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Filed pursuant to Rule 424(b)(l)
under the Securities Act of 1933
Registration No. 333-53336
PROSPECTUS
810,070 SHARES
PATTERSON ENERGY, INC.
COMMON STOCK
This prospectus relates to 810,070 shares of Patterson that may be
offered for sale or otherwise transferred from time to time by certain of our
stockholders. See "Selling Stockholders." We have agreed to pay all fees and
expenses incident to this offering.
The common stock is traded on the Nasdaq National Market under the
symbol "PTEN." On January 8, 2001, the closing sales price of our common stock
was $32.56 per share.
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Prospective purchasers of the common stock should consider carefully
the matters set forth under "Risk Factors" beginning on page 6.
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The Securities and Exchange Commission and State Securities regulators
have not approved or disapproved these shares, or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
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The selling stockholders may offer these shares 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, 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."
January 10, 2001
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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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Forward Looking Statements......................................................................2
Incorporation Of Certain Documents By Reference.................................................3
Patterson.......................................................................................5
Risk Factors....................................................................................6
Use Of Proceeds................................................................................10
Dividend Policy................................................................................10
Selling Stockholders...........................................................................10
Description Of Capital Stock...................................................................11
Plan Of Distribution...........................................................................13
Legal Matters..................................................................................14
Independent Accountants........................................................................14
Expert.........................................................................................14
Where You Can Find More Information............................................................15
</TABLE>
FORWARD LOOKING STATEMENTS
Some statements contained in this prospectus, any accompanying
prospectus supplement, and the documents incorporated by reference are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements include, without limitation, statements relating to the drilling and
completion of wells, well operations, utilization rates of drilling rigs, oil
and natural gas prices, reserve estimates (including related future net revenue
and present value estimates), business strategies and other plans and objectives
of our management for future operations and activities and other such matters.
The words "believes," "budgeted," "plan," "plans," "estimates," "expect,"
"expects," "intends," "strategy," "project," "will," "could," "may" and similar
expressions identify forward-looking statements. Actual results could differ
materially from those expressed in the forward-looking statements. Factors that
could cause such a difference include:
o Swings in oil and natural gas prices;
o Swings in demand for contract drilling services;
o Shortages of drill pipe and other drilling equipment; o
Shortages of qualified drilling personnel;
o Effects of competition from other drilling contractors;
o Occurrence of operating hazards and uninsured losses; and
o Governmental regulation, among others described under "Risk
Factors" below.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately by us with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that is
included directly in this document.
This prospectus includes by reference the documents listed below that
we have previously filed with the SEC and that are not included in or delivered
with this document. They contain important information about our company and its
financial condition.
(1) Patterson's Current Report on Form 8-K dated December 22, 1999,
filed with the SEC on January 7, 2000;
(2) Patterson's Current Report on Form 8-K dated February 3, 2000,
filed with the SEC on February 9, 2000;
(3) Patterson's Current Report on Form 8-K dated February 7, 2000,
filed with the SEC on February 9, 2000;
(4) Patterson's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, filed with the SEC on March 29, 2000;
(5) Patterson's Current Report on Form 8-K dated March 31, 2000, filed
with the SEC on April 4, 2000;
(6) Patterson's Definitive Proxy Statement for the Annual Meeting of
Stockholders held on June 22, 2000, filed with the SEC on May 1, 2000;
(7) Patterson's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000, filed with the SEC on May 15, 2000;
(8) Patterson's Form 10/KA dated June 12, 2000 to Annual Report on Form
10-K, filed with the SEC on June 12, 2000;
(9) Patterson's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000, filed with the SEC on August 14, 2000;
(10) Patterson's Current Report on Form 8-K dated June 2, 2000, filed
with the SEC on August 22, 2000;
(11) Patterson's Current Report on Form 8-K dated July 27, 2000, filed
with the SEC on August 22, 2000;
(12) Patterson's Current Report on Form 8-K, dated September 11, 2000,
filed with the SEC on September 13, 2000;
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(13) Patterson's Current Report on Form 8-K, dated October 3, 2000,
filed with the SEC on November 11, 2000;
(14) Patterson's Quarterly Report on Form 10Q for the quarter ended
September 30, 2000, filed with the SEC on November 14, 2000;
(15) Patterson's Current Report on Form 8-K, dated November 20, 2000,
filed with the SEC on December 1, 2000
(16) Patterson's Current Report on Form 8-K dated November 15, 2000,
filed with the SEC on December 1, 2000;
(17) The description of Patterson's common stock contained in the
Registration Statement on Form 8-A filed with the SEC on November 2, 1993.
We incorporate by reference additional documents that we may file with
the SEC under Section 13(a), 15(c), 14 or 14(d) of the Securities Exchange Act
of 1934 between the date of this prospectus and the termination of this
offering. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document from us without charge, excluding any exhibits to those documents
unless the exhibit is specifically incorporated by reference as an exhibit to
this prospectus. You can obtain documents incorporated by reference in this
prospectus by requesting them in writing or by telephone from us at the
following address:
Jonathan D. (Jody) Nelson
Chief Financial Officer
Patterson Energy, Inc.
4510 Lamesa Highway
P.O. Box 1416
Snyder, Texas 79550
(915) 573-1104
We have not authorized anyone to give any information or make any
representation about us that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this document. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to sell, or solicitations of offers to purchase, the
Securities offered by this document is unlawful, or if you are a person to whom
it is unlawful to direct these types of activities, then the offer presented in
this document does not extend to you. The information contained in this document
speaks only as of the date of this document, unless the information specifically
indicates that another date applies.
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PATTERSON
Patterson is one of the leading providers of domestic land drilling
services to major and independent oil and natural gas companies. Formed in 1978
and reincorporated in 1993 as a Delaware corporation, Patterson focuses it
operations in Texas, New Mexico, Oklahoma, Louisiana and Utah. We currently have
a drilling fleet of 152 rigs, 138 of which are currently operable. We are also
engaged in the acquisition, exploration, development, and production of crude
oil and natural gas and provide contract drilling and completion fluid services
to other oil and natural gas operators.
The Company has established a reputation for reliable, high quality
drilling equipment and well-trained crews. We continually seek to modify and
upgrade our equipment to maximize the performance and capabilities of our
drilling rig fleet, which we believe provides us with a competitive advantage.
Additionally, we have the in-house capability to design, manufacture, repair and
modify our drilling rigs. Of our drilling rigs, 91 are capable of drilling to
depths of 12,000 feet and greater, including 52 that are capable of drilling to
15,000 feet and greater. During 2000, we drilled 1,441 wells for 240
non-affiliated customers.
Our oil and natural gas activities are designed to complement our land
drilling operations and diversify our overall business strategy. These
activities are primarily focused in mature producing regions in the Permian
Basin and South Texas. Oil and natural gas operations comprised approximately 5%
of our consolidated operating revenues for the nine months ended September 30,
2000. At December 31, 1999, our proved developed reserves were approximately 1.9
million BOE and had a present value (discounted at 10% before income taxes) of
estimated future net revenues of approximately $17.2 million.
Our drilling and completion fluid services are provided to operators of
oil and natural gas wells located in our areas of operation. Operating revenues
derived from these activities constituted approximately 7% of Patterson's
consolidated operating revenues for the nine months ended September 30, 2000. We
believe that these services integrate well with our other core operating
activities.
Our headquarters are located at 4510 Lamesa Highway, Snyder, Texas, and
our telephone number at that address is (915) 573-1104. We also have small
offices variously located in Texas, Oklahoma, New Mexico, Utah, and Louisiana
with yard facilities located in each of our areas of operations.
You can obtain additional information about us in the reports and other
documents incorporated by reference in this prospectus. See "Incorporation of
Certain Documents by Reference" and "Where You Can Find More Information."
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RISK FACTORS
Ownership of shares of Patterson common stock involves certain risks.
In determining whether to purchase shares, you should carefully consider the
following risk factors and other information contained in or incorporated by
reference in this prospectus or in any applicable prospectus supplement.
RISKS RELATED TO PATTERSON'S BUSINESS GENERALLY
PATTERSON IS DEPENDENT ON THE OIL AND NATURAL GAS INDUSTRY AND MARKET PRICES FOR
OIL AND NATURAL GAS. DECLINES IN OIL AND NATURAL GAS PRICES HAVE ADVERSELY
AFFECTED PATTERSON'S OPERATIONS.
Patterson's revenue, profitability and rate of growth are substantially
dependent upon prevailing prices for oil and natural gas. 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 international military, political
and economic conditions and the ability of the Organization of Petroleum
Exporting Countries to set and maintain production and prices. All of these
factors are beyond our control. We expect oil and natural gas prices to continue
to be volatile and to effect our financial condition and operations and ability
to access sources of capital.
INDUSTRY CONDITIONS FOR CONTRACT DRILLING SERVICES HAVE BEEN POOR FOR MUCH OF
THE TIME SINCE 1982.
The contract drilling business experienced increased demand for
drilling services from 1995 through the third quarter of 1997 and from
approximately the third quarter of 1999 to the present due in each case to
strong oil and natural gas prices. However, except for those periods and other
occasional upturns, the market for onshore contract drilling services has
generally been depressed since 1982. 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 Patterson, ongoing movement of drilling rigs from region to region or
reactivation of onshore drilling rigs or new construction of drilling rigs could
adversely effect utilization rates and pricing, even in an environment of
stronger oil and natural gas prices and increased drilling activity. We cannot
predict either the future level of demand for our contract drilling services or
future conditions in the contract drilling business.
SHORTAGE OF DRILL PIPE AND OTHER DRILLING EQUIPMENT COULD ADVERSELY AFFECT
PATTERSON'S DRILLING OPERATIONS.
The increased demand for domestic drilling from mid-1995 through the
third quarter of 1997 and related increase in contract drilling activity
resulted in a shortage of drill pipe and other ancillary drilling equipment
throughout the industry. This shortage caused the price of drill pipe to
increase significantly and required that orders for new drill pipe be placed at
least one year in advance. Notwithstanding the recent increase in demand for
contract drilling services, we have not experienced a drill pipe shortage, due
in part to a long-term drill pipe supply contract at a fixed price. This
contract expired in November 2000. Severe problems associated with drill pipe
shortages recur. Additionally, further increases in demand for drilling services
could cause shortages in other drilling parts. Severe shortages could impair
Patterson's ability to obtain the equipment required for its contract drilling
operations.
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THE INDUSTRIES IN WHICH PATTERSON OPERATES ARE HIGHLY
COMPETITIVE.
The inability to compete effectively in the contract drilling industry
would adversely impact Patterson's operations. Price is generally the most
important competitive factor. Other competitive factors include the availability
of drilling equipment and experienced personnel at or near the time and place
required by customers, the reputation of the drilling contractor and its
relationship with existing customers. Competition usually exists on a regional
basis, although drilling rigs are mobile and can be moved from one region to
another in response to increased demand. An oversupply of drilling rigs in any
region may result. Demand for land drilling equipment is also dependent on the
exploration and development budgets of oil and natural gas companies, which are
in turn influenced primarily by the financial condition of such companies, by
general economic conditions, by prices of oil and natural gas, and from time to
time political considerations and policies. It is not practical to estimate the
number of contract drilling competitors of Patterson, some of which have
substantially greater resources than Patterson. Also, in recent years, many
drilling companies have consolidated or merged with other companies. Although
this consolidation has decreased the total number of competitors, Patterson
believes the competition for drilling services will continue to be intense.
There is also substantial competition for the acquisition of oil and
natural gas leases suitable for exploration and for the hiring of experienced
personnel. Patterson's competitors in the exploration, development and
production segment of its operations include major integrated oil and natural
gas companies, numerous independent oil and natural gas companies, drilling and
production purchase programs and individual producers and operators. Patterson's
ability to increase its holdings of oil and natural gas reserves in the future
is directly dependent upon its ability to select, acquire and develop suitable
prospects in competition with those companies. Many competitors have financial
resources, staff, facilities and other resources significantly greater than
those of Patterson.
Additionally, there is substantial competition in the fluids services
business. As is the case with our contract drilling and exploration and
production businesses, many of our competitors have financial resources, staff,
facilities and other resources significantly greater than those of Patterson.
LABOR SHORTAGES ARE ADVERSELY AFFECTING PATTERSON'S DRILLING OPERATIONS.
The increase in domestic drilling demand from mid-1995 through the
third quarter of 1997 and related increase in contract drilling activity caused
a shortage of qualified drilling rig personnel in the industry. This increase
adversely impaired our ability to attract and retain sufficient qualified
personnel and to market and operate our drilling rigs. Further, labor shortages
resulted in wage increases, which impacted our operating margins. The return to
higher demand levels in the contract drilling industry in 2000 has reinstated
the problems associated with labor shortages. Of particular concern to us is
that these problems are more severe than those previously experienced by
Patterson and were reinstated at a much lower rig utilization rate than
experienced in the past. These labor shortages are adversely effecting
Patterson's operations. They are impeding Patterson's ability to place
additional drilling rigs into operation and are causing delays in the drilling
of new wells for Patterson customers.
PATTERSON HAS SIGNIFICANT BORROWINGS; FAILURE TO REPAY COULD RESULT IN
FORECLOSURE ON DRILLING RIGS.
Patterson has a $70 million credit facility with an outstanding
principal balance of $25 million at December 31, 2000. All of Patterson's
drilling assets are pledged as collateral on the facility. The loan is payable
in monthly payments of interest only until February 2001, at which time the loan
will convert to a term loan with a 60-month principal and interest amortization.
A decline in general economic conditions
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in the oil and natural gas industry could adversely affect Patterson's ability
to repay the loan. Failure to repay could, at the lender's election, result in
acceleration of the maturity date of the loan and foreclosure on the drilling
assets. Additionally, the loan agreement contains a number of covenants,
including financial covenants, the failure of which to satisfy could also cause
acceleration of the maturity date and require immediate repayment.
CONTINUED GROWTH THROUGH RIG ACQUISITIONS IS NOT ASSURED.
Patterson substantially increased its drilling rig fleet over the past
several years through strategic acquisitions. Although the land drilling
industry has experienced significant consolidation over the past few years,
Patterson believes that acquisition opportunities still exist. However,
there can be no assurance that suitable acquisitions can be found. We are likely
to continue to face intense competition from other companies for available
acquisition opportunities.
There can be no assurance that Patterson will have sufficient capital
resources to complete acquisitions, that acquisitions can be completed on terms
acceptable to us or that any completed acquisition would improve Patterson's
financial condition, results of operation, business or prospects in any material
manner. In fact, Patterson may incur substantial indebtedness to finance future
acquisitions and also may issue equity securities or convertible securities in
connection with any such acquisitions. Additional debt service requirements
could represent a significant burden on our results of operations and financial
condition and the issuance of additional equity or convertible shares could be
dilutive to our existing stockholders. Also, continued growth could strain
Patterson's management, operations, employees and resources.
PATTERSON'S OPERATIONS ARE SUBJECT TO OPERATING HAZARDS AND UNINSURED RISKS.
Contract drilling and oil and natural gas activities are subject to a
number of risks and hazards. These could cause serious injury or death to
persons, suspension of drilling operations, serious damage to equipment or
property of others, and damage to producing formations in surrounding areas. Our
operations could also cause environment damage, particularly through oil spills,
gas leaks, discharges of toxic gases or extensive uncontrolled fires. In
addition, we could become subject to liability for reservoir damages. The
occurrence of a significant event, including pollution or environmental damage,
could materially affect our operations and financial condition.
We believe we are adequately insured or indemnified against normal and
foreseeable risks in our operations in accordance with industry standards.
However, such insurance or indemnification may not be adequate to protect
Patterson against liability from all consequences of well disasters, extensive
fire damage or damage to the environment. There is no assurance that Patterson
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. In
addition to insurance, Patterson generally seeks to obtain indemnity agreements
whenever possible from its customers requiring them to hold Patterson harmless
if production or reservoir damage occurs. However, even when we are successful
in obtaining contractual indemnification, the customer may not maintain adequate
insurance to support such indemnification.
VIOLATIONS OF ENVIRONMENTAL LAWS AND REGULATIONS COULD MATERIALLY ADVERSELY
AFFECT PATTERSON'S OPERATIONS.
Patterson'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 clean-up under certain
circumstances, or otherwise relating to the protection of the environment. Laws
and regulations protecting the
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environment have generally become more stringent in recent years, and may in
certain circumstances impose strict liability, rendering an entity liable for
environmental damage without regard to negligence or to the fault on the part of
such entity. Such laws and regulations may expose us to liability for the
conduct of, or conditions caused by, others, or for our acts that were in
compliance with all applicable laws at the time such acts were performed.
Although we generally have been able to obtain some degree of
contractual indemnification from our customers in most of our day rate drilling
contracts against pollution and environmental damages, there is no assurance
that Patterson will be able to enforce the indemnification in all instances,
that the customer will be financially able in all cases to comply with its
indemnity obligations, or that Patterson will be able to obtain such
indemnification agreements in the future. No such indemnification is typically
available for turnkey contracts. While we also maintain insurance coverage
against certain environmental liabilities, including pollution caused by sudden
and accidental oil spills, we cannot assure that we will continue to be able to
secure or carry this insurance or, if Patterson were able to do so, that the
coverage would be adequate to cover the liabilities.
ESTIMATES OF PATTERSON'S OIL AND NATURAL GAS RESERVES ARE UNCERTAIN.
Estimates of our proved reserves and future net revenues derived
therefrom are based on engineering reports prepared by an independent petroleum
engineer based upon a review of production histories and other geologic,
economic, ownership and engineering data provided by Patterson. These estimates
are based on several assumptions that the SEC 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, our
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.
RISKS RELATED TO PATTERSON'S OPERATIONS
THE LOSS OF SERVICES OF KEY OFFICERS COULD HURT PATTERSON'S OPERATIONS.
Patterson is highly dependent on 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, Chief Executive Officer
and the President, respectively, could have a detrimental affect on Patterson.
Patterson has no employment agreements with any of its executive officers.
ANTI-TAKEOVER MEASURES IN PATTERSON'S CHARTER DOCUMENTS AND UNDER STATE LAW
COULD DISCOURAGE AN ACQUISITION OF PATTERSON AND THEREBY AFFECT THE RELATED
PURCHASE PRICE.
Patterson, as a Delaware corporation, is subject to the Delaware
General Corporation Law, including Section 203, an anti-takeover law enacted in
1988. Patterson has also enacted certain anti-takeover measures, including a
stockholders rights plan. In addition, our Board of Directors has the authority
to issue up to one million shares of preferred stock and to determine the price,
rights (including voting rights), conversion ratios, preferences and privileges
of that stock without further vote or action by the holders of the common stock.
As a result of these measures and others, potential acquirers of Patterson may
find it more difficult or be discouraged from attempting to effect an
acquisition transaction with us, thereby possibly depriving holders of Patterson
securities of certain opportunities to sell or otherwise dispose of such
securities at above-market prices pursuant to their transactions.
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PATTERSON HAS PAID NO DIVIDENDS ON ITS COMMON STOCK AND HAS NO PLANS TO PAY
DIVIDENDS IN THE FORESEEABLE FUTURE.
Patterson has not declared or paid cash dividends on its common stock
in the past and does not expect to declare or pay any cash dividends on its
common stock in the foreseeable future. The terms of our existing credit
facility prohibit payment of dividends by Patterson without the prior written
consent of the noteholders
PARTICIPATION BY PATTERSON DIRECTORS AND OFFICERS IN OIL AND NATURAL GAS
PROSPECTS COULD CREATE CONFLICTS OF INTEREST.
Certain of Patterson's directors and executive officers and their
respective affiliates have participated and may continue to participate from
time to time in oil and natural gas prospects and properties in which Patterson
has an interest. Conflicts of interest may arise between such persons and
Patterson as to the advisability of conducting drilling and recompletion
activities on these properties. Of the 184 wells operated by Patterson at June
30, 2000, Patterson's directors, officers and/or their respective affiliates
were working interest owners in approximately 147 wells.
PATTERSON BOARD MAY ISSUE PREFERRED STOCK WITH RIGHTS AND PREFERENCES ADVERSE TO
COMMON STOCK.
Patterson has a class of authorized preferred stock. Patterson's 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 common stock. Patterson has not issued any shares of preferred
stock. However, as of November 30, 2000, an aggregate of 371,497 shares of
preferred stock had been reserved for issuance upon exercise of the Rights
described under "Description of Capital Stock - Stockholder Rights Plan," below.
USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock by
the selling stockholders.
DIVIDEND POLICY
Patterson has not paid cash dividends on our common stock in the past
and does not expect to pay any cash dividends on the common stock in the
foreseeable future. We instead intend to retain our earnings to support the
operations and growth of our businesses. Any future cash dividends would depend
on future earnings, capital requirements, Patterson's financial condition and
other factors deemed relevant by our Board of Directors. In addition, the terms
of an existing credit facility prohibit payment of dividends by Patterson
without the prior written consent of the noteholders.
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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. The information was provided to
Patterson by the selling stockholders for inclusion in this prospectus.
<TABLE>
<CAPTION>
Shares Being
Shares Owned Offered in Shares Owned
Name Before Offering the Offering(1) After Offering(2)
---- --------------------------- -------------- ----------------------
Number Percent Number Percent
------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
LaWayne Jones 650,708 * 650,708 -0- -0-
Lance E. Jones 159,362 * 159,362 -0- -0-
------------ ------------
Totals.............. 810,070 810,070
============ ============
</TABLE>
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* Less than 1%.
(1) These shares were issued by Patterson in January 2001 as partial
consideration for the acquisition by us of Jones Drilling Corporation
and the assets of L.E. Jones Drilling Company, both of which entities
were privately-owned and affiliated Oklahoma corporations. These two
entities owned a total of fourteen operable drilling rigs and eight
non-operable drilling rigs and related equipment at the time of the
acquisition.
(2) Assumes all Shares offered hereby are sold.
DESCRIPTION OF CAPITAL STOCK
We are authorized by our Restated Certificate of Incorporation, as
amended, to issue 50 million shares of common stock and one million shares of
preferred stock. As of November 30, 2000, there were 37,149,736 shares of our
common stock issued and outstanding and no issued and outstanding shares of our
preferred stock.
COMMON STOCK
A summary of the terms and provisions of our common stock is set forth
below.
Dividends. The holders of our common stock are entitled to receive
dividends when, as and if declared by our Board out of funds legally available
therefor. However, if any shares of our preferred stock are at the time
outstanding, the payment of dividends on our common stock or other distributions
(including Patterson repurchases of our common stock) will be subject to the
declaration and payment of all cumulative dividends on our outstanding shares of
preferred stock.
Liquidation. In the event of the dissolution, liquidation or winding up
of Patterson, holders of common stock will be entitled to share ratably in any
assets remaining after the satisfaction in full of the prior rights of
creditors, including holders of Patterson's indebtedness, and the payment of the
aggregate liquidation preference of the preferred stock.
Voting. Our stockholders are entitled to one vote for each share on all
matters voted on by our stockholders, including election of directors. Shares of
common stock held by Patterson or any entity controlled by Patterson do not have
voting rights and are not counted in determining the presence of a quorum. Our
directors are elected annually. Holders of our common stock have no cumulative
voting rights.
No Other Rights. The holders of our common stock do not have any
conversion, redemption or preemptive rights.
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Transfer Agent. The transfer agent for our common stock is Continental
Stock Transfer & Trust Company, New York, New York.
Listing. Shares of Patterson's outstanding common stock are traded on
the Nasdaq National Market.
PREFERRED STOCK
Our 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
Patterson's Restated Certificate of Incorporation, as amended, as our Board
determines. The rights, preferences, limitations and restrictions on different
series of preferred stock may differ with respect to:
o dividend rates,
o amounts payable on liquidation,
o voting rights,
o conversion rights,
o redemption provisions,
o sinking fund provisions, and
o other matters.
Our Board may authorize the issuance of preferred stock ranking senior
to our common stock with respect to the payment of dividends and the
distribution of assets on liquidation. In addition, our Board 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 our preferred stock are
outstanding. Our Board, without stockholder approval, can issue preferred stock
with voting, conversion and other 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
Patterson. Patterson has not issued any shares of preferred stock. However, as
of November 30, 2000, an aggregate of 371,497 shares of preferred stock had been
reserved for issuance upon exercise of the Rights described under "--Stockholder
Rights Plan."
STOCKHOLDER RIGHTS PLAN
In January 1997, our Board adopted a stockholder rights plan under
which stockholders of record as of January 17, 1997, received a dividend in the
form of preferred share purchase rights (the "Rights"). The Rights permit the
holder to purchase one one-hundredth of a share (a unit) of Series A preferred
stock at an initial exercise price of $41.50 per share under certain
circumstances. The purchase price, the number of units of preferred stock and
the type of securities issuable upon exercise of the Rights are subject to
adjustment. The Rights expire on January 2, 2007 unless earlier redeemed or
exchanged. Until a Right is exercised, the holder thereof has no rights as a
stockholder of Patterson, including the right to vote or receive dividends. The
Rights become exercisable on the earlier to occur of (i) the acquisition by a
person or group of affiliated or associated persons of 15% or more of the
outstanding shares of common stock, or (ii) 10 days following the commencement
of or announcement of an intention to acquire 15% or more of the outstanding
shares of common stock through a tender offer or exchange offer.
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
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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. Section 203
of the DGCL, which applies to Patterson since the common stock is traded 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 combinations" 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,
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
Patterson's common stock.
Patterson's Restated Certificate of Incorporation, as amended, 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, as amended, provides that special meetings of stockholders may be
called only by our Board (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, as amended, provides that stockholder action may be taken only at
annual or special meetings and not by written consent of the stockholders.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws provide that 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 Patterson 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. The Bylaws also
specify certain requirements for a stockholders 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 "Description of Capital Stock"
for information concerning Patterson's capital stock.
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 their 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 the
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"
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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 selling
stockholders' 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 the shares by the selling stockholders.
Patterson 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
Patterson by Baker & Hostetler LLP, Denver, Colorado. A member of that firms
owns 6,000 shares of Patterson's common stock.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
With respect to the unaudited interim financial information
incorporated in this Prospectus by reference to the Quarterly Reports on Form
10-Q for the quarters ended March 31, June 30, and September 30, 2000,
PricewaterhouseCoopers LLP reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports dated May 15, 2000, August 11, 2000 and November
11, 2000, incorporated by reference herein, states that they did not audit and
they do not express an opinion on that unaudited financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act of 1933 for their reports on the unaudited financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Securities Act of 1933, as
amended.
EXPERT
The estimated reserve evaluations and related calculations of Mr. Brian
Wallace, P.E., Dallas, Texas, an independent petroleum engineer, incorporated in
this Prospectus by reference from Patterson's Annual Report on Form 10-K for the
year ended December 31, 1999, have been so incorporated in reliance upon the
authority of Mr. Wallace as an expert in petroleum engineering.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934. You
may read and copy this information at the following locations of the SEC:
Judiciary Plaza, Room 10024 Seven World Trade Center
450 Fifth Street, N.W. Suite 1300
Washington, D.C. 20549 New York, New York 10048
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661
You can also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, N.W., Room 10024, Washington, D.C.
20549, at prescribed rates. You may obtain information on the operation of the
Public Reference Room by calling the SEC at (800) SEC-0330.
The SEC also maintains an internet world wide web site that contains
reports, proxy statements and other information about issuers, like Patterson,
that file electronically with the SEC. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information
about us at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
We have filed with the SEC a registration statement on Form S-3 that
registers the Securities we are offering. The registration statement, including
the attached exhibits and schedules, contains additional relevant information
about us and our Securities. The rules and regulations of the SEC allow us to
omit certain information included in the registration statement from this
prospectus.
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