purchase Agreement"), providing for,
among other things, the purchase by PDC of the drilling rigs, related equipment
and vehicle owned by McGee Drilling.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Patterson Energy, Inc. ("PEC"), the sole
stockholder of PDC (the "Non-Compete Period"). For purposes of this Agreement,
"Change in Control" shall be deemed to have occurred, if (i) a tender offer
shall be made and consummated for the ownership of more than fifty percent of
the outstanding voting securities of PEC, or (ii) there is a merger,
consolidation or other reorganization of PEC or PDC with another entity and as
a result of such merger, consolidation or other reorganization, less than fifty
percent of the outstanding voting securities of the surviving or resulting
entity shall be owned by the former stockholders of PEC as the same shall have
existed immediately prior to such merger, consolidation or other
reorganization.

AX 3-1
<PAGE> 22
2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid G.H. McGee, by cashier's check, the amount of $749,000 as additional
compensation for entering into this Agreement.

3. Covenant Not to Compete.

(a) McGee Drilling covenants and agrees that during the
Non-Compete Period, McGee Drilling shall not, without the prior written consent
of PDC, directly or indirectly, alone or in association with any other person,
carry on, be engaged, concerned, or take part in, render services to, or
otherwise assist, or own, share in the earnings of, or invest in the stock,
bonds, or other securities of, any person which is engaged in, the contract oil
and gas well drilling business within the Permian Basin of West Texas and
Southeastern New Mexico (the "Competitive Business"); provided, however, that
McGee Drilling may (i) invest and/or engage in any business that routinely
provides third-party services (as such term is commonly used in the contract
oil and gas well drilling business) to a Competitive Business, but is not
engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which McGee
Drilling is prohibited from engaging in certain activities by this Section
shall be extended by the length of time during which McGee Drilling is in
breach of the terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by McGee Drilling not to enter into competition
with PDC as set forth in Section 2(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of
McGee Drilling to comply with such covenant, PDC would not have agreed to enter
into this Agreement or the Asset Purchase Agreement. PDC and McGee Drilling
have independently consulted with their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenant, with specific regard to the nature of the business conducted by PDC
and its affiliates. McGee Drilling agrees that such covenant is reasonable in
scope, geographic area, and duration, and that compliance with such covenant
would not impose economic hardship on McGee Drilling.

Exh A(I) - 2
<PAGE> 23
4. Restrictions on Soliciting Business of PDC.

McGee Drilling further covenants and agrees that during the
Non-Compete Period, McGee Drilling will not, either for itself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 2 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC,
McGee Drilling acknowledges that PDC will have no adequate remedies at law if
McGee Drilling violates the terms of Sections 2 or 3, hereof. In such event,
McGee Drilling agrees that PDC shall have the right, in addition to any other
rights it may have, to obtain in any court of competent jurisdiction specific
performance of such Sections of this Agreement or injunctive relief to restrain
any breach or threatened breach thereof. Nothing herein shall be construed as
prohibiting PDC from pursuing any other remedies available to PDC (whether at
law or in equity) for such breach or threatened breach, including, without
limitation, the recovery of monetary damages from McGee Drilling.

The provisions of this Section 4 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and McGee
Drilling.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to McGee Drilling that: (i) it has all requisite power
to enter into and perform its

Exh A(I) - 3
<PAGE> 24
obligations under this Agreement; (ii) this Agreement has been duly and validly
authorized by all necessary corporate action on the part of PDC; (iii) the
execution of this Agreement by PDC and performance of PDC's obligations
hereunder do not require the consent or approval of any other party; and (iv)
this Agreement is a valid and binding obligation of PDC.

(b) Representations and Warranties of McGee Drilling.
McGee Drilling hereby represents and warrants to PDC that: (i) McGee Drilling
has the capacity and power to enter into and perform obligations of McGee
Drilling under this Agreement; (ii) McGee Drilling has duly and validly
executed this Agreement; (iii) the execution of this Agreement and performance
of obligations of McGee Drilling hereunder do not require the consent or
approval of any other party; and (iv) this Agreement constitutes a valid and
binding obligation of McGee Drilling.

8. General Provisions.

(b) Governing Law and Construction. This Agreement will
be governed by and construed in accordance with the laws of the State of Texas
without reference to its conflict-of-laws principles. This Agreement's final
form resulted from review and negotiations among the parties and their
attorneys, and no part of this Agreement should be construed against any party
on the basis of authorship.

(c) Forum for Dispute Resolution. If any dispute arises
among the parties concerning the interpretation or performance of any portion
of this Agreement which the parties are unable to resolve themselves, and any
party brings an action against any other party seeking a declaratory order,
specific performance, damages, or any other legal or equitable relief based on
this Agreement, the parties agree that the forum for any such action shall be
an appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.

Exh A(I) - 4
<PAGE> 25
(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to another subsidiary of PEC without the prior written consent of
McGee Drilling, and provided further that a transfer by PDC as a result of a
merger or sale of all or substantially all of the assets of PDC with or to a
third party that assumes PDC's obligations hereunder by operation of law or
otherwise shall not constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

To PDC:
Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer

Exh A(I) - 5
<PAGE> 26
To MCGEE DRILLING:

McGee Drilling Corporation
P.O. Box 2471
Midland, Texas 79701
Facsimile: (915) 683-1715

with copies to:

William M. Kerr, Jr., Esq.
Kerr & Ward, L.L.P.
500 West Texas, Suite 1310
Midland, Texas 79701
Facsimile: (915) 684-9997

IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
----------------------------------
James C. Brown
Vice President-Finance

"MCGEE DRILLING"

MCGEE DRILLING CORPORATION

By:
----------------------------------
G.H. McGee
President

Exh A(I) - 6
<PAGE> 27
EXHIBIT A(II)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and G.H. McGee, an individual residing
in Midland, Texas ("G.H. McGee").

RECITALS:

C. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and MCGEE DRILLING
CORPORATION ("McGee Drilling"), providing for, among other things, the purchase
by PDC of the drilling rigs, related equipment and vehicle owned by McGee
Drilling.

D. G.H. McGee is an officer, a director and a
stockholder of McGee Drilling.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Patterson Energy, Inc., the sole stockholder of
PDC ("PEC"), unless sooner terminated as the result of the death of G.H. McGee
(the "Non-Compete Period"). For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of

Exh A(II)-1
<PAGE> 28
PEC or PDC with another entity and as a result of such merger, consolidation or
other reorganization, less than fifty percent of the outstanding voting
securities of the surviving or resulting entity shall be owned by the former
stockholders of PEC as the same shall have existed immediately prior to such
merger, consolidation or other reorganization.

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid G.H. McGee, by cashier's check, the amount of $749,000 as additional
compensation for entering into this Agreement.

3. Covenant Not to Compete.

(a) G.H. McGee covenants and agrees that during the
Non-Compete Period, G.H. McGee shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or otherwise assist, or own, share in the earnings of, or invest
in the stock, bonds, or other securities of, any person which is engaged in,
the contract oil and gas well drilling business within the Permian Basin of
West Texas and Southeastern New Mexico (the "Competitive Business"); provided,
however, that G.H. McGee may (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which G.H.
McGee is prohibited from engaging in certain activities by this Section shall
be extended by the length of time during which G.H. McGee is in breach of the
terms of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by G.H. McGee not to enter into competition with
PDC as set forth in Section 3(a) hereof is an essential element of this
Agreement and the Asset Purchase Agreement and that, but for the agreement of
G.H. McGee to comply with such covenant, PDC would not have

Exh A(II)-2
<PAGE> 29
agreed to enter into this Agreement or the Asset Purchase Agreement. PDC and
G.H. McGee have independently consulted with their respective counsel and have
been advised in all respects concerning the reasonableness and propriety of
such covenant, with specific regard to the nature of the business conducted by
PDC and its affiliates. G.H. McGee agrees that such covenant is reasonable in
scope, geographic area, and duration, and that compliance with such covenant
would not impose economic or professional hardship on G.H. McGee.

4. Restrictions on Soliciting Business of PDC.

G.H. McGee further covenants and agrees that during the
Non-Compete Period, G.H. McGee will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, G.H.
McGee acknowledges that PDC will have no adequate remedies at law if G.H. McGee
violates the terms of Section 3 or 4, hereof. In such event, G.H. McGee agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from G.H. McGee.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

Exh A(II)-3
<PAGE> 30
6. Attorneys Fees and Costs.

7. Representations and Warranties of PDC and G.H. McGee.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to G.H. McGee that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of G.H. McGee. G.H.
McGee hereby represents and warrants to PDC that: (i) G.H. McGee has the
capacity and power to enter into and perform obligations of G.H. McGee under
this Agreement; (ii) G.H. McGee has duly and validly executed this Agreement;
(iii) the execution of this Agreement and performance of obligations of G.H.
McGee hereunder do not require the consent or approval of any other party; and
(iv) this Agreement constitutes a valid and binding obligation of G.H. McGee.

8. General Provisions.

(c) Forum for Dispute Resolution. If any dispute arises
among the parties concerning the interpretation or performance of any portion
of this Agreement which the parties are unable to resolve themselves, and any
party brings an action against any other party seeking a declaratory order,
specific performance, damages, or any other legal or equitable relief based on
this Agreement, the parties agree that the forum for any such action shall be
an appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and

Exh A(II)-4
<PAGE> 31
further agree that the prevailing party in any such action, as determined by
the court, shall be awarded its reasonable attorneys' fees and costs in
addition to any relief or judgment the court awards.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to another subsidiary of PEC without the prior written consent of
G.H. McGee, and provided further that a transfer by PDC as a result of a merger
or sale of all or substantially all of the assets of PDC with or to a third
party that assumes PDC's obligations hereunder by operation of law or otherwise
shall not constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

Exh A(II)-5
<PAGE> 32
To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer

To G.H. McGee:

G.H. McGee
McGee Drilling Corporation
P.O. Box 2471
Midland, Texas 79701
Facsimile: (915) 683-1715

with copies to:

William M. Kerr, Jr., Esq.
Kerr & Ward, L.L.P.
500 West Texas, Suite 1310
Midland, Texas 79701
Facsimile: (915) 684-9997

Exh A(II)-6
<PAGE> 33
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
--------------------------------
James C. Brown
Vice President-Finance

"G.H. MCGEE"

-----------------------------------
G.H. McGee

Exh A(II)-7
<PAGE> 34
EXHIBIT A(III)

PATTERSON DRILLING COMPANY

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT is made and entered into this
_____ day of August, 1997 (this "Agreement"), by and between PATTERSON DRILLING
COMPANY, a Delaware corporation ("PDC"), and DAVID ESSEX, an individual
residing in Midland, Texas ("D Essex").

RECITALS:

F. Simultaneously with the execution of this Agreement,
PDC has entered into that certain Asset Purchase Agreement, dated of even date
herewith (the "Asset Purchase Agreement"), between PDC and McGee Drilling
Corporation ("McGee Drilling"), providing for, among other things, the purchase
by PDC of the drilling rigs, related equipment, rolling stock and office
equipment owned by McGee Drilling.

G. David Essex is an officer, a director and a
stockholder of McGee Drilling.

1. Period of Agreement.

The period of this Agreement shall commence on the date hereof
and remain in effect through the first to occur of (i) August 1, 2002, or (ii)
a Change in Control of PDC or Patterson Energy, Inc., the sole stockholder of
PDC ("PEC"), unless sooner terminated as the result of the death of D Essex
(the "Non-Compete Period"). For purposes of this Agreement, "Change in
Control" shall be deemed to have occurred, if (i) a tender offer shall be made
and consummated for the ownership of more than fifty percent of the outstanding
voting securities of PEC, or (ii) there is a merger, consolidation or other
reorganization of PEC or PDC with another entity and as a result of such
merger, consolidation or other reorganization, less than

Exh A(III)-1
<PAGE> 35
fifty percent of the outstanding voting securities of the surviving or
resulting entity shall be owned by the former stockholders of PEC as the same
shall have existed immediately prior to such merger, consolidation or other
reorganization.

2. Compensation.

Simultaneously with the execution of this Agreement, PDC has
paid D Essex by cashier's check, the amount of $1,000 as compensation for
entering into this Agreement.

3. Covenant Not to Compete.

(a) D Essex covenants and agrees that during the
Non-Compete Period, D Essex shall not, without the prior written consent of
PDC, directly or indirectly, and whether as a principal or as an agent,
officer, director, employee, consultant, or otherwise, alone or in association
with any other person, carry on, be engaged, concerned, or take part in, render
services to, or otherwise assist, or own, share in the earnings of, or invest
in the stock, bonds, or other securities of, any person which is engaged in,
the contract oil and gas well drilling business within the Permian Basin of
West Texas and Southeastern New Mexico (the "Competitive Business"); provided,
however, that D Essex may (i) invest and/or engage in any business that
routinely provides third-party services (as such term is commonly used in the
contract oil and gas well drilling business) to a Competitive Business, but is
not engaged in the actual conduct of a Competitive Business, or (ii) invest in
stock, bonds, or other securities of any Competitive Business (but without
otherwise participating in the Competitive Business) if: (A) such stock,
bonds, or other securities are listed on any national securities exchange or
are registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended; (B) the investment does not exceed, in the case of any class of
capital stock of any one issuer, two percent (2%) of the issued and outstanding
shares, or, in the case of bonds or other securities of any one issuer, two
percent (2%) of the aggregate principal amount thereof issued and outstanding;
and (C) such investment would not prevent, directly or indirectly, the
transaction of business by PDC or any affiliate of PDC with any state,
district, territory, or possession of the United States or any governmental
subdivision, agency, or instrumentality thereof by virtue of any statute, law,
regulation or administrative practice. The period of time during which D Essex
is prohibited from engaging in certain activities by this Section shall be
extended by the length of time during which D Essex is in breach of the terms
of this section.

(b) It is understood by and between the parties hereto
that the foregoing covenant by D Essex not to enter into competition with PDC
as set forth in Section 3(a) hereof is an essential element of this Agreement
and the Asset Purchase Agreement and that, but for the agreement of D Essex to
comply with such covenant, PDC would not have agreed to enter into this
Agreement or the Asset Purchase Agreement. PDC and D Essex have independently
consulted with their respective counsel and have been advised in all respects
concerning the

Exh A(III)-2
<PAGE> 36
reasonableness and propriety of such covenant, with specific regard to the
nature of the business conducted by PDC and its affiliates. D Essex agrees
that such covenant is reasonable in scope, geographic area, and duration, and
that compliance with such covenant would not impose economic or professional
hardship on D Essex.

4. Restrictions on Soliciting Business of PDC.

D Essex further covenants and agrees that during the
Non-Compete Period, D Essex will not, either for himself or for any other
person or entity, directly or indirectly, engage in any of the following
activities in a Competitive Business without the express prior written consent
of PDC:

(a) Solicit or hire any of the employees of PDC or
solicit or take away any of PDC's customers, lessors, or suppliers or attempt
any of the foregoing:

(b) Acquire or attempt to acquire rights providing any
product or service in a Competitive Business within the territory described in
Section 3 hereof; or

(c) Engage in any act which would interfere with or harm
any business relationship PDC has with any customer, lessor, employee,
principal or supplier.

5. Specific Performance.

Without intending to limit the remedies available to PDC, D
Essex acknowledges that PDC will have no adequate remedies at law if D Essex
violates the terms of Section 3 or 4, hereof. In such event, D Essex agrees
that PDC shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction specific performance of such
Sections of this Agreement or injunctive relief to restrain any breach or
threatened breach thereof. Nothing herein shall be construed as prohibiting
PDC from pursuing any other remedies available to PDC (whether at law or in
equity) for such breach or threatened breach, including, without limitation,
the recovery of monetary damages from D Essex.

The provisions of this Section 5 shall survive the expiration,
termination or cancellation of this Agreement.

6. Attorneys Fees and Costs.

Exh A(III)-3
<PAGE> 37
7. Representations and Warranties of PDC and D Essex.

(a) Representations and Warranties of PDC. PDC hereby
represents and warrants to D Essex that: (i) it has all requisite power to
enter into and perform its obligations under this Agreement; (ii) this
Agreement has been duly and validly authorized by all necessary corporate
action on the part of PDC; (iii) the execution of this Agreement by PDC and
performance of PDC's obligations hereunder do not require the consent or
approval of any other party; and (iv) this Agreement is a valid and binding
obligation of PDC.

(b) Representations and Warranties of D Essex. D Essex
hereby represents and warrants to PDC that: (i) D Essex has the capacity and
power to enter into and perform obligations of D Essex under this Agreement;
(ii) D Essex has duly and validly executed this Agreement; (iii) the execution
of this Agreement and performance of obligations of D Essex hereunder do not
require the consent or approval of any other party; and (iv) this Agreement
constitutes a valid and binding obligation of D Essex.

8. General Provisions.

(c) Forum for Dispute Resolution. If any dispute arises
among the parties concerning the interpretation or performance of any portion
of this Agreement which the parties are unable to resolve themselves, and any
party brings an action against any other party seeking a declaratory order,
specific performance, damages, or any other legal or equitable relief based on
this Agreement, the parties agree that the forum for any such action shall be
an appropriate federal or state court in Texas having jurisdiction, agree that
venue will be proper in such courts, and waive any objections based on
inconvenience of the forum, and further agree that the prevailing party in any
such action, as determined by the court, shall be awarded its reasonable
attorneys' fees and costs in addition to any relief or judgment the court
awards.

Exh A(III)-4
<PAGE> 38
agreements with respect thereto. The terms of this Agreement may be modified
only in a writing, signed by authorized representatives of both parties.

(e) Assignability. This Agreement will be binding upon
the parties' respective successors and permitted assigns. Neither party may
assign this Agreement and/or any of its rights and/or obligations hereunder
without the prior written consent of the other party, and any such attempted
assignment will be void; provided, however, that PDC may assign this Agreement
to PEC or to a subsidiary of PEC without the prior written consent of D Essex
and provided further that a transfer by PDC as a result of a merger or sale of
all or substantially all of the assets of PDC with or to a third party that
assumes PDC's obligations hereunder by operation of law or otherwise shall not
constitute a prohibited assignment under this Section 8(e).

(h) Headings. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

To PDC:

Patterson Drilling Company
4510 Lamesa Highway
P.O. Drawer 1410
Snyder, Texas 79550

Exh A(III)-5
<PAGE> 39
Facsimile: (915) 573-0281
Attention: A. Glenn Patterson
President and Chief Operating Officer

To D Essex:

David Essex
414 West Texas, Suite 312
Midland, Texas 79710

with copies to:

William M. Kerr, Jr., Esq.
Kerr & Ward, L.L.P.
500 West Texas, Suite 1310
Midland, Texas 79701
Facsimile: (915) 684-9997

Exh A(III)-6
<PAGE> 40
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their respective representatives as of the day and year first
above written.

"PDC"

PATTERSON DRILLING COMPANY

By:
-------------------------------------
James C. Brown
Vice President-Finance

"D Essex"

----------------------------------------
David Essex

Exh A(III)-7
<PAGE> 41
EXHIBIT B

BILL OF SALE AND ASSIGNMENT

KNOW ALL MEN BY THESE PRESENTS, that, pursuant to that certain
Asset Purchase Agreement, dated of even date herewith ("Asset Purchase
Agreement") between PATTERSON DRILLING COMPANY ("PDC"), a Delaware corporation,
and MCGEE DRILLING CORPORATION ("McGee Drilling"), a Texas corporation (McGee
Drilling is referred to herein as the "Assignor"), the Assignor, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby grants, bargains, sells, conveys and transfers unto PDC
(the "Assignee"), all of the Assignor's right, title and interest in and to (i)
the Drilling Rigs, Equipment and Vehicle set forth in Appendix I attached
hereto and incorporated herein by this reference; and (ii) the Drilling
Contracts and Other Agreements described in Appendix II attached hereto and
incorporated herein by this reference.

This Bill of Sale and Assignment is executed pursuant to that
certain Asset Purchase Agreement (the "Agreement") dated as of August 1, 1997,
between PDC and McGee Drilling. The representations, warranties, covenants,
and obligations contained in the Agreement shall survive the execution and
delivery of this Bill of Sale and Assignment in accordance with the provisions
of the Agreement, and execution and delivery of this Bill of Sale and
Assignment shall not affect, expand, diminish, or otherwise impair any of the
representations, warranties, covenants, and obligations in the Agreement.

THE EXPRESS REPRESENTATIONS AND WARRANTIES OF MCGEE DRILLING CONTAINED
IN THE AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, BY MCGEE DRILLING WITH RESPECT TO
THE ASSETS TRANSFERRED HEREBY. WITHOUT LIMITING THE FOREGOING, PDC ACCEPTS THE
ASSETS IN THEIR "AS IS" CONDITION, WITH ALL FAULTS AND DEFECTS, AND WITHOUT
WARRANTY OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY, AS TO CONDITION,
MERCHANTABILITY, CONFORMITY TO MODELS OR SAMPLES, OR FITNESS FOR A PARTICULAR
PURPOSE.

Exh B-1
<PAGE> 42
IN WITNESS WHEREOF, the Assignor has caused this Bill of Sale
and Assignment to be duly executed by its duly authorized officer as of the
_____ day of August, 1997.

MCGEE DRILLING CORPORATION

By:
--------------------------------------
G.H. McGee
President

PATTERSON DRILLING COMPANY

By:
--------------------------------------
James C. Brown
Vice President-Finance

Exh B-2
<PAGE> 43
APPENDIX I
TO
BILL OF SALE AND ASSIGNMENT
FROM
MCGEE DRILLING CORPORATION
TO
PATTERSON DRILLING COMPANY
(LIST OF ASSETS ASSIGNED)

A. DRILLING RIGS AND EQUIPMENT

The Drilling Rigs and Equipment includes all of the drilling rigs,
parts and related equipment, including engines, mud pumps, hooks and
blocks, derricks substructives, rotary tables, blow-out prevention
equipment, drill bits and all tubular goods on the rigs and in the
yard leased by McGee Drilling, all of which are listed below, less the
parts and related equipment sold or disposed of since April 13, 1997,
and plus the parts and related equipment acquired by McGee Drilling
since April 13, 1997, in each case in the ordinary course of business,
consistent with past practice.

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

RIG NO. 1

<TABLE>
<S> <C>
Drawworks: N-42 Brewster Dwks, Single Drum, with Foster Catheads,
22" Parmac Single Brake, Extended skid for two (2)
Engine In-Line Compound, Top mtd Air Compressor &
fawick Clutches. Rated 10,000 ft. capacity.

Dwks Engines: Two (2) New Style Caterpillar D-3406 Engines with
Radiator mtd. On Master Skids: (SN-67B12455 &
67B12441) with Twin Disc. TCI Torque converters Type
F11524.

Mast & Sub: 127 ft. L.C. Moore Mast SN T-2855, GNW 450M# Csg Cap.
350M#, Set Back 250M#, 4 sheave crown & 1 fast line
sheave, grooved for 1 1/8" line. 14 ft. Clear High x
42 ft. Long Substructure.Mud Pumps:
</TABLE>

Exh B-3
<PAGE> 44
RIG NO. 1

<TABLE>
<S> <C>
Ideco 600 Duplex Pump (600 hp) with
relief valves K-20 Pulsation Dampener,
Intergal mounted on extended pump skid
complete with D-379 Caterpillar engine
(SN-67B5537) complete with Pump
Sheave, pillar block Engine Sheave,
Clutch, Belts & Guard.

EWCO (15W-600) Ellis Williams Duplex Mud Tank System:
Pump (600 hp) with relief valves, CE
Dampener, Intergal mounted on extended
pump skid complete with D-3412 (1200
rpm) Caterpillar Engine (SN38S12059),
Complete with pump sheave, pillar
block Engine Sheave, Belts & belt
Guard.

Two (2) Tank 500 bbl System, Shaker & Rotary Table:
Suction Tank, 10' x 5' x 50',
including Brant Shale Shaker. Suction
Tank, Incl. 100 bbl Pre-mix section
with 5 x 6 Cent. Pump, driven with D-
3304 Cat Engine. Complete with all
Extensions, Walkways, Rails, and
suction connections.

Ideco 23' rated @ 175 Ton. Hook & Block:

Ideco 200 Ton Combination Shorty (1 Swivel:
1/8") Block w/150 Ton Hydra Hook.

Gardner Denver 200 Ton. Handling Equip:

Type B-42" Wooley Tool Tongs Generator House:
4 1/2" Elevators & Slips
Drill Collar Slips & Clamps Elevator
Bails, Lift Subs, X-over Subs,
Saver Subs, Bit Subs. Lot.
</TABLE>

Exh B-4
<PAGE> 45
RIG NO. 1

<TABLE>
<S> <C>
Two (2) 3304 Caterpillar Engines (4B-
13076) intergal with two (2) 90 KW
Kato Generator, Complete with Control
Panel, Transformers, housed in 8 x 25'
skidded house. 80 Gal Air Volume
Tank, with Quincy Compressor driven by
10 hp electric motor. One (1) 5 x 6
Centrifugal pump with 25 hp. electric
motor.

Blow Out Prevention Two (2) 12" Shaffer Type E-3, 0000# BOP, with 4 1/2"
Equipment: Pipe & Blind Rams.

One (1) 12" 3000# GK Hydril Annular.

Lot of Misc. 12" Spools, X-Over Studded Adapters.

Accumulator & Koomey "80" 120 gal Model 25040, SN12/14701, 5 Station
Control Equipment: Controls, actuated by both air and electric motor
driven Triplex pump.

Choke Manifold: Choke Manifold 2 1/16" x 4 1/16" 3000# WKM Valves, 2 x
4-way Cross, Manual Chokes.

Drilling Line: 1 1/8" x 5000 ft. @ $1.20/ft.

Special Equipment: BRT Rotary Table Bushing

Gardner Denver Air Hoist

Halliburton Wire Line Unit

Ideal Wire Line Anchor
</TABLE>

Exh B-5
<PAGE> 46
RIG NO. 1

<TABLE>
<S> <C>
Satellite Weight Indicator

Instrumentation: Star 3 pen recorder
Satellite Automatic Driller
7-14 Degree Deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights throughout Rig.

Fabricated Items: Fuel Tank (8400 gal) Franks Fuel

Two (2) 8'dia x 32'L, skidded Water Tanks. Ea. 500
bbl. W/Cent. Pump

Top Drillers Dog House 8'W x 8'H x 22'L with 3' Porch
Heaters & Lockers

Change House 8'W x 26'L

Lubester 3 compartment, with tool box, skidded 8'W x
12'L

Skidded Mud Mixing Cent. Pump with Electric Motor.
And Mud Hopper, mtd on 6' x 6' Skid with lifting eye.

Misc. Fabricated Catwalk, 2 Sec. 5"W x 30'L
Items: 1 1/8" Skidded Drig Line Spool
8'W x 15' Derrick Stand
(4) Sets Pipe Racks 42"H.
V-Door Ramp 66"W x 12L

Big Canvas: Full Set of Rig Canvas for Mast and wind walls on
floor

Rubber Goods: 3 1/2" x 55' Rotary Hose, 8" Suction & vibrating hoses
for all systems

Toolpushers Trailer 8'W x 40'2 axle Trailer House, with bedroom, bath,
House: kitchen, & office area
</TABLE>

Exh B-6
<PAGE> 47
RIG NO. 1

DRILL PIPE, DRILL COLLARS & KELLY

(280 JTS) 9000 FT, 4 1/2" 16.60 # XH Grade E. Drill Pipe 6-6 1/8" OD Jts.

27-6 1/4" OD x 2 1/4" ID Drill Collars W/XH Connections

15 8" OD x 2 1/2" ID Drill Collars w/6 5/8" Reg. Conn.

1 4" x 40' Square Kelly

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

RIG NO. 2

<TABLE>
<S> <C>
Drawworks: U-36-A Mid Continent Dwks, Single Drum, with Type 33
Foster Catheads, V 80 Parmac Hydro. Brake, with
extended in-line two (2) Engine Compound with 16"
clutches. Compound driven 390 Quincy Air Comp.

Dwks Engines: Two (2) Caterpillar D-3408 TAPC Engines N-67U5220 &
67U5233) with Twin Disc TCI 3 stage Converters Type
F11524

Masts & Sub: 131' Lee C. Moore (SN-T-2845) with 4-42" sheave Crown,
1 fast line sheave for 1 1/8" with 13 ft. Clear Sub x
48'L. GNW 550M#; Csg cap. 375M#, Set Back 250M#.

Mud Pumps: Cont. Emsco DB-550 Duplex Pump (SN69) with 3"
Discharge Valves, 2" Cameron & Relief Valves, K-20
Dampener. Pump Sheave. Mtd. on 8"W x 28'L Pump Skid
with Cross Skid with D-379 Caterpillar, Pump Dn tail
Shaft, 24" Clutch & 16"-16D Sheave. Belts, and Guard.

Oilwell Duplex Pump Type A-700, 7 3/4" x 16,
</TABLE>

Exh B-7
<PAGE> 48
RIG NO. 1

<TABLE>
<S> <C>
(SN-P- 118-43) With necessary valves, relief Valves and
K-20 Dampener, Mtd on 8'W x 32'L Pump Skid with Cross
Skid with D-379 Cat. Engine, 14"-14D Pump Sheave, 24"
Fawick Clutch, Belts & Guard.

Mud Tank System: Two (2) Tank 650 bbl System Shaker and Suction Tank.
Shaker & Suction Mud Tank 10'W x 6'H x 40'L extension
for Brandt Shaker, Lightning Mixer, and walkways.
Intermediate Tank (Pre-mix) 8'W x 30'L w/14' extension
for 6 x 8 Cent Pump, with V6-71 Detroit Engine with
mud hopper, 10 hp agitator 10 hp mtr. Driving 5 x 6
cent. Pump.

Rotary Table: Oilwell 27 1/2" (SN 21-106)

Hook & Block: Gardner Denver 200 Ton 4 sheave Block for 1 1/8" Line
(SN-6245) with B.J. Unimatic 6150 Hook (SN-359)

Swivel: Oilwell PC-300 Ton

Handling Equip: Type B 42" Wooley tool Tongs; 4 1/2" Drill Pipe
Elevators & Slips Drill Collar Slips & Clamps
Elevator Bails, Lift Subs, X-Over Subs, Saver Subs,
Bits Subs. Lot.

Generator House: Two (2) D-3306TPC Caterpillar Engines w/150 KW Kato
(EX9E) Generators; Sq. D. Control Panel. Day Tank, 2
x 3 Cent. Pump w/20 hp Electric motor; Gardner Denver
Screw Type Compressor Model EBGRDA (SN-771761) driven
by 30 hp Electric Mtr. all in 8W x 26L x 9H skidded
Gen. House.

Blow Out Prevention Two (2) 13 5/8" Shaffer Type E-3000# BOP, with 4 1/2"
Equipment: Blind & Pipe Rams.

One (1) 13 5/8" 3000# Shaffer Annular
</TABLE>

Exh B-8
<PAGE> 49
RIG NO. 2

<TABLE>
<S> <C>
Lot of Misc. 13 3/8" Spools, X-Over Studded Adapter
Flanges.

Accumulator & Control Equipment: Type 80 Koomey Model 180-115, (SN 3500), Seven (7)
station, 18 bottles, 300 psi Triplex Pump UET 20B, 20
hp Elect. Mtr. (both air & hydraulic actuated)
Suitcases for Hydr. Lines to Rig.

Choke Manifold: 2 1/16" x 4 1/16" 5000#, 1-4 1/16 WKM Valve, 1-4 1/16"
McEvoy Valve, 4-2" Barton Valves, 2-2" WKM L Valves, 2
x 4 four way Cross. Two manual Chokes.

Drilling Line: 1 1/8" x 5000' Drilling Line (new) @ $1.40/ft.

Special Equipment: Varco 5 1/4" Hex Roller Kelly Bushing

Ingersol Rand HUL 40 Air Hoist

Halliburton Wire Line Unit

National Ideal Wire Line Anchor

Martin Decker Weight Indicator

Instrumentation: Star 3-pen Recorder
Satellite Automatic Driller
7-14 degree Deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights throughout Rig.

Fabricated Items: Fuel Tank (8400 gal) Franks Fuel

Two (2) 8" dia. x 32'L , skidded Water Tanks. Each
500 bbl, w/Cent. Pump

Top Drillers Dog House, 8W x 8H x 22'L with 3' Porch.
Lockers & Heaters
</TABLE>

Exh B-9
<PAGE> 50
RIG NO. 2

<TABLE>
<S> <C>
Change House, 8"W x 16'L, with Lockers & Bench

Storage & Tool House 7'W x 20'L

Lubester, 3 compartment, 39" dia. x 5'L, with Tool Box
on 9'W x 12'L skid.

Fabricated Items: 8W x 22W Skidded Parts and Tool House.

Misc. Fabricated Catwalk, 2 Sec. 5W x 30'L
Items: 1 1/8 Drilling Line Spool Skd.
8'W x 15'H Derrick Stand
(4) Sets Pipe Racks 42"H
V-Door Ramp 66"W x 12'L

Rig Canvas: Full Set of Rig Canvas for Mast and wind walls on
Floor.

Rubber Goods: 3 1/2" x 55' Rotary Hose, 8" Suction and vibrating
hoses for all systems.

Toolpushers Trailer: 8'W x 40'L 1996 "Idle Time" Trailer House with
Bedroom, Bath, Kitchen & Living Room
</TABLE>

DRILL PIPE, DRILL COLLARS & KELLY

(290 JTS) 9300 FT. 4 1/2" 16.60 LB. XH Gr. E. Drill
Pipe 6 1/8-6 1/4" OD Jts.

(93 JTS) 3000 FT. 4 1/2" 16.60 LB. XH Gr. G. Drill Pipe
6 1/4" OD Jts.

24 - New 6 1/2" OD x 2 1/4" ID Drill Collars w/XH Conn.

14 - 8" OD x 2 1/2" ID Drill Collars w/XH Conn.

1 - 5 1/4" Hex Kelly

Exh B-10
<PAGE> 51
RIG NO. 2

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

RIG NO. 3

<TABLE>
<S> <C> <C>
Drawworks: Skytop Brewster N-75, Single Drum, Lebus grooved (1
1/4") Line. Foster Make up & Break. Out Catheads.
Drillers Console, Crown-o-matic, & over-running Clutch
for Brake. Mtd. On Extended Skid for three (3)
Engine In-Line Compound, 24" Fawick Clutches &
Spiders, w two (2) top mounted Ingersol Rand air
Compressors 242-5CI, (SN-30T 485459 & 30T-556282),
with Double (2) 16"D Gr. Pedestal Pump Drives.
Hydromatic Brake:

</TABLE>

Exh B-11
<PAGE> 52
RIG NO. 3

<TABLE>
<S> <C>
Parmac 342-34" Double Hydro. Brake (SN-51702)
Engines: Three (3) Caterpillar D-353E Engines, complete with
Air Starters, Gen. Radiator Group, & Clutch Hubs.
(SN-46B7624) (46B09177) (46B7467).

Mast & Substructure: 142 Ft. Superior Mast (SN-NA) 768,000# Static Hook
Load. (Mfg 1981). Six (6) Sheave 52" and one (1)
Fast Line Sheave, all for 1 1/4" Line. Complete with
Racking Board, Standpipe Manifold, Ladder, Boom & Tong
Cwts. Substructure: 14'H x 30W x 54'L, Box on Box
Stairs, Safety Rails. Build in Air Volume Tank Parts
House & Starting Fuel Tank in Subs.

Mud Pumps: Continental Emsco DB-700 Duplex Mud Pump (SN-266), 7
1/2 x 16", with Quick Change Steel Fluid End, with
C.E. PD-53 Pulsation Dampener (SN276), 3" Relief
Valves, Type D Pressure Gauge, Rod Cooling Pump, Belts
& Guard. Driven from Engine Compound. (Like New).

Continental Emsco DB-700 Duplex Mud Pump (SN 263) 700
hp, 7 1/2" x 16". Quick Change Valve Cast Steel Fluid
End. C.E. PD-53 Dampener (SN259) Relief Valve,
Cooling Pump, Type D Pressure Gauge. Mounted on 8W x
32"L Pump Skid with Cross Engine Skid with D-379 Cat.
Engine, Pump Drive Tail Shaft, Clutch and Drive
Sheave. Belts and Guard. (like new).Mud Tank:

Three (3) Tank 750 bbl System. Shaker Rotary Table:
Tank 9'11"W x 5'6"H x 42'L, W/4 Slant
Btm Compartments, Plumbing, Mud
Agitator Top Mtd Walkways, Rumba
Single Shale Shaker with 3 hp mtr.
Stairs, Rails, Skidded. Volume Tank,
9'11"W x 5'6"H
</TABLE>

Exh B-12
<PAGE> 53
RIG NO. 3

<TABLE>
<S> <C>
x 30'L, (3) Compartment Slant Bottom,
Plumbing, w/12'L Pump Room, with
Mission 6 x 8 Centrifugal Pumps & 50
hp mtrs. Top mtd walkways, Rails,
Stairs, skidded. Suction Tank, 9'11"
x 5'6" x 30L, w/12'L Pump Room Ext.
with 6 x 8" Centrifugal Pump & 50 hp
Mt., (2) Compartment, Slant Bottom,
Plumbing, Mud Mixer, Top Mtd Walkways,
Stairs, Rails, Skidded. Also used as
(Premix Tank)Rotary Table:

Oilwell A-20 1/2" Rotary Table, 53 Hook & Block:
1/4" Center, SN R104A-107, w/split
bushing.

Oilwell 350 Ton Block, Gr. 1 1/4", W/ Swivel:
BJ 5350-350 Ton Dynaplex Hook.

Oilwell PC-300 (300 Ton) Handling Equip:

Type B 42" Wooley Tool Tongs Generator House:
4 1/2" Drill Pipe Elevators(3) & Slips
Drill Collar Slips and Clamps
2 3/4 x 108" Elevator Links
Lift Subs, X-Over Subs, Saver Subs,
Bit Subs

Two (2) Kato Generator Sets. 1-300KW
(SN-77974-2) with Cat. D-353E
(SN46B7757) 1-325KW Kato (SN82891)
with D353E Cat. (SN-46B7715). Quincy
390 Compressor w/35 hp mtr. 3" x 2"
Cent. Pump w/20 hp Mtr. Simplex Mod
Controls on

Generator & Allan Bradley Electrical
Control Panel, all mtd in 9'11" x 9'H
x 40L Skidded Gen. House.
</TABLE>

Exh B-13
<PAGE> 54
RIG NO. 3

<TABLE>
<S> <C>
Blow Out Prevention Hydril 13 5/8" 5000# Annular
Equipment: Hydril 11" 5000# Annular
Hydril 11" 5000# Double Blow Out Preventer w/ 4 1/2"
Blind and Pipe Rams.
Lot of Misc. 11' & 13 5/8" Spools, X-Over Studded
Adapter Flanges

Accumulator & Valvcon 80 Gallon 5 Station Closing Unit (SN 5074) w
Control Equip: Hydraulic Fl. Reservoir, both Air & hydraulic Pump.,
Triplex Hydr. Pump w/Elec. Mtr. (8) Bottles, Skidded.

Suitcases for Hydraulic Lines to Rig 5 Station Remote
Closing Unit.

Choke Manifold: (2) 4 1/16" Manual Gate Valves, (2) 4 1/16" Demco
Manual Valves, 2" Check Valves 4 way cross with manual
Chokes.

Drilling Line: 1 1/4" x 7500 ft. Drilling Line (new)

Special Equipment: Varco 5 1/2" HD Hex Kelly Bushing
Ingersol Rand HUL Air Hoist
Mathey "Retriever" Hydr. Wire Line measuring Device
(15000' cap) w/15 hp mtr.
National "D" Wire Line Anchor
Martin Decker Weight Indicator w/gauges.

Instrumentation: Star 3 pen recorder
Satellite Automatic Driller
7-14 degree deviation Instr.

Lighting Fixtures: Fluorescent & Vapor Proof Lights & Writing throughout
Rig

Fabricated Items: Fuel Tank (8400 gal) Property (Franks Fuel)
</TABLE>

Exh B-14
<PAGE> 55
RIG NO. 3

Two (2) 8' Dia. x 32' Long Skidded Water Tanks, (500
bbl) ea w/cent. pump

Top Drillers Dog House 8'W x 8'H x 30'L, with
knowledge box, lockers, Bench Storage, Cabinets,
Parts, Bins, Heater, Skidded

Mud & Tool House 8'W x 36'L on 40'L Skid.

Tool & Storage House 7" x 20'L Skidded.

Lubester, 4 Compartment (1000 gal)
Oil Storage Tank. 40" Dia x 8'L mtd. on 9'W x 16'L
Skid.

Misc. Fabricated Catwalk, 2 Section, 6'W x 42" H, x 35' Long (plated
Items: 1/2 Steel top)
1 1/4" Drilling Line Spool on Skid
8'W x 15' H Derrick Stand
V Door Ramp, 5 1/2' x 12'L
Junk Box 8'W x 36"H x 24'L Skidded.
(10) - 8'W x 30'L & (8) 8'W x 12' L Steel
Reinforced Wooden Mats, for Substructure and Pumps

Rig Canvas: Full Set of Rig Canvas for Mast and Wind Walls on
Floor

Rubber Goods: 4 1/2" ID x 55' L Rotary Hose
2 - 10" OD x 5' Long Suction Hoses
4 - 3 1/2" ID x 8' x 10' Long Vibrated Hoses

Toolpusher Trailer: 8'W x 40'L "1995 Idle Time" Trailer w/bedroom, Bath,
Kitchen & Living Room
</TABLE>

DRILL PIPE, DRILL COLLARS & KELLY

(220 JTS) 7,000 ft. 4 1/2" 20# Gr. "G" Drill Pipe 6
1/4 OD Jts.

Exh B-15
<PAGE> 56
RIG NO. 3

(179 JTS) 5,700 ft. 4 1/2" 16.60# Gr. "E" Drill Pipe 6 1/4" OD Jts.

24 - 6 1/2" OD x 2 1/4" ID Drill Collars w/XH Conn. New

6 - 6/3/4" OD x 2 3/8" ID Drill Collars w/XH conn.

18 - 8" OD x 2 1/2" ID Drill Collars New

1 - 5 1/4" Hex Kelly

B. VEHICLE

Year Description
---- -----------
1995 Chevrolet Pickup ID No.
2GCEC19K7S1103026 1997 Sticker No.
12075676

Exh B-16
<PAGE> 57
APPENDIX II
TO
BILL OF SALE AND ASSIGNMENT
FROM
MCGEE DRILLING CORPORATION
TO
PATTERSON DRILLING COMPANY
(LIST OF DRILLING CONTRACTS AND OTHER AGREEMENTS ASSIGNED)

A. Drilling Contracts.

6. Miscellaneous Master Drilling Contracts respectively between
the following named Operators and McGee Drilling Corporation:

Exh B-17
<PAGE> 58
Operator

Amerada Hess Corporation

Bass Enterprises Production Company

Burlington Resources

John Hendrix Corporation

Marathon Oil Company

Parker & Parsley

Pogo Producing Company

Santa Fe Energy Resources

B. Leased Vehicles Lease Agreements.

C. Purchase Orders.

1. Tubular Goods Order No. 34440-00 to Grant Prideco, Inc. in the
amount of $503,452.95 for approximately 15,000 feet of drill
pipe and related tubular goods as therein described.

2. Tubular Goods Order No. 34441-00 to Grant Prideco, Inc. in the
amount of $108,432.68 for approximately 3,000 feet of drill
pipe and related tubular goods as therein described.

Exh B-18
<PAGE> 59
D. Other Agreements

1. Service Agreement dated February 25, 1997, between Cellular
One and McGee Drilling Corp., relating to cellular phone ESN
No. 21216642980.

2. Service Agreement dated February 4, 1997, between Cellular One
and McGee Drilling Corp., relating to cellular phone ESN Nos.
21216729212, 21216640239, and 2l2l6640241.

3. Service Agreement dated January 23, 1997, between Cellular One
and McGee Drilling Corp,, relating to cellular phone ESN Nos.
21216621678 and C3121ECC.

Exh B-19

<PAGE> 1
EXHIBIT 5.1.1

[BAKER & HOSTETLER LLP LETTERHEAD]

August 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 566,000 shares (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 15.1.1

August 5, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Patterson Energy, Inc.
Registration on Form S-3 (File No. 333-29035)

We are aware that our report dated April 30, 1997 on our review of interim
financial information of Patterson Energy, Inc. for the period ended March 31,
1997 and included in the Company's Quarterly Report on Form 10-Q for the
quarter then ended is 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 23.1.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration
Statement of Patterson Energy, Inc. on Form S-3 (File No. 333-29035) 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
August 5, 1997

<PAGE> 1
EXHIBIT 23.2.1

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
August 5, 1997

<PAGE> 1
EXHIBIT 23.3.1

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
August 5, 1997