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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-22664
PATTERSON ENERGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 75-2504748
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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P. O. Drawer 1416, 4510 Lamesa Highway, Snyder, Texas 79550
(Address of principal executive offices) (Zip Code)
(915) 573-1104
(Registrant's telephone number, including area code)
No change
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [x] No [ ]
As of May 2, 1996 the issuer had 3,194,951 shares of Common Stock, par value
$0.01 per share, outstanding.
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This Form 10-Q/A is being filed solely for the purpose of reporting a
change in the capital expenditures of the contract drilling segment for the
three months ended March 31, 1996, from $1,146,000 to $1,238,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had working capital of approximately
$5,740,000 and cash and cash equivalents of approximately $3,433,000 as
compared to a working capital of approximately $6,385,000 and cash and cash
equivalents of approximately $5,106,000 as of March 31, 1995. For the three
months ended March 31, 1996, the Company generated net cash from operations of
approximately $2,090,000 and borrowed additional funds in the amount of
$1,140,000. These funds were used primarily to acquire drilling and other
related equipment of approximately $1,238,000, to fund leasehold acquisition,
exploration and development of approximately $933,000, to reduce certain notes
payable by approximately $157,000 and to increase cash by approximately
$965,000.
The Company's management believes that it will continue to use cash
flow from operations and borrowings (if available) which, together with the
current working capital should be sufficient to fund operations, and service
notes payable for at least the next 12 months. The Company's ability to repay
debt would be adversely affected by a decline in natural gas and crude oil
prices or by unsuccessful results in the Company's contract drilling activities
or exploration, development and production activities. See "Volatility of Oil
and Gas Prices" below in this Item.
The Company believes it must continually upgrade and maintain its
contract drilling fleet, and has budgeted approximately $4,000,000 in capital
expenditures for fiscal year 1996 for maintaining the contract drilling fleet.
For the three months ended March 31, 1996 the Company had expended $1,238,000
of this budget for the acquisition of drilling equipment (primarily new drill
pipe).
The Company has budgeted approximately $4,000,000 for capital
expenditures in the oil and gas segment in 1996. The funds (if available) will
be used for leasehold acquisitions, exploration and development of oil and gas
properties. As of March 31, 1996 the Company had expended approximately
$933,000 of this budget and has drawn down, in the first quarter of 1996,
$1,000,000, of a $3,500,000 line of credit with Norwest Bank Texas, Wichita
Falls, N.A.
RESULTS OF OPERATIONS
Comparison of the fiscal quarters ended March 31, 1996 and 1995
For the fiscal quarter ended March 31, 1996 contract drilling revenues
were approximately $10,533,000 as compared to $9,042,000 for the same fiscal
quarter in 1995, an increase of 16%. Average rig utilization was 77% for the
fiscal quarter ended March 31, 1996 as compared to 76%, in the same fiscal
quarter in 1995. Direct contract drilling cost for the fiscal quarter ended
March 31, 1996 was approximately $8,746,000 or 83% of contract drilling
revenues as compared to approximately $7,455,000 or 82% of contract drilling
revenues for the same period in 1995. The increase in contract drilling
revenues and direct drilling costs was due primarily to the addition of three
drilling rigs acquired during the second and third quarters of 1995. General
and administrative expense for the contract drilling segment was $447,000 for
the fiscal quarter ended March 31, 1996 as compared to approximately $442,000
for the same period in 1995. Depreciation expense was approximately $1,131,000
for the drilling segment in the fiscal quarter ended March 31, 1996 as
compared to approximately $693,000 in the same period in 1995. The increase
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
in depreciation expense is due primarily to the addition of the aforementioned
drilling rigs in late 1995 and significant capital expenditures for drill pipe.
The Company expended approximately $4,254,000 during fiscal 1995 and
approximately $556,000 during the fiscal quarter ended March 31, 1996 to
acquire approximately 242,000 feet of new drill pipe. In the fiscal quarter
ended March 31, 1996, income from this segment was approximately $268,000 as
compared to approximately $458,000 for the same period in 1995.
Oil and gas revenue was approximately $1,324,000 for the fiscal
quarter ended March 31, 1996, as compared to approximately $919,000 for the
fiscal quarter ended March 31, 1995. The volume of oil and gas sold increased
by 22% and 43%, respectively, in the fiscal quarter ended March 31, 1996 as
compared to the same period in 1995. The average price per barrel of oil was
$18.30 in the first quarter of 1996 as compared to $16.46 for the same period
in 1995, and the average price per mcf of gas was $1.53 in the first quarter of
1996 as compared to $1.37 in the first quarter of 1995. General and
administrative expenses for the oil and gas segment was approximately $361,000
for the fiscal quarter ended March 31, 1996 as compared to approximately
$279,000 for the same period in 1995. In the fiscal quarter ended March 31,
1996 income from the oil and gas segment was approximately $217,000 as compared
to $125,000 for the fiscal quarter ended March 31, 1995.
For the fiscal quarter ended March 31, 1996 interest expense was
approximately $329,000 compared to $188,000 for the same period in 1995. The
increase is due to higher interest rates and an increase in the principal
balance of outstanding notes payable.
INCOME TAXES
Subsequent to fiscal year end 1995 and first quarter end March 31
1996, the Company revised its estimates relative to the realization of the
future benefits of its deferred tax assets, particularly the net operating loss
carryforwards. In light of the Company's recent historical earnings, stable
rig utilization rates and increased crude oil prices, management has determined
that it is more likely than not that the Company will realize the benefits
provided by its net operating loss carryforwards and certain other deferred tax
assets. As such, the Company reduced its valuation allowance and recognized a
net deferred income tax benefit of approximately $1,610,000 in the quarter
ended March 31, 1996.
VOLATILITY OF OIL AND GAS PRICES
The Company's revenue, profitability and future rate of growth are
substantially dependent upon prevailing prices of oil and gas, both with
respect to its contract drilling and oil and gas segments. Historically, oil
and gas prices and markets have been extremely volatile. Prices are affected
by market supply and demand factors as well as actions of state and
local agencies, the United States and foreign governments and international
cartels. All of these are beyond the control of the Company. Any significant
or extended decline in those prices would have a material adverse effect on the
Company's financial condition and results of operations. The price of oil fell
to a five-year low in December, 1993, ($13.50 per barrel in the United States)
and has risen and fallen since then to $21.11 per barrel on May 7, 1996.
The average price of natural gas per mcf received by the Company has
increased from $1.37 in the first quarter of 1995 to $1.53 in the first quarter
of 1996. The sustained low prices of natural gas in particular have continued
to suppress the demand for contract drilling rigs in South and Southeast Texas
and have caused the Company's contract drilling rates in that area to remain
relatively flat among periods. If oil and gas prices decline from their
current levels, the Company's rig utilization, contract drilling rates and oil
and gas operations would be further adversely effected.
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SIGNATURE
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PATTERSON ENERGY, INC.
By: /s/ Cloyce A. Talbott
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Cloyce A. Talbott
Chairman of the Board and
Chief Executive Officer
By: /s/ James C. Brown
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James C. Brown
Vice President Finance
DATED: January 24, 1997
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