<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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)
DELAWARE
(State or other jurisdiction of 75-2504748
incorporation or organization) (I.R.S. Employer Identification No.)
P. O. BOX 1416, 4510 LAMESA HIGHWAY, SNYDER, TEXAS, 79550
(Address of principal executive offices) (Zip Code)
(915) 573-1104
(Registrant's telephone number, including area code)
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 November 13, 2000 the issuer had outstanding 37,149,286 shares of common
stock, $0.01 par value, its only class of voting stock.
<PAGE> 2
PATTERSON ENERGY, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants................................................................ 3
Part I - Financial Information
Item 1. Financial Statements
Unaudited condensed consolidated balance sheets............................ 4
Unaudited condensed consolidated statements of operations.................. 6
Unaudited condensed consolidated statement of stockholders' equity......... 7
Unaudited condensed consolidated statements of cash flows.................. 8
Notes to unaudited condensed consolidated financial statements............. 10
Item 2. Changes in Securities and Use of Proceeds...................................... 13
Item 3. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... 14
Item 4. Quantitative and Qualitative Disclosures About Market Risk..................... 18
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995......................... 19
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K............................................... 20
Signatures....................................................................................... 24
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
of Patterson Energy, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
Patterson Energy, Inc. and its subsidiaries as of September 30, 2000 and the
related condensed consolidated statements of operations for each of the three
month and nine month periods ended September 30, 1999 and 2000 and the related
condensed consolidated statement of cash flows for the nine month periods ended
September 30, 1999 and 2000 and the related condensed consolidated statement of
stockholders' equity for the nine month period ended September 30, 2000. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.
We previously audited, in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 1999, and the related consolidated statements of operations and cash flows
for the year then ended (not presented herein), and in our report dated February
24, 2000, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet information as of December 31, 1999 is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
November 11, 2000
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE FOLLOWING UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDE
ALL ADJUSTMENTS WHICH IN THE OPINION OF MANAGEMENT ARE NECESSARY IN ORDER TO
MAKE SUCH FINANCIAL STATEMENTS NOT MISLEADING.
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
------------ ------------
(in thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,792 $ 62,682
Accounts receivable:
Trade, less allowance for doubtful accounts of $365,000 and
$615,000 at December 31, 1999 and September 30, 2000,
respectively 41,571 61,096
Oil and natural gas sales 803 1,375
Costs of uncompleted drilling contracts in
excess of related billings 87 242
Inventory 1,970 2,241
Deferred income taxes 964 3,145
Undeveloped oil and natural gas properties held for resale 2,658 3,032
Other current assets 1,919 1,774
------------ ------------
Total current assets 58,764 135,587
Property and equipment, at cost, net 133,824 188,120
Intangible assets, net 41,818 39,931
Other assets 1,851 1,912
------------ ------------
Total assets $ 236,257 $ 365,550
============ ============
</TABLE>
4
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
<PAGE> 5
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
------------ ------------
(in thousands)
<S> <C> <C>
Current liabilities:
Current maturities of notes payable $ -- $ 3,481
Accounts payable:
Trade 23,676 26,299
Revenue distribution 2,407 3,273
Other 1,201 560
Federal income taxes payable -- 6,183
Accrued expenses 4,432 5,852
------------ ------------
Total current liabilities 31,716 45,648
------------ ------------
Deferred income taxes, net 1,688 11,354
Other liabilities 65 45
Notes payable, less current maturities 50,000 21,722
------------ ------------
51,753 33,121
------------ ------------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, par value $.01; authorized 1,000,000 shares,
no shares issued -- --
Common stock, par value $.01; authorized 50,000,000 shares
with 32,675,678 and 37,372,286 issued at December 31, 1999
and September 30, 2000, respectively 327 373
Additional paid-in capital 117,597 241,726
Retained earnings 34,864 46,332
------------ ------------
152,788 288,431
------------ ------------
Treasury stock, at cost, 300,000 shares at September 30, 2000 -- (1,650)
------------ ------------
Total stockholders' equity 152,788 286,781
------------ ------------
Total liabilities and stockholders' equity $ 236,257 $ 365,550
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
5
<PAGE> 6
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Operating revenues:
Drilling ............................. $ 34,579 $ 69,498 $ 83,754 $ 179,034
Drilling fluids ...................... 2,722 4,912 7,461 14,386
Oil and natural gas sales ............ 2,075 3,778 4,619 9,456
Well operation fees .................. 388 422 1,125 1,439
Other ................................ 48 18 135 18
------------ ------------ ------------ ------------
39,812 78,628 97,094 204,333
------------ ------------ ------------ ------------
Operating costs and expenses:
Direct drilling costs ................ 30,513 51,332 73,646 137,564
Drilling fluids ...................... 2,278 3,846 6,428 11,380
Lease operating and production ....... 411 720 1,088 2,140
Exploration costs .................... 151 609 500 931
Depreciation, depletion and
amortization ...................... 7,295 7,338 21,421 23,502
General and administrative expense.... 1,868 2,647 5,295 6,994
------------ ------------ ------------ ------------
42,516 66,492 108,378 182,511
------------ ------------ ------------ ------------
Operating income (loss) .................. (2,704) 12,136 (11,284) 21,822
------------ ------------ ------------ ------------
Other income (expense):
Net gain (loss) on sale of assets .... 54 34 (27) 84
Interest income ...................... 132 223 348 460
Interest expense ..................... (968) (1,622) (2,994) (4,347)
Other ................................ 4 20 44 17
------------ ------------ ------------ ------------
(778) (1,345) (2,629) (3,786)
------------ ------------ ------------ ------------
Income (loss) before income taxes ........ (3,482) 10,791 (13,913) 18,036
------------ ------------ ------------ ------------
Income tax expense (benefit):
Current .............................. 4,714 6,033 1,608 6,183
Deferred ............................. (5,842) (1,991) (6,162) 385
------------ ------------ ------------ ------------
(1,128) 4,042 (4,554) 6,568
------------ ------------ ------------ ------------
Net income (loss) ........................ $ (2,354) $ 6,749 $ (9,359) $ 11,468
============ ============ ============ ============
Net income (loss) per common share:
Basic ................................ $ (0.07) $ 0.20 $ (0.29) $ 0.34
============ ============ ============ ============
Diluted .............................. $ (0.07) $ 0.19 $ (0.29) $ 0.33
============ ============ ============ ============
Weighted average number of common shares
outstanding:
Basic ................................ 32,527 34,573 32,452 33,449
============ ============ ============ ============
Diluted .............................. 32,527 36,009 32,452 34,859
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
6
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PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Common Stock
---------------------------
Number of Additional Retained Treasury
Shares Amount paid-in capital earnings Stock Total
------------ ------------ --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 ............ 32,676 $ 327 $ 117,597 $ 34,864 $ -- $ 152,788
Issuance of common stock .............. 4,696 46 124,129 -- -- 124,175
Treasury stock acquired ............... (300) -- -- -- (1,650) (1,650)
Net income ............................ -- -- -- 11,468 -- 11,468
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2000 ........... 37,072 $ 373 $ 241,726 $ 46,332 $ (1,650) $ 286,781
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
7
<PAGE> 8
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 2000
------------ ------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................................ $ (9,359) $ 11,468
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation, depletion and amortization ..................... 21,421 23,502
Net (gain) loss on sale of assets ............................ 27 (84)
Deferred income tax expense (benefit) ........................ (6,162) 385
Decrease in deferred compensation liabilities ................ (20) (20)
Change in operating assets and liabilities:
Trade accounts receivable ....................... 291 (19,525)
Oil and natural gas sales receivable ............ (399) (572)
Inventory ....................................... 110 (271)
Federal income taxes receivable ................. 7,235 --
Undeveloped oil and natural gas properties ...... (1,767) (374)
Other current assets ............................ (744) 145
Costs of uncompleted contracts in excess
of related billings ........................... (963) (155)
Trade accounts payable .......................... 4,850 2,623
Revenue distribution payable .................... 946 866
Accrued expenses ................................ 1,177 1,420
Federal income taxes payable .................... -- 6,183
Other current payables .......................... 138 (641)
------------ ------------
Net cash provided by operating activities .... 16,781 24,950
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment through acquisitions ..... -- (4,556)
Purchases of property and equipment .......................... (9,703) (41,440)
Proceeds from sales of property and equipment ................ 766 409
Other assets ................................................. (423) (214)
------------ ------------
Net cash used in investing activities ........ (9,360) (45,801)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock ....................... -- 99,000
Purchase of treasury stock ................................... -- (1,650)
Proceeds from notes payable .................................. -- 15,203
Payments of notes payable .................................... (6,429) (40,000)
Proceeds from exercise of stock options ...................... 604 2,188
------------ ------------
Net cash provided by (used in)
financing activities ....................... (5,825) 74,741
------------ ------------
Net increase in cash and cash equivalents ......................... 1,596 53,890
Cash and cash equivalents at beginning of period .................. 8,986 8,792
------------ ------------
Cash and cash equivalents at end of period ........................ $ 10,582 $ 62,682
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ................................................... $ 2,994 $ 4,347
Income taxes ............................................... $ -- $ --
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
8
<PAGE> 9
PATTERSON ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
Supplemental disclosure of cash flow information - continued:
On March 31, 2000, the Company acquired 100% of the outstanding stock of
WEK Drilling Company, Inc. for $7.2 million. Total consideration paid included
$5.66 million of cash provided by the Company's credit facility and the issuance
of 53,000 shares of its common stock valued at $29.0625 per share (See Note 2).
On June 2, 2000, the Company consummated the acquisition of 100% of the
outstanding stock of High Valley Drilling, Inc. Consideration for the
acquisition included 1,150,000 restricted shares of the Company's common stock
and three-year warrants to acquire an additional 127,000 shares at an exercise
price of $22.00 per share. The Company's common stock was valued at $18.00 per
share for purposes of recording the acquisition as a purchase, which represents
the market price of the stock on the day the acquisition was announced. The
warrants were valued at $900,000 using the Black-Scholes model. A deferred tax
liability was recorded in the amount of approximately $7.2 million (See Note 2).
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
9
<PAGE> 10
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of Patterson
Energy, Inc. ("Patterson") and its wholly-owned subsidiaries, Patterson (GP)
LLC, Patterson (LP) LLC, Patterson Drilling Company LP, LLLP, Lone Star Mud LP,
LLLP, Patterson Petroleum LP, LLLP, and Patterson Petroleum Trading Company LP,
LLLP (collectively referred to hereafter as the "Company"). All significant
intercompany accounts and transactions have been eliminated.
The interim condensed consolidated financial statements have been
prepared by management of the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes the
disclosures included herein are adequate to make the information presented not
misleading. In the opinion of management, all adjustments (consisting of only
normal recurring accruals) considered necessary for presentation of the
information have been included. The unaudited condensed consolidated balance
sheet as of December 31, 1999, as presented herein, was derived from the audited
balance sheet, but does not include all disclosures required by generally
accepted accounting principles.
The Company provides a dual presentation of its earnings per share;
Basic Earnings per Share ("Basic EPS") and Diluted Earnings per Share ("Diluted
EPS"). Basic EPS is based on the weighted average number of shares outstanding
during the period. Diluted EPS includes common stock equivalents, which are
dilutive to earnings per share. For the three and nine months ended September
30, 2000, the dilutive securities, consisting of certain stock options and
warrants, approximated 1.4 million shares for each respective period. Dilutive
securities of approximately 1.4 million shares were excluded from the three and
nine months ended September 30, 1999 calculations of Diluted EPS as a result of
the Company's net loss for the respective periods.
The results of operations for the three and nine months ended September
30, 2000, are not necessarily indicative of the results to be expected for the
full year.
Certain reclassifications have been made to the 1999 consolidated
financial statements in order for them to conform with the 2000 presentation.
2. RECENT ACQUISITIONS
On June 2, 2000, the Company consummated the acquisition of 100% of the
outstanding stock of High Valley Drilling, Inc. The assets consisted of eight
non-operable drilling rigs and other related equipment. The drilling rigs, when
completely refurbished, will have depth capacities equal to or exceeding 15,000
feet with three of the rigs having a depth rating of 25,000 feet. Consideration
for the acquisition included 1,150,000 restricted shares of the Company's common
stock and three-year warrants to acquire an additional 127,000 shares at an
exercise price of $22.00 per share. The owners were granted certain demand and
"piggy-back" registration rights with regard to the Company's shares and warrant
shares. On September 8, 2000, 1,170,122 shares were registered with the
Securities and Exchange Commission under Form S-3 pursuant to such demand rights
of the shareholders. The demand registration rights have been exercised and the
shares and warrant shares have been registered for resale with the SEC. The
Company's common stock was valued at $18.00 per share for purposes of recording
the acquisition as a purchase, which represents the market price of the stock on
the day the acquisition was announced. The warrants were valued at $900,000
using the Black-Scholes model. A deferred tax liability was recorded in the
amount of $7.2 million.
On March 31, 2000, the Company acquired 100% of the outstanding stock of
WEK Drilling Company, Inc., a privately held, non-affiliated drilling company
with its principal operations in southeast New Mexico, for an aggregate purchase
price of $7.2 million. The assets acquired included four operable contract
drilling rigs and other related equipment and working capital of approximately
$1.2 million. Three of the rigs have depth capacities greater than 12,000 feet
with the other rig having a depth rating of 10,500 feet. The acquisition was
funded using $5.66 million of proceeds from the Company's credit facility and
53,000 shares of the Company's common stock valued at $29.0625 per share.
Certain assets, unrelated to the contract drilling business, were sold back to
one of the previous owners for a cash payment of $1.0 million. The shares have
been registered for resale with the SEC.
The above acquisitions were accounted for as purchases and the related
results of operations and cash flows have been included in the condensed
consolidated financial statements since the respective dates of acquisition. No
goodwill was recorded in connection with these acquisitions.
10
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PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
3. STOCKHOLDERS' EQUITY
On February 1, 2000, in accordance with the Asset Purchase Agreement
between the Company and Padre Industries, Inc., the Company exercised its option
to buy back 300,000 shares at $5.50 per share, of the 800,000 shares initially
given as consideration for the Company's acquisition of the drilling assets of
Padre Industries, Inc.
On March 31, 2000, the Company issued 53,000 shares of its common stock
as partial consideration for the acquisition of 100% of the outstanding stock of
WEK Drilling Company, Inc. (See Note 2). The common stock was recorded at its
approximate fair market value on the date of the transaction of $29.0625 per
share.
On June 2, 2000, the Company issued 1,150,000 shares of its common
stock and three-year warrants to acquire an additional 127,000 shares at an
exercise price of $22.00 per share as consideration for the acquisition of the
assets of High Valley Drilling, Inc. (See Note 2). The common stock was recorded
at its approximate fair market value on the date of the transaction of $18.00
per share and the warrants were valued at $900,000 using the Black-Scholes
model.
On September 14, 2000, the Company completed a public offering of 3
million shares of its common stock at a public price of $34.50 per share. An
underwriting discount of $1.50 was paid, for a net price to the Company of
$33.00 per share. Net proceeds from the offering totaled approximately $99.0
million. Certain of the proceeds were used to reduce, prior to maturity,
outstanding indebtedness with Transamerica Equipment Financial Services
Corporation from $64.4 million to $24.4 million, as well as a prepayment penalty
of approximately $200,000 which is included in interest expense at September 30,
2000 as management considers the amount immaterial to treat as an extraordinary
item.
4. BUSINESS SEGMENTS
The Company conducts its business through three distinct operating
activities: contract drilling of oil and natural gas wells, oil and natural gas
exploration, development, acquisition and production and providing drilling
fluid services to operators in the oil and natural gas industry. Separate
financial data for each of the Company's three business segments is provided
below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
Revenues:
Contract drilling .................................... $ 34,579 $ 69,498 $ 83,754 $ 179,034
Oil and natural gas .................................. 2,511 4,218 5,879 10,913
Drilling fluids ...................................... 2,722 4,912 7,461 14,386
------------ ------------ ------------ ------------
Total operating revenues ................................. $ 39,812 $ 78,628 $ 97,094 $ 204,333
============ ============ ============ ============
Income (loss) from operations:
Contract drilling .................................... $ (3,096) $ 9,664 $ (10,939) $ 18,035
Oil and natural gas .................................. 739 2,676 1,021 4,327
Drilling fluids ...................................... (343) (184) (1,322) (523)
------------ ------------ ------------ ------------
(2,700) 12,156 (11,240) 21,839
Net gain (loss) on sale of assets ........................ 54 34 (27) 84
Interest income .......................................... 132 223 348 460
Interest expense ......................................... (968) (1,622) (2,994) (4,347)
------------ ------------ ------------ ------------
Income (loss) before income taxes......................... $ (3,482) $ 10,791 $ (13,913) $ 18,036
============ ============ ============ ============
</TABLE>
11
<PAGE> 12
PATTERSON ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
5. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ("SFAS No. 133") in June 1998. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. This
statement, as amended, by SFAS No. 138, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The provisions of SFAS No. 133 are
not expected to have a material impact on the Company's consolidated financial
statements.
In April 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Including Stock
Based Compensation: An Interpretation of APB Opinion No. 25." This
interpretation serves to clarify previous stock based compensation guidance,
specifically Accounting Principles Board Opinion No. 25. This interpretation,
which generally provides for prospective application for grants or modifications
to existing stock options or awards made after June 30, 2000, is not expected to
have a material impact on the Company's consolidated financial statements.
6. SUBSEQUENT EVENT
On October 3, 2000, the Company, through a wholly-owned subsidiary,
completed the acquisition of the drilling and completion fluid operations of
Ambar, Inc., a non-affiliated entity with its principal operations in the
Louisiana and Texas Gulf coasts and the Gulf of Mexico. Pursuant to the
transaction, the Company acquired working capital of approximately $7.8 million
(current assets of $18.2 million and current liabilities of $10.4 million),
fixed assets with an approximate fair market value of $15.8 million and other
trademarks and intellectual property which are specific to the division's
operations. Consideration paid by the Company was cash of $11.6 million.
The acquired drilling and completion fluid operations are supported by ten
separate field facilities, including seven dock facilities and one barite
grinding plant, located throughout southern Louisiana and Texas, a sales office
in Houston, Texas and an administrative office in Lafayette, Louisiana.
12
<PAGE> 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Since year-end 1999, Patterson has issued a total of 1,203,000 shares of
common stock and warrants to purchase an additional 127,000 shares of its common
stock. None of these securities was registered under the Securities Act of 1933,
as amended, at the time of issuance.
These securities were issued in two separate transactions, as follows:
(a) On March 31, 2000, we acquired all of the outstanding capital stock of
WEK Drilling Company, Inc., a privately owned corporation based in
Roswell, New Mexico, in consideration for $7.2 million, consisting of
$5.66 million in cash and 53,000 shares of Patterson's common stock
valued at $29.0625 per share; and
(b) The remaining 1,150,000 shares and the 127,000 warrants were issued to
High Valley Drilling, Inc., a privately owned corporation based in
Oklahoma City, Oklahoma. The shares were valued at $18.00 per share,
which represented the market price of the stock on the day the
acquisition was announced. The warrants are exercisable for a period
of three years commencing on the date of issuance, at an exercise
price of $22.00 per share.
No underwriter was involved in either of the transactions and no sales
commissions, fees or similar compensation were paid to any person in connection
with the issuance of the shares. Patterson believes that the issuance of these
securities in each instance was exempt from the registration requirements of
Section 5 of the Securities Act by virtue of Section 4(2) of the Securities Act
and/or under Rule 506 of Regulation D promulgated thereunder.
13
<PAGE> 14
ITEM 3. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, our working capital was approximately $89.9
million with cash and cash equivalents of $62.7 million compared to working
capital of $27.0 million with cash and cash equivalents of $8.8 million at
December 31, 1999. For the nine months ended September 30, 2000, we generated
net cash from operations of $25.0 million. This was attributable to improved
utilization rates in response to increased industry drilling activity as a
result of the recovery of the market price for the underlying commodities. These
funds were used primarily to acquire and refurbish drilling and other related
equipment of approximately $36.7 million, to fund leasehold acquisition,
exploration and development of $2.7 million and approximately $2.1 million was
used to expand the operating capacity of the drilling fluids services business.
On October 3, 2000, we, through a wholly-owned subsidiary, completed
the acquisition of the drilling and completion fluid operations of Ambar, Inc.,
a non-affiliated entity with its principal operations in the Louisiana and Texas
Gulf coasts and the Gulf of Mexico. Pursuant to the transaction, we acquired
working capital of approximately $7.8 million (current assets of $18.2 million
and current liabilities of $10.4 million), fixed assets with an approximate fair
market value of $15.8 million and other trademarks and intellectual property
which are specific to the division's operations. We paid cash of $11.6 million
in consideration for the purchase.
On September 14, 2000, we completed a public offering of 3 million
shares of our common stock at a public price of $34.50 per share. An
underwriting discount of $1.50 was paid, for a net price of $33.00 per share.
Net proceeds from the offering totaled approximately $99.0 million. Certain
of the proceeds were used to reduce, prior to maturity, outstanding
indebtedness with Transamerica Equipment Financial Services Corporation from
$64.4 million to $24.4 million, as well as a prepayment penalty of
approximately $200,000 which is included in interest expense at September 30,
2000 as management considers the amount immaterial to treat as an extraordinary
item. We expect to use $5.5 million to $7.5 million of net proceeds for capital
expenditures on the remaining inoperable rigs acquired from High Valley
Drilling, Inc., in June 2000 and from $40 million to $45 million of net
proceeds for business and equipment acquisitions. Remaining net proceeds are
expected to be used for general corporate purposes.
On June 2, 2000, we consummated the acquisition of High Valley
Drilling, Inc. The assets consisted of eight non-operable drilling rigs and
other related equipment. The drilling rigs, when completely refurbished, will
have depth capacities equal to or exceeding 15,000 feet with three of the rigs
having a depth rating of 25,000 feet. Consideration for the acquisition included
1,150,000 restricted shares of our common stock and three-year warrants to
acquire an additional 127,000 shares at an exercise price of $22.00 per share.
The owners were granted certain demand and "piggy-back" registration rights with
regard to the shares and warrant shares issued. The demand registration rights
have been exercised and the shares and the warrant shares registered for resale
with the SEC. The common stock we issued in connection with the acquisition was
recorded at $18.00 per share which represents the market price of the stock on
the day the acquisition was announced.
Through September 30, 2000, we expended approximately $8.0 million
refurbishing the High Valley rigs. Two of the rigs were placed into operation by
the end of September 2000. We expect to spend an additional $5.5 to $7.5 million
to refurbish the remaining rigs, and anticipate the respective rigs to become
operational at various times over the next twelve months.
On July 20, 2000, we executed an amendment to our existing credit
facility with Transamerica Equipment Financial Services Corporation, increasing
our credit facility from $60.0 million to $70.0 million. On July 26, 2000, we
drew $5.0 million under the credit facility to fund the above mentioned capital
expenditures. On September 14, 2000, we paid $40.0 million on our outstanding
debt with Transamerica, using net proceeds from the public offering of our
common stock, also completed on September 14, 2000.
On March 31, 2000, we acquired 100% of the outstanding stock of WEK
Drilling Company, Inc., a privately held, non-affiliated drilling company with
its principal operations in southeast New Mexico, for an aggregate purchase
price of $7.2 million. The assets acquired included four operable contract
drilling rigs and other related equipment and working capital of approximately
$1.2 million. Three of the rigs have depth capacities greater than 12,000 feet
with the other rig having a depth rating of 10,500 feet. The acquisition was
funded using $5.66 million of proceeds from our credit facility with
Transamerica Equipment Financial Services Corporation and 53,000 shares of our
common stock valued at $29.0625 per share. Certain assets, unrelated to the
contract drilling business, were sold back to one of the previous owners for a
cash payment of $1.0 million.
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<PAGE> 15
We believe that the current level of cash and cash equivalents, together
with cash generated from operations should be sufficient to meet any immediate
capital needs. From time to time, we review acquisition opportunities relating
to our business. The timing, size or success of any acquisition and the
associated capital commitments are unpredictable. Should further opportunities
for growth requiring capital arise, we believe we would be able to satisfy these
needs through a combination of working capital, cash from operations, and either
debt or equity financing. However, there can be no assurance that such capital
would be available.
RESULTS OF OPERATIONS
Comparison of the nine months ended September 30, 2000 and 1999
For the nine months ended September 30, 2000, contract drilling
revenues increased 114% from $83.8 million in 1999 to $179.0 million in the same
period of 2000. The increase in revenues was largely attributable to the
increased demand for our contract drilling services. The increased demand was
evidenced by average rig utilization of 72% for the nine months ended September
30, 2000 as compared to an average rig utilization of 39% for the comparable
period in 1999. Direct contract drilling expenses for the nine months ended
September 30, 2000, were $137.6 million, or 77% of the contract drilling
revenues, as compared to $73.6 million, or 88% of the contract drilling revenues
for the same period in 1999. General and administrative expense increased 18%
for the contract drilling segment, from $2.8 million for the nine months ended
September 30, 1999, to approximately $3.3 million for the same period in 2000.
Depreciation and amortization expense for the contract drilling segment was
$20.1 million for the nine months ended September 30, 2000, as compared to $18.2
million for the same period in 1999. The contract drilling segment generated
operating income of $18.0 million for the nine months ended September 30, 2000,
as compared to an operating loss of $10.9 million for the same period in 1999.
These results are reflective of increased productivity in the contract drilling
industry as evidenced by the increase in utilization, which is primarily
attributable to increases in oil prices.
Oil and natural gas sales revenues were approximately $9.5 million for
the nine months ended September 30, 2000, as compared to $4.6 million in 1999.
The volume of oil and natural gas sold on an equivalent barrel basis increased
by 19% for the first nine months in 2000, as compared to the same nine-month
period in 1999. The average price per Bbl of crude oil received was $29.18 in
2000, as compared to $16.06 in 1999, and the average price per Mcf of natural
gas was $3.42 in 2000, as compared to $2.05 in 1999. General and administrative
expenses for the oil and natural gas segment were $1.1 million and $847,000 for
the nine months ended September 30, 2000 and 1999, respectively. Exploration
costs were $931,000 and $500,000 for the nine months ended September 30, 2000
and 1999, respectively. Depreciation and depletion expense was $2.4 million for
both the nine months ended September 30, 2000 and September 30, 1999. Other
revenues generated by our oil and natural gas segment, consisting primarily of
fees generated from lease operating activities, were $1.5 million and $1.3
million for the nine months ended September 30, 2000 and 1999, respectively.
The oil and natural gas segment generated income from operations of $4.3
million for the nine month period in 2000, as compared to $1.0 million in 1999.
The increase in the segment's operating results was primarily attributable to
the increased commodity prices as stated above.
Operating revenues from our drilling fluid services were approximately
$14.4 million and $7.5 million for the nine months ended September 30, 2000 and
1999, respectively. Related operating costs incurred were $11.4 million for the
first nine months of 2000 as compared to $6.4 million in 1999. The increase in
operating margin was principally attributable to the upturn in the oil and
natural gas industry. For the nine months ended September 30, 2000, depreciation
and amortization expense was $958,000 as compared to $786,000 in 1999. General
and administrative expense for the drilling fluids segment increased 63% to $2.6
million for the nine months ended September 30, 2000. For the nine months ended
September 30, 2000, the drilling fluids segment generated a loss from operations
of approximately $523,000 as compared to a net operating loss of approximately
$1.3 million for the comparative nine-month period in 1999.
For the nine months ended September 30, 2000, interest expense was $4.3
million as compared to $3.0 million for the same period in 1999. Interest income
for the first nine months of 2000 was $460,000 as compared to $348,000 in 1999.
The Company incurred a net gain on the sale of certain assets of approximately
$84,000 during the nine months ended September 30, 2000 compared to a net loss
of approximately $27,000 in 1999.
Comparison of the three months ended September 30, 2000 and 1999
For the three months ended September 30, 2000, contract drilling
revenues increased 101% from $34.6 million in the third quarter of 1999 to $69.5
million in the same period of 2000. This increase in revenues was driven by a
rise in average rig utilization from 50% for the aforementioned period in 1999
to 78% in 2000. Direct contract drilling expenses
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<PAGE> 16
for the three months ended September 30, 2000, were $51.3 million, or 74% of the
contract drilling revenues, as compared to $30.5 million, or 88% of the contract
drilling revenues for the same period in 1999. General and administrative
expense for the contract drilling segment was $1.3 million and $1.0 million for
the three months ended September 30, 2000 and 1999, respectively. Depreciation
and amortization expense for the contract drilling segment was $7.2 million for
the three months ended September 30, 2000, as compared to $6.1 million for the
same period in 1999. The contract drilling segment generated operating income of
$9.7 million for the three months ended September 30, 2000, as compared to an
operating loss of $3.1 million for the same period in 1999. These results are
reflective of increased productivity in the contract drilling industry as
evidenced by the increase in utilization, which is primarily attributable to
increases in oil prices.
Oil and natural gas sales revenues were $3.8 million for the three
months ended September 30, 2000, as compared to $2.1 million in 1999. The volume
of oil and natural gas sold on an equivalent barrel basis increased by 9% in the
third quarter 2000, as compared to the same three-month period in 1999. The
average price per Bbl of crude oil received was $30.85 in 2000, as compared to
$19.68 in 1999, and the average price per Mcf of natural gas was $4.49 in 2000,
as compared to $2.42 in 1999. General and administrative expenses for our oil
and natural gas segment were $394,000 and $283,000 for the three months ended
September 30, 2000 and 1999, respectively. Depreciation and depletion expense,
including exploration costs, was $428,000 in 2000, as compared to $1.1 million
in 1999. Other revenues generated by our oil and natural gas segment, consisting
primarily of fees generated from lease operating activities, were $440,000 and
$436,000 for the three-months ended September 30, 2000 and 1999, respectively.
The oil and natural gas segment generated income from operations of $2.7 million
for the three month period in 2000, as compared to income of $739,000 for that
of 1999. The increase in the segment's operating results was primarily
attributable to the increased commodity prices and production as stated above.
Operating revenues from our drilling fluid services were approximately
$4.9 million and $2.7 million for the quarters ended September 30, 2000 and
1999, respectively. Related operating costs incurred were $3.9 million for the
three months ended September 30, 2000 as compared to $2.3 million in 1999. The
increase in operating margin was principally attributable to the upturn in the
oil and gas industry resulting from increased commodity prices as discussed
above in the oil and natural gas section. For the three months ended September
30, 2000, depreciation and amortization expense was $361,000 as compared to
$257,000 in 1999. General and administrative expense for the drilling fluids
segment increased 69% to $907,000 for the three months ended September 30, 2000.
For the fiscal quarter ended September 30, 2000, the drilling fluids segment
generated a net loss from operations of approximately $184,000 as compared to a
net operating loss of approximately $343,000 for the comparative three month
period in 1999.
For the three months ended September 30, 2000, interest expense was
$1.6 million as compared to $968,000 for the same period in 1999. Interest
income for the third quarter of 2000 was $223,000 as compared to $132,000 in
1999. The Company incurred a net gain on the sale of certain assets of
approximately $34,000 during the three months ended September 30, 2000 compared
to a net gain of approximately $54,000 for the same three month period in 1999.
VOLATILITY OF OIL AND NATURAL GAS PRICES AND ITS IMPACT ON OPERATIONS
Our revenue, profitability and future rate of growth are substantially
dependent upon prevailing prices for oil and natural gas. Historically, oil and
natural 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 our control. Any significant or extended decline in oil
and/or natural gas prices will have a material adverse effect on our financial
condition and results of operations. Low level commodity prices beginning in the
fourth quarter of 1997 and continuing into mid-1999 adversely impacted
operations. Although there has been significant improvement in oil and natural
gas prices since mid-1999, we expect oil and natural gas prices to continue to
be volatile and therefore to affect our financial condition and operations as
well as our ability to access capital sources.
IMPACT OF INFLATION
We believe that inflation will not have a significant impact on our
financial position.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ("SFAS No. 133") in June 1998. SFAS No. 133
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<PAGE> 17
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement, as amended by SFAS No. 138, is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. The
provisions of SFAS No. 133 are not expected to have a material impact on our
consolidated financial statements.
In April 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, "Accounting for Certain Transactions Including Stock
Based Compensation: An Interpretation of APB Opinion No. 25." This
interpretation serves to clarify previous stock based compensation guidance,
specifically Accounting Principles Board Opinion No. 25. This interpretation,
which generally provides for prospective application for grants or modifications
to existing stock options or awards made after June 30, 2000, is not expected to
have a material impact on the Company's consolidated financial statements.
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<PAGE> 18
ITEM 4. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have exposure to market risk associated with the floating rate portion
of the interest charged on the $25.2 million outstanding under our credit
facility with Transamerica Equipment Financial Services Corporation. This
instrument, which matures on January 1, 2006, bears interest at LIBOR plus 3.10%
to 3.51%. Our exposure to interest rate risk due to changes in LIBOR is not
expected to be material and at September 30, 2000, the fair value of the
obligation approximates its related carrying value because the obligation bears
interest at the current market rate.
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---------------
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in Item 2 of this Report contains forward-looking
statements which are made pursuant to the "safe harbor" provisions of The
Private Securities Litigation Reform Act of 1995. These statements include,
without limitation, statements relating to: liquidity; financing of operations;
continued volatility of oil and natural gas prices; source and sufficiency of
funds required for immediate capital needs and additional rig acquisitions (if
further opportunities arise); and such other matters. The words "believes,"
"plans," "intends," "expected," "estimates" or "budgeted" and similar
expressions identify forward-looking statements. The forward-looking statements
are based on certain assumptions and analyses made by the Company in light of
its experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes are appropriate in
the circumstances. The Company does not undertake to update, revise or correct
any of the forward-looking information. Factors that could cause actual results
to differ materially from the Company's expectations expressed in the
forward-looking statements include, but are not limited to, the following:
intense competition in the contract drilling industry; low oil prices and/or
natural gas prices; adverse market conditions for contract drilling services;
drill-pipe shortages; labor shortages, primarily qualified drilling rig
personnel; insurance coverage limitations and requirements; inability to acquire
additional drilling rigs on terms favorable to the Company and the loss of key
personnel, particularly Cloyce A. Talbott and A. Glenn Patterson, the Chairman
and Chief Executive Officer and the President and Chief Operating Officer of the
Company, respectively. For a more complete explanation of these various factors
and others, see "Cautionary Statement for Purposes of the 'Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995" included in
the amendment to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, beginning on page 13. The Form 10K/A amendment was filed with
the SEC on June 12, 2000.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
The following exhibits are filed herewith or incorporated by reference:
2.1 Plan and Agreement of Merger dated October 14, 1993, between Patterson
Energy, Inc., a Texas corporation, and Patterson Energy, Inc., a
Delaware corporation, together with related Certificates of Merger.
(1)
2.2 Agreement and Plan of Merger, dated April 22, 1996 among Patterson
Energy, Inc., Patterson Drilling Company and Tucker Drilling Company,
Inc. (2)
2.2.1 Amendment to Agreement and Plan of Merger, dated May 16, 1996 among
Patterson Energy, Inc., Patterson Drilling Company and Tucker Drilling
Company, Inc. (3)
2.3 Asset Purchase Agreement, dated June 4, 1997, among Patterson Energy,
Inc., Patterson Drilling Company and Wes-Tex Drilling Company. (5)
2.3.1 Amendment to Asset Purchase Agreement, dated June 4, 1997, among
Patterson Energy Inc., Patterson Drilling Company and Wes-Tex Drilling
Company. (5)
2.4 Agreement and Plan of Merger, dated January 20, 1998, among Patterson
Energy, Inc., Patterson Onshore Drilling Company and Robertson Onshore
Drilling Company. (7)
2.5 Stock Purchase Agreement, dated January 5, 1998, among Patterson
Energy, Inc., Spencer D. Armour, III. And Richard G. Price. (19)
2.6 Stock Purchase Agreement, dated September 17, 1998, among Lone Star
Mud, Inc. and Mark Campbell (shareholder of Tejas Drilling Fluids,
Inc.). (4)
2.7 Asset Purchase Agreement, dated January 27, 1999, among Patterson
Energy, Inc., Patterson Drilling Company and Padre Industries, Inc.
(4)
2.8 Agreement and Plan of Merger, dated April 3, 2000, among Patterson
Energy, Inc. and High Valley Drilling, Inc. (20)
2.9 Stock purchase agreement, dated March 31, 2000, among Patterson
Energy, Inc., Patterson Drilling Company LP, LLLP, Kenneth Reynolds
and Gary Chappell. (21)
2.10 Asset Purchase Agreement between Ambar Drilling Fluids LP, LLLP, an
indirect wholly-owned subsidiary of Patterson Energy, Inc., dated as
of September 30, 2000. (23)
3.1 Restated Certificate of Incorporation. (8)
3.1.1 Certificate of Amendment to the Certificate of Incorporation. (9)
3.2 Bylaws. (1)
4.1 Excerpt from Restated Certificate of Incorporation of Patterson
Energy, Inc. regarding authorized Common Stock and Preferred Stock.
(10)
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<PAGE> 21
10.1 Loan and Security Agreement dated December 21, 1999 among Patterson
Drilling Company and Transamerica Equipment Financial Services
Corporation. (18)
10.1.1 Promissory Note dated December 21, 1999 between Patterson Drilling
Company and Transamerica Equipment Financial Services Corporation.
(18)
10.1.2 Corporate guarantees of Lone Star Mud, Inc. and Patterson Energy, Inc.
(18)
10.1.3 Amendment to Loan and Security Agreement dated July 20, 2000 among
Patterson Drilling Company and Transamerica Equipment Financial
Services Corporation. (22)
10.2 Aircraft Lease, dated December 20, 1999, (effective January 1, 2000)
between Talbott Aviation, Inc. and Patterson Energy, Inc. (18)
10.3 Participation Agreement, dated October 19, 1994, between Patterson
Petroleum Trading Company, Inc. and BHT Marketing, Inc. (12)
10.3.1 Participation Agreement dated October 24, 1995, between Patterson
Petroleum Trading Company, Inc. and BHT Marketing, Inc. (13)
10.4 Crude Oil Purchase Contract, dated October 19, 1994, between Patterson
Petroleum, Inc. and BHT Marketing, Inc. (12)
10.4.1 Crude Oil Purchase Contract, dated October 24, 1995, between Patterson
Petroleum, Inc. and BHT Marketing, Inc. (13)
10.5 Patterson Energy, Inc. 1993 Stock Incentive Plan, as amended. (15)
10.6 Patterson Energy, Inc. Non-Employee Directors' Stock Option Plan, as
amended. (16)
10.7 Model Form Operating Agreement. (17)
10.8 Form of Drilling Bid Proposal and Footage Drilling Contract. (17)
10.9 Form of Turnkey Drilling Agreement. (17)
15.1 Awareness Letter of Independent Accountants - PricewaterhouseCoopers
LLP
21.1 Subsidiaries of the registrant. (18)
27.1 Financial Data Schedule as of September 30, 2000 and for the nine
months then ended.
------------------
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(1) Incorporated herein by reference to Item 27, "Exhibits" to Amendment
No. 2 to Registration Statement on Form SB-2 (File No. 33-68058-FW);
filed October 28, 1993.
(2) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated April 22, 1996 and filed on April 30,
1996.
(3) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated May 16, 1996 and filed on May 22, 1996.
(4) Incorporated herein by reference to Item 14, "Exhibits, Financial
Statement Schedules and Reports on Form 8-K", to Form 10-K dated
December 31, 1998.
(5) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits", to Form 8-K dated June 3, 1997; filed June 11, 1997.
(6) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits" to Form 8-K dated November 14, 1997 and filed December 24,
1997.
(7) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits," to Form 8-K dated January 23, 1998; filed February 3, 1998.
(8) Incorporated herein by reference to Item 6, "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 1996;
filed August 12, 1996.
(9) Incorporated herein by reference to Item 6. "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 1997;
filed August 14, 1997.
(10) Incorporated herein by reference to Item 16, "Exhibits" to
Registration Statement on Form S-3 filed with the Securities Exchange
Commission on December 18, 1996.
(11) Incorporated herein by reference to Item 7, "Financial Statements and
Exhibits", to Form 8-K dated September 12, 1997; filed September 19,
1997.
(12) Incorporated herein by reference to Item 27, "Exhibits" to Post
Effective Amendment No. 1 to Registration Statement on Form SB-2 (File
No. 33-68058-FW).
(13) Incorporated by reference to Item 7, "Financial Statements and
Exhibits" to Form 10-KSB for the year ended December 31, 1995.
(14) Incorporated by reference to Item 5, "Other Items" to Form 8-K dated
December 1, 1995 and filed on January 16, 1996.
(15) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 333-47917); filed March 13, 1998.
(16) Incorporated herein by reference to Item 8, "Exhibits" to Registration
Statement on Form S-8 (File No. 33-39471); filed November 4, 1997.
(17) Incorporated by reference to Item 27, "Exhibits" to Registration
Statement filed with the Securities and Exchange Commission on August
30, 1993.
(18) Incorporated by reference to Item 14, "Exhibits, Financial Statement
Schedules and Reports on Form 8-K" to Form 10-K dated December 31,
1999.
(19) Incorporated herein by reference to Item 16, "Exhibits" to
Registration Statement on Form S-3 filed with the Securities Exchange
Commission on January 5, 1998.
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<PAGE> 23
(20) Incorporated herein by reference to Item 6. "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended March 31, 2000;
filed May 15, 2000.
(21) Incorporated herein by reference to Item 16, "Exhibits" to
Registration Statement on Form S-3 filed with the Securities Exchange
Commission on April 4, 2000.
(22) Incorporated herein by reference to Item 6. "Exhibits and Reports on
Form 8-K" to Form 10-Q for the quarterly period ended June 30, 2000;
filed August 14, 2000.
(23) Incorporated herein by reference to Item 7. "Financial Statements and
Exhibits", to Form 8-K dated October 3, 2000; filed November 6, 2000.
(b) REPORTS ON FORM 8-K.
The following reports on Form 8-K were filed:
(1) Report dated September 11, 2000, announcing the Company's
sale of 3.0 million shares of its common stock; filed
September 13, 2000.
(2) Report dated July 27, 2000, announcing the Company's results
from operations for the period ended June 30, 2000; filed
August 22, 2000.
(3) Report dated June 2, 2000 announcing the Company's
consummation of the merger between Patterson Energy, Inc.,
and High Valley Drilling, Inc. filed August 22, 2000.
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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
------------------------------------
Cloyce A. Talbott
Chairman of the Board and
Chief Executive Officer
By: /s/ Jonathan D. Nelson
------------------------------------
Jonathan D. (Jody) Nelson
Vice President-Finance
Chief Financial Officer
DATED: November 14, 2000
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<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
15.1 Awareness Letter of Independent Accountants,
PricewaterhouseCoopers LLP
27.1 Financial Data Schedule as of September 30, 2000 and for
the nine months then ended.
</TABLE>
