UTI ENERGY CORP, 424B4, 1997-10-02

UTI ENERGY CORP
424B4, 1997-10-02
OIL & GAS FIELD SERVICES, NEC

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<PAGE> 1

PROSPECTUS
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6,100,000 Shares

UTI ENERGY CORP.
[UTI ENERGY CORP. LOGO]
Common Stock
- --------------------------------------------------------------------------------
Of the 6,100,000 shares of common stock, par value $.001 per share (the "Common
Stock"), offered hereby, 1,575,000 shares are being sold by UTI Energy Corp.
(the "Company" or "UTI") and 4,525,000 shares, including warrants to purchase
shares of Common Stock, are being sold by the selling stockholders (the "Selling
Stockholders"). See "Principal and Selling Stockholders".

The Common Stock is listed on the American Stock Exchange (the "AMEX") under the
symbol "UTI". On September 30, 1997, the last reported sales price of the Common
Stock as reported on the AMEX was $41.3125 per share. See "Price Range of Common
Stock and Dividend Policy".

SEE "RISK FACTORS" ON PAGES 8 TO 12 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=======================================================================================================================
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders(2)
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<S> <C> <C> <C> <C>
Per Share.............................. $39.50 $1.78 $37.72 $37.72
- -----------------------------------------------------------------------------------------------------------------------
Total(3)............................... $240,950,000 $10,858,000 $59,409,000 $170,683,000
=======================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(2) Before deducting expenses payable by the Company and the Selling
Stockholders, estimated to be $350,000 and $15,000, respectively. The
Company will receive $12,792,440 from the exercise of warrants relating to
1,590,000 of the shares being offered by the Selling Stockholders.
(3) The Company and certain Selling Stockholders of the Company have granted the
several Underwriters 30-day over-allotment options to purchase, in the
aggregate, up to an additional 915,000 shares of Common Stock, including
warrants to purchase shares of Common Stock, on the same terms and
conditions as set forth above less the exercise price of any warrants. If
all such additional shares are purchased by the Underwriters, the total
Price to Public will be $277,092,500, the total Underwriting Discounts and
Commissions will be $12,486,700, the total Proceeds to Company will be
$75,056,199, and the total Proceeds to Selling Stockholders will be
$189,549,601. See "Underwriting".
- --------------------------------------------------------------------------------

The shares of Common Stock are offered by the several Underwriters, subject to
delivery by the Company and the Selling Stockholders and acceptance by the
Underwriters, to prior sale and to withdrawal, cancellation or modification of
the offer without notice. Delivery of the shares to the Underwriters is expected
to be made at the offices of Prudential Securities Incorporated, One New York
Plaza, New York, New York, on or about October 6, 1997.

PRUDENTIAL SECURITIES INCORPORATED
LEHMAN BROTHERS

RAUSCHER PIERCE REFSNES, INC.

SIMMONS & COMPANY
INTERNATIONAL
September 30, 1997
<PAGE> 2

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

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<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements included or incorporated in
this Prospectus. Unless the context otherwise requires, references in this
Prospectus to "UTI" or the "Company" shall mean UTI Energy Corp. and its
subsidiaries. Unless otherwise noted herein, the information contained in this
Prospectus assumes the Underwriters' over-allotment options will not be
exercised and gives effect to the Company's three-for-one stock split effected
on September 5, 1997.

THE COMPANY

UTI is a leading provider of onshore contract drilling services to
exploration and production companies and operates one of the largest land
drilling rig fleets in the United States. The Company's drilling operations
currently are concentrated in the prolific oil and natural gas producing basins
of Oklahoma, Texas and the Gulf Coast. The Company's rig fleet currently
consists of 89 land drilling rigs that are well suited to the requirements of
its markets. The Company also provides drilling and pressure pumping services in
the Appalachian Basin.

Beginning in 1995, the Company made a strategic decision to focus its
efforts on the expansion of its land drilling operations to take advantage of
improving market conditions and of the benefits arising from a consolidation in
the land drilling industry. To effect this strategy, the Company embarked on an
acquisition program aimed at expanding the Company's presence in select oil and
gas producing regions in the United States. Since 1995, the Company has more
than tripled the size of its rig fleet through acquisitions that have improved
its drilling capabilities, diversified its operations geographically and
expanded its market share in its core areas of operations. These acquisitions
also have provided the Company with significant operational leverage through its
75 currently marketed and 14 stacked rigs, a large inventory of drilling
equipment and approximately 250,000 feet of spare drill pipe. The Company
estimates that its stacked rigs could be placed in service at an average capital
cost of approximately $250,000 per rig.

The Company's drilling operations are managed on a regional basis through
local operating units and by managers with expertise and knowledge of regional
drilling conditions and needs. These units are supported by centralized
management responsible for the allocation and sharing of equipment, supplies and
personnel and the establishment of bidding parameters. The Company believes that
this organizational structure provides it with an important competitive
advantage in both operations and acquisitions in the fragmented land drilling
market.

Since 1994, the Company's financial results, including revenues, net income
and earnings from continuing operations before interest, other income, taxes,
depreciation and amortization ("EBITDA"), have increased substantially as a
result of its acquisitions, improved market conditions and higher margins
associated with increased day and contract rates. Revenues have grown from $36.3
million for the year ended December 31, 1994 to $97.3 million for the year ended
December 31, 1996. Over the same period, net income and EBITDA have grown from
$1.1 million to $4.9 million and from $3.5 million to $11.3 million,
respectively. For the six months ended June 30, 1997, the Company's revenues,
net income and EBITDA were $76.8 million, $3.6 million and $11.2 million,
respectively. In addition, the number of wells drilled by the Company has
increased from 287 in 1994 to 625 in 1996 and 403 for the first six months of
1997.

INDUSTRY CONDITIONS

Industry conditions in the United States land drilling market have improved
significantly over the last two years, which has resulted in improved financial
performance and increased industry and company-wide rig utilization and contract
rates. The market improvements have resulted from a number of factors, including
a consolidation of existing drilling equipment, an increase in domestic
exploration and development drilling activity, the mobilization of rigs to
international markets and the use of components from stacked rigs to refurbish
other rigs. While the improved market conditions have led to increasing contract
rates on a daily and footage basis in the Company's markets, the Company does
not believe that such rates have reached levels
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<PAGE> 4

that justify the construction of new rigs. Further, shortages of qualified
personnel to staff stacked rigs that are placed into operation have limited the
number of rigs that may be returned to the market.

The number of available land rigs in the United States has declined from
approximately 4,700 rigs in 1981 to less than 1,500 in 1997. During the period
from 1988 to 1996, the number of drilling contractors also has declined from
approximately 600 to 290, with the top four companies, including the Company,
currently owning approximately 42% of the available land rigs in the United
States. In 1996, approximately 33% of the footage drilled in the United States
was drilled by only ten contractors, down from 25 contractors in 1993. Increased
land drilling activity is reflective of improvements in exploration and
development technologies, in particular the greater use of 3-D seismic data and
horizontal drilling. These technological advancements have increased drilling
success rates, lowered finding costs and increased well production rates, which
in turn have allowed producers to conduct more consistent and active drilling
programs, even in periods of lower oil and natural gas prices.

BUSINESS STRATEGY

The Company's strategy is to continue to be one of the leading
consolidators in the industry and to take advantage of improving market
conditions and the benefits of consolidation. The Company also intends to expand
its operations through the redeployment of equipment among the Company's
existing regional operations. Key aspects of the Company's business strategy
include:

Acquisitions and Consolidations. The Company seeks acquisitions of
companies with existing operations, established reputations for quality
operations and equipment that can be assimilated into the Company's operations.
These acquisitions are intended to supplement the Company's existing operations
by providing additional equipment, experienced employees, higher market share
and improved operating leverage.

Decentralized Operating Structure. The Company maintains a decentralized
operating structure with regional managers who are responsible for the
day-to-day operations and customer relations in their areas. The Company
believes that expansion of market share in its core operating areas and its
regional operating structure provide for cost savings and efficiencies.

Diversified Drilling Operations. The Company seeks to achieve a diversified
mix of drilling equipment that is well suited to meet its customers' regional
demands for rigs. The Company's rig fleet has depth capabilities ranging from
5,000 to 25,000 feet and is located in the prolific oil and natural gas
producing basins of Oklahoma, Texas and the Gulf Coast.

Large Inventory of Available Equipment. The Company seeks operational
leverage through the ownership of available equipment that can be utilized when
needed in a cost effective manner. Rigs, drill pipe and other equipment are
allocated among regional drilling units based on the needs and profitability of
the units.

Disciplined Pricing Approach. The Company maintains a disciplined approach
to bidding on drilling contracts, with a focus on profitability rather than on
the maximization of rig utilization.

RECENT ACQUISITIONS

J.S.M. & Associates, Inc. On September 11, 1997, the Company acquired
J.S.M. & Associates, Inc. ("JSM"), a West Texas land drilling contractor, for
618,748 shares of Common Stock (including 61,874 escrow shares to be issued
following a contractual post-closing adjustment period) and $2.6 million in
cash, subject to adjustment. The acquisition provided the Company with seven
actively marketed and fully manned high-quality land drilling rigs having depth
capabilities ranging from 10,000 to 14,000 feet. The acquisition also provided
the Company with an additional office and warehouse in Odessa, Texas, various
spare equipment and supplies and $950,000 in net working capital. The JSM
acquisition makes the Company one of the two largest land drilling contractors
in the Permian Basin with a rig fleet of 33 rigs.

Southland Drilling Company. In April 1997, the Company completed the
acquisition of the contract drilling assets of Southland Drilling Company, Ltd.
("Southland") for $27.1 million in cash and warrants to purchase 300,000 shares
of Common Stock at $16.00 per share. The acquisition provided eight actively
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<PAGE> 5

marketed high-quality land drilling rigs having depth capabilities ranging from
12,000 feet to 16,000 feet and experienced rig crews. During 1996, these eight
rigs operated at an average utilization rate of approximately 90%. The Southland
acquisition provided the Company with an operating base in South Texas and
expanded the Company's presence in the South Texas and Gulf Coast markets.

Quarles Drilling Corporation. In January 1997, the Company completed the
acquisition of the contract drilling assets of Quarles Drilling Corporation
("Quarles") for $8.1 million in cash and 733,779 shares of Common Stock having a
value at the time of $8.1 million. The assets acquired from Quarles consisted of
nine actively marketed high-quality land drilling rigs, including three electric
deep drilling rigs. This acquisition expanded the Company's operations in
Oklahoma and East Texas and allowed the Company to enter the Texas Gulf Coast
market with the electric deep drilling rigs.

Viersen and Cochran Drilling Company. In August 1996, the Company completed
the acquisition of Viersen and Cochran Drilling Company ("Viersen") for
approximately $6.0 million in cash, a two-year $8.0 million note and warrants to
purchase 600,000 shares of Common Stock at $5.00 per share. Viersen's assets
consisted of 13 high-quality land drilling rigs, two of which were electric deep
drilling rigs, over 500,000 feet of spare drill pipe, over 800 drill collars and
other spare drilling equipment. Since the Viersen acquisition, the Company has
redeployed eight of the Viersen rigs into the Company's Texas and Oklahoma
operations and is utilizing the acquired drill pipe and related drilling
equipment throughout its operations as needed.

FWA Drilling Company. In November 1995, the Company completed the
acquisition of FWA Drilling Company ("FWA") for $14.0 million ($12.9 million net
of working capital). The FWA acquisition added 29 land drilling rigs to the
Company's fleet and expanded the Company's operations into the East and West
Texas markets where it had previously not been operating.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company.............. 1,575,000 shares
Common Stock Offered by the Selling
Stockholders................................... 4,525,000 shares(1)
Total.................................. 6,100,000 shares
Common Stock to be Outstanding after the
Offering....................................... 16,121,515 shares(2)
Use of Proceeds.................................. Net proceeds to the Company will be used for
repayment of debt and for general corporate
purposes. See "Use of Proceeds".
American Stock Exchange Symbol................... UTI
</TABLE>

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(1) The Company will receive approximately $12.8 million of the net proceeds
from the sale of the shares by the Selling Stockholders from the exercise of
warrants relating to 1,590,000 of the shares being offered by them.

(2) Includes 1,590,000 shares to be issued upon exercise of warrants to purchase
shares that are being sold by Selling Stockholders in the Offering and
61,874 escrow shares issuable to the prior JSM shareholders. Does not
include an aggregate of 1,388,850 shares reserved for issuance for
outstanding options pursuant to the Company's various employee and director
stock option plans. Also does not include an aggregate of 870,000 shares of
Common Stock reserved for issuance pursuant to outstanding warrants that are
not being exercised in connection with this Offering.

RISK FACTORS

Investors should consider the material risk factors involved in connection
with an investment in the Common Stock and the impact to investors from various
events that could adversely affect the Company's business. See "Risk Factors".
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<PAGE> 6

SUMMARY OPERATING DATA

The following table sets forth certain historical operating data for the
Company for each of the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------ SIX MONTHS ENDED
1994 1995 1996 JUNE 30, 1997
------ ------ ------ ----------------
<S> <C> <C> <C> <C>
Drilling rigs owned (at end of period)..... 27 55 65 82
Average number of owned rigs during
period................................... 27 31 59 77
Utilization rate(1)........................ 40% 39% 54% 69%
Number of wells drilled.................... 287 231 625 403
Average revenue per day(2)................. $4,915 $4,790 $5,390 $6,050
Operating days(3).......................... 3,931 4,405 11,912 9,571
</TABLE>

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(1) Utilization rates are based on a 365-day year and are calculated by dividing
the number of rigs utilized by the total number of rigs in the Company's
drilling fleet, including stacked rigs. A rig is considered utilized when it
is being operated, mobilized, assembled or dismantled while under contract.
For the six months ended June 30, 1997, the utilization rate of the
Company's rigs, excluding stacked rigs, was 87%.

(2) Calculated as (i) total revenues from dayrate, footage and turnkey contracts
less well costs incidental to drilling footage and turnkey wells divided by
(ii) the aggregate number of operating days.

(3) An operating day is defined as a day during which a rig is being operated,
mobilized, assembled or dismantled while under contract.
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SUMMARY HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain summary historical and pro forma
condensed consolidated financial data of the Company. The data derived from the
unaudited pro forma condensed consolidated statements of income give effect to
the acquisitions of Viersen, Quarles and Southland and this Offering and the
application of the net proceeds to the Company therefrom and the exercise of
warrants by the Selling Stockholders as if these transactions occurred on
January 1, 1996. The as adjusted balance sheet data gives effect to the sale of
shares of Common Stock offered by the Company in this Offering, the issuance of
shares of Common Stock upon exercise of warrants to purchase shares of Common
Stock that are being sold by Selling Stockholders in this Offering, the
application of the net proceeds to the Company therefrom and the acquisition of
JSM on September 11, 1997, as if these transactions had occurred on June 30,
1997. The unaudited pro forma information set forth below is not necessarily
indicative of the results that actually would have been achieved had such
transactions been consummated as of January 1, 1996, or that may be achieved in
the future. This information should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Selected Consolidated Financial Data, the Pro Forma Condensed Consolidated
Statements of Income and the financial statements and the related notes thereto
of the Company, Viersen and the acquired businesses of Quarles and Southland
included elsewhere or incorporated by reference herein.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------- ---------------------------
PRO PRO
FORMA FORMA
1994 1995 1996 1996 1996 1997 1997
------- ------- ------- -------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues................................ $36,275 $40,124 $97,301 $148,914 $40,065 $76,808 $87,562
Cost of sales........................... 27,857 32,685 78,257 125,499 32,702 60,462 70,064
Selling, general and administrative
expenses.............................. 4,958 5,082 7,768 9,523 3,447 5,174 5,558
Depreciation and amortization........... 2,302 2,552 4,292 8,731 1,979 4,020 4,777
------- ------- ------- -------- ------- ------- -------
Operating income (loss)................. 1,158 (195) 6,984 5,161 1,937 7,152 7,163
Other income............................ 461 293 1,341 1,341 854 254 254
Interest expense........................ (260) (265) (1,148) (3,630) (432) (1,754) (2,148)
Income taxes (benefit).................. 293 (592) 2,324 919 678 2,031 1,897
------- ------- ------- -------- ------- ------- -------
Income from continuing operations....... 1,066 425 4,853 1,953 1,681 3,621 3,372
Income from discontinued operations
(less applicable income taxes)(1)..... 26 38 -- -- -- -- --
Loss on disposal of discontinued
operations (less applicable tax
benefit)(1)........................... -- (361) -- -- -- -- --
------- ------- ------- -------- ------- ------- -------
Net Income....................... $ 1,092 $ 102 $ 4,853 $ 1,953 $ 1,681 $ 3,621 $ 3,372
======= ======= ======= ======== ======= ======= =======
EARNINGS PER SHARE (FULLY DILUTED)(2):
Continuing operations................... $ 0.11 $ 0.04 $ 0.42 $ 0.13 $ 0.15 $ 0.26 $ 0.21
Discontinued operations................. -- -- -- -- -- -- --
Loss on disposal of discontinued
operations............................ -- (0.03) -- -- -- -- --
------- ------- ------- -------- ------- ------- -------
Earnings per common share(2).............. $ 0.11 $ 0.01 $ 0.42 $ 0.13 $ 0.15 $ 0.26 $ 0.21
======= ======= ======= ======== ======= ======= =======
Weighted average shares outstanding (fully
diluted)(2)............................. 9,732 9,899 11,559 15,302 10,888 13,683 16,298
======= ======= ======= ======== ======= ======= =======
OTHER DATA:
EBITDA(3)............................... $ 3,460 $ 2,357 $11,276 $ 13,892 $ 3,916 $11,172 $11,940
Capital expenditures.................... 1,343 1,910 4,311 2,074 6,767
Cash flow from operations............... 5,177 (508) 6,323 2,336 3,573
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $116,953 $170,006
Working capital........................................... 8,408 53,161
Long-term debt, less current portion and discount......... 48,520 23,180
Stockholders' equity...................................... 37,289 122,268
</TABLE>

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(1) Attributable to the Company's oilfield distribution segment that was sold in
September 1995.

(2) Share and per share amounts have been restated to reflect the Company's
three-for-one stock split effected on September 5, 1997.

(3) EBITDA, or "earnings from continuing operations before interest expense,
other income, income taxes, depreciation and amortization", is a
supplemental financial measurement used by the Company in the evaluation of
its business and should not be construed as an alternative to income from
operations or to cash flow from operations and is presented solely as a
supplemental disclosure.
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<PAGE> 8

RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus in
connection with an investment in the Common Stock offered hereby.

This Prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including statements regarding, among other items, (i) the Company's growth
strategies, including its intention to make acquisitions, (ii) anticipated
trends in the Company's business and its future results of operations, (iii)
market conditions in the oil and gas industry, (iv) demand and pricing for the
Company's contract drilling services, (v) the ability of the Company to make and
integrate acquisitions and (vi) the outcome of litigation and the impact of
governmental regulation. These forward-looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a result of the
factors described in this Prospectus including, without limitation, the
information set forth below and under the headings "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business". In
light of these risks and uncertainties, there can be no assurance that actual
results will be as projected in the forward-looking statements.

DEPENDENCE ON VOLATILE OIL AND GAS INDUSTRY. Demand and prices for the
Company's services depend upon the level of activity in the onshore oil and gas
exploration and production industry in the United States, which in turn depends
upon numerous factors over which the Company has no control, including the level
of oil and gas prices, expectations about future oil and gas prices, the ability
of the Organization of Petroleum Exporting Countries ("OPEC") to set and
maintain production levels and prices, the cost of exploring for, producing and
delivering oil and gas, the level and price of foreign imports of oil and
natural gas, the discovery rate of new oil and gas reserves, available pipeline
and other oil and gas transportation capacity, worldwide weather conditions,
international political, military, regulatory and economic conditions and the
ability of oil and gas companies to raise capital. Domestic exploration activity
also has been particularly affected by an increase in the exploration and demand
for natural gas. The level of drilling activity in the onshore oil and gas
exploration and production industry in the United States has been volatile and
no assurance can be given that current levels of oil and gas exploration
activities in the Company's markets will continue or that demand for the
Company's services will correspond to the level of activity in the industry
generally. Further, any material changes in the demand for or supply of natural
gas could materially impact the demand for the Company's services. Prices for
oil and gas are expected to continue to be volatile and to affect the demand for
and pricing of the Company's services. A material decline in oil or gas prices
or industry activity in the United States could have a material adverse effect
on the Company's results of operations and financial condition.

MARKET CONDITIONS FOR LAND CONTRACT DRILLING SERVICES. The United States
land drilling industry has been adversely affected for many years by an
oversupply of drilling rigs and a large number of drilling contractors. These
conditions resulted in depressed dayrates and substantial competition for
available contracts. Although there recently have been improvements in the
United States land drilling market, future declines in demand, ongoing movement
or reactivation of onshore drilling rigs or new construction of drilling rigs
could adversely affect rig utilization rates and pricing, even in an environment
of stronger oil and natural gas prices and increased drilling activity. The
Company cannot predict either the future level of demand for its contract
drilling services or future conditions in the land contract drilling services
industry. Any significant decrease in demand for, or the prices received for,
the Company's services could have a material adverse effect on the Company's
results of operations and financial condition.

AVAILABILITY AND ASSIMILATION OF ACQUISITIONS. The Company's growth has
been enhanced materially by strategic acquisitions that have substantially
increased the Company's drilling rig fleet. While the Company believes that the
land drilling industry is highly fragmented and that significant acquisition
opportunities are available, there can be no assurance that suitable acquisition
candidates can be found, and the Company faces increased competition from other
companies for available acquisition opportunities. If the prices paid by

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<PAGE> 9

buyers of drilling rigs continue to rise, the Company may find fewer acceptable
acquisition opportunities. The Company may elect or be required to incur
substantial indebtedness to finance future acquisitions and also may issue
equity securities or convertible securities in connection with such
acquisitions. Additional debt service requirements could represent a significant
burden on the Company's results of operations and financial condition, and the
issuance of additional equity or convertible securities could result in dilution
to stockholders. In addition, there can be no assurance that the Company will
successfully integrate the operations and assets of any future acquisition with
its own, that the Company's management will be able to manage effectively the
growth and increased size of the Company or that the Company will be successful
in deploying idle or stacked rigs acquired by it or in maintaining the crews and
market share attributable to operable drilling rigs acquired by the Company. Any
failure by the Company to successfully effect and implement its acquisition
strategy could have a material adverse effect on the Company's future results of
operations and financial condition. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

COMPETITION. The contract drilling, workover and well servicing industry is
a highly-fragmented, intensely competitive and cyclical business. Since 1982,
the contract drilling business has been severely impacted by the decline and
continued instability in the prices of oil and natural gas. Though these
depressed economic conditions have resulted in a consolidation of the number of
competitors and the reduction of the number of rigs available, the supply of
available rigs, particularly in the domestic land markets, still exceeds the
demand for those rigs. This excess capacity in the industry has resulted in
substantial competition. Competition for services in a particular market is
based on price, location, type and condition of available equipment and quality
of service. A number of large and small contractors provide competition for
drilling contracts in all areas of the Company's business. Although no single
drilling competitor operates in all such areas, certain competitors are present
in more than one of those areas and drilling rigs are mobile and can be moved
from one region to another in response to increased demand. Some of the
Company's competitors have greater financial resources than the Company, which
may enable them to better withstand industry downturns, to compete more
effectively on the basis of price, to acquire existing rigs or to build new
rigs. See "Business -- Competition and Seasonality".

LABOR SHORTAGES. Increases in domestic drilling demand since mid-1995 and
increases in contract drilling activity have resulted in a shortage in many
areas of qualified drilling rig personnel in the industry. These shortages make
it more difficult for the Company and other contractors to return stacked rigs
to the market and to retain crews. If the Company is unable to attract and
retain sufficient qualified personnel, its ability to market and operate its
active drilling rigs and return its 14 currently stacked rigs to the market will
be restricted, which could have a material adverse effect on the Company's
results of operations. Further, wage rates of qualified rig crews have begun to
rise in the land drilling industry in response to the increasing number of
active rigs in service, which could ultimately have the effect of reducing the
Company's operating margins and results of operations. See
"Business -- Employees".

RISK ASSOCIATED WITH FOOTAGE AND TURNKEY CONTRACTS. The Company performs
drilling services pursuant to footage and turnkey drilling contracts under which
the Company agrees to drill a well to a specified depth for a fixed price. As of
September 1, 1997, the Company had 58% of its operating rigs under footage or
turnkey contracts. Most of the Company's footage contracts are for shallow wells
in West Texas that can be drilled in less than 15 days. Under such contracts,
the Company is not entitled to payment unless the well is drilled to the
specified depth, and the Company must bear the costs of performing drilling
services until the well has been drilled. Accordingly, the Company typically
will invest working capital in footage and turnkey projects prior to receiving
payment for its services. In addition, profitability of the contract is
dependent upon keeping expenses within the estimates used by the Company in
determining the contract price and completing the contracts on schedule. Turnkey
and footage contracts offer the possibility of greater profits than conventional
dayrate contracts, but also entail more financial risk. The risks associated
with a turnkey or footage contract are greater than on a well drilled on a
dayrate basis because in a turnkey or footage contract the contractor assumes
most of the risks associated with drilling operations generally assumed by the
operator in a dayrate contract, including risk of blowout, loss of hole, stuck
drill string, machinery breakdowns, abnormal drilling conditions and risks
associated with subcontractors' services, supplies and personnel. There

9
<PAGE> 10

can be no assurance that the Company will not incur losses on turnkey and
footage contracts in the future. See "Business -- Contract Drilling Services".

OPERATING HAZARDS AND UNINSURED RISKS. The Company's drilling operations
and fleet are subject to the many hazards inherent in the onshore drilling
industry, such as blowouts, explosions, cratering, well fires and spills. These
hazards can result in personal injury and loss of life, severe damage to or
destruction of property and equipment, pollution or environmental damage and
suspension of operations. The Company maintains insurance protection as it deems
appropriate. Such insurance coverage, however, may not in all situations provide
sufficient funds to protect the Company from all liabilities that could result
from its operations, and claims will be subject to various retentions and
deductibles. The Company generally seeks to obtain indemnity agreements whenever
possible from the Company's customers requiring its customers to hold the
Company harmless in the event of loss of production or reservoir damage. Even
when obtained, however, contractual indemnification may not be supported by
adequate insurance maintained by the customer. There can be no assurance that
the Company's insurance or contractual indemnity protection will be sufficient
or effective under all circumstances or against all hazards to which the Company
may be subject. The occurrence of a significant event not fully insured or
indemnified against or the failure of a customer to meet its indemnification
obligations could have a material adverse effect on the Company's results of
operations and financial condition. Moreover, no assurance can be given that the
Company will be able to maintain insurance in the future at rates it considers
reasonable. See "Business -- Operating Risks and Insurance".

SHORTAGE OF DRILL PIPE IN THE CONTRACT DRILLING INDUSTRY. There is
currently a growing shortage of drill pipe in the contract drilling industry in
the United States. This shortage has caused the price of drill pipe to increase
significantly and has required orders for new drill pipe to be placed up to nine
to 12 months in advance of expected use. The Company currently has an inventory
of approximately 250,000 feet of spare drill pipe, which the Company believes is
sufficient to supply its current fleet for the next two years based upon the
Company's current size and level of operations. The Company has also benefited
from the ownership and availability of this low cost drill pipe through lower
depreciation and operating expenses. There can be no assurance, however, that
any continued expansion caused by the Company's implementation of its growth
strategy will not require the Company to increase its capital expenditures with
respect to drill pipe and other equipment. Any significant delays in the Company
obtaining drill pipe, or the inability of the Company to acquire drill pipe at
prices that can be fully passed on to the customer through higher prices, could
have a material adverse effect on the Company's results of operations and
financial condition. See "Business -- Contract Drilling Services -- Drilling
Rigs and Other Contract Drilling Assets".

ENVIRONMENTAL RISKS. The Company is subject to numerous domestic
governmental regulations that relate directly or indirectly to its operations,
including certain regulations controlling the discharge of materials into the
environment, requiring removal and cleanup under certain circumstances, or
otherwise relating to the protection of the environment. For example, the
Company may be liable for damages and for the cost of removing oil spills for
which it is held responsible and for which it is not insured or contractually
indemnified. Laws and regulations protecting the environment have become more
stringent in recent years and may in certain circumstances impose "strict
liability" and render a company liable for environmental damage without regard
to negligence or fault on the part of such company. Such laws and regulations
may expose the Company to liability for the conduct of, or conditions caused by,
others, or for acts of the Company that were in compliance with all applicable
laws at the time such acts were performed. The application of these requirements
or the adoption of new requirements could have a material adverse effect on the
Company.

While the Company has generally been able to obtain some degree of
contractual indemnification from its customers in most of its dayrate drilling
contracts against pollution and environmental damages, there can be no assurance
that such indemnification will be enforceable in all instances, that the
customer will be financially able in all cases to comply with its indemnity
obligations or that the Company will be able to obtain such indemnification
agreements in the future. No such indemnification is typically available for
footage or turnkey contracts.

The Company also maintains insurance coverage against certain environmental
liabilities, including pollution caused by sudden and accidental oil spills.
There can be no assurance that this insurance will

10
<PAGE> 11

continue to be available or carried by the Company or, if available and carried,
will be adequate to cover the Company's liability in all circumstances. See
"Business -- Environmental Regulation".

RELATIONSHIP WITH REMY. Remy Capital Partners III, L.P. ("Remy"), a Selling
Stockholder, currently beneficially owns 5,383,650 shares of Common Stock. Since
Remy's investment in the Company in early 1995, representatives of Remy
Investors and Consultants, Incorporated ("Remy Consultants"), the sole general
partner of Remy, have assisted the Company in pursuing and effecting the
Company's acquisition and business strategies. In addition, representatives of
Remy Consultants, including Mark Siegel, Chairman of the Board of Directors of
the Company, have provided the Company with various financial and management
assistance. Remy Consultants and its representatives have generally been
compensated by the Company for their assistance and services through the grant
of options or warrants. In December 1995, warrants to purchase an aggregate of
360,000 shares of Common Stock at the then market price were granted to Remy and
its affiliates in consideration for the services provided to the Company by them
in 1995. These warrants will be used in connection with this Offering and the
Underwriters' over-allotment options. Similarly, in January 1997 and July 1997
options to purchase an aggregate of 180,000 shares and 165,000 shares,
respectively, of Common Stock at the then market price were granted to
representatives of Remy Consultants in their capacities as employees of the
Company. It is anticipated that options and similar stock-based and other
compensation may be paid by the Company to Remy Consultants and its
representatives in the future for services provided by them on behalf of the
Company. Although it currently is anticipated that Remy Consultants and its
representatives will continue to be active in the formulation and implementation
of the acquisition and management strategy of the Company after this Offering,
there can be no assurance in this regard or as to the level of such
participation in the future.

After this Offering, Remy, Remy Consultants and their representatives will
own approximately 22% of the outstanding Common Stock (20% if the over-allotment
options are exercised in full) and options and warrants that, if exercised,
would result in it and its affiliates owning 25% of the Common Stock. While Remy
will not have absolute control following this Offering to determine all matters
to come before the stockholders of the Company, it and its affiliates will have
significant influence over the Company's management. See "Principal and Selling
Stockholders".

SHARES ELIGIBLE FOR FUTURE SALE. At September 30, 1997, the Company had
outstanding options and warrants to purchase an aggregate of 3,848,850 shares of
Common Stock at prices ranging from $1.77 to $20.00 per share, of which warrants
to purchase an aggregate of 1,590,000 shares of Common Stock at an average
exercise price of $8.05 per share will be exercised in connection with this
Offering. In addition, following this Offering, Remy and various other
stockholders will have registration rights with respect to 3,601,762 and
1,466,081 shares of Common Stock, respectively. The Company, the Company's
directors and officers and the Selling Stockholders have agreed with the
representatives of the Underwriters not to directly or indirectly offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock or other capital stock of the Company or any
securities convertible into or exchangeable for any shares of Common Stock or
other capital stock of the Company, for a period of 90 days from the date of
this Prospectus without the prior written consent of Prudential Securities
Incorporated on behalf of the Underwriters, except that such agreements do not
prevent the Company from granting additional options under any employee benefit
plan or additional shares or rights to acquire shares in connection with
acquisitions of businesses or assets or other business combinations, provided
that the Company will not grant any demand registration rights covering any
shares issued in connection with such an acquisition or other business
combination that are exercisable prior to 90 days following the date of this
Prospectus. Prudential Securities Incorporated may, in its sole discretion, at
any time and without notice, release all or any portion of the shares of Common
Stock subject to such agreements. Sales of substantial amounts of Common Stock
into the public market, or a perception that such sales could occur, and the
existence of options or warrants to purchase shares of Common Stock at prices
that may be below the then current market price of the Common Stock could
adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through the sale of its equity securities.
See "Principal and Selling Stockholders", "Description of Capital
Stock -- Registration Rights", "Shares Eligible for Future Sale" and
"Underwriting".

11
<PAGE> 12

ABSENCE OF DIVIDENDS. The Company has not declared or paid any cash
dividends on the Common Stock and currently anticipates that, for the
foreseeable future, any earnings will be retained for the development of the
Company's business. Accordingly, no cash dividends are contemplated to be
declared or paid on the Common Stock. In addition, the Company's existing credit
arrangements with its bank prohibit the payment of cash dividends and the
Company's 12% Senior Subordinated Notes due 2001 (the "Subordinated Notes") also
limit cash dividends and restricted payments. See "Price Range of Common Stock
and Dividend Policy".

12
<PAGE> 13

USE OF PROCEEDS

The net proceeds to the Company from the sale of Common Stock being offered
by the Company hereby are estimated to be approximately $59.1 million ($74.7
million if the Underwriters' over-allotment options are exercised in full). The
Company will not receive any proceeds from the sale of Common Stock offered by
the Selling Stockholders in this Offering. The Company, however, will receive
$12.8 million from the exercise of warrants held by the Selling Stockholders in
connection with the sale of Common Stock offered by them ($13.2 million if the
Underwriters' over-allotment options are exercised in full), resulting in total
net proceeds to the Company of $71.9 million ($87.9 million if the Underwriters'
over-allotment options are exercised in full).

The Company will use approximately $22.9 million of the total estimated net
proceeds to the Company from this Offering, including proceeds from the exercise
of warrants held by the Selling Stockholders, to repay in full the outstanding
principal and accrued interest under the Company's Loan and Security Agreement
with Mellon Bank, N.A. ("Mellon") dated April 11, 1997 (the "Term Loan") and
approximately $8.0 million to repay in full the outstanding borrowings and
accrued interest on its Amended and Restated Loan and Security Agreement with
Mellon dated December 7, 1995, as amended (the "Working Capital Line").
Indebtedness under the Term Loan was incurred by the Company to partially
finance the Southland acquisition and to repay then-existing indebtedness
incurred in connection with the FWA, Viersen and Quarles acquisitions.
Indebtedness under the Term Loan bears annual interest at Mellon's prime rate
(8.5% at August 30, 1997) and is required to be repaid in monthly installments
through June 1, 2000. The Company also is required to prepay the Term Loan
without penalty utilizing the net proceeds to the Company from any public
offering of Common Stock, including this Offering. The Working Capital Line
provides for a revolving line of credit up to $12 million, subject to collateral
requirements. Interest under the Working Capital Line is calculated at the lower
of Mellon's prime rate or other rate options available at the time of borrowing,
depending on the Company's financial performance. Current borrowings under the
Working Capital Line bear interest at an annual rate of 8.5%. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

The remaining $41.0 million of the total estimated net proceeds to the
Company from this Offering will be utilized by the Company for general corporate
purposes, including to fund the expansion of the Company's business through
selective acquisitions of businesses and assets. Pending such application, such
funds will be invested in short-term, interest-bearing, investment-grade
securities or will be utilized by the Company to repay all or a portion of the
Subordinated Notes, subject to the waiver of certain restrictions on their
prepayment. If the Subordinated Notes are prepaid, the Company will have no
outstanding long-term debt. The Company believes that it has significant
borrowing capacity and currently intends to utilize such capacity to facilitate
future acquisitions.

13
<PAGE> 14

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the AMEX under the symbol "UTI". The
following table sets forth, for the periods indicated, the high and low sales
prices per share for the Common Stock as reported on the AMEX adjusted for the
Company's three-for-one stock split effected on September 5, 1997.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year ended December 31, 1995
First quarter............................................. $ 1.60 $ 1.17
Second quarter............................................ 1.75 1.46
Third quarter............................................. 1.71 1.50
Fourth quarter............................................ 1.93 1.33
Year ended December 31, 1996
First quarter............................................. $ 2.38 $ 1.75
Second quarter............................................ 4.83 2.29
Third quarter............................................. 5.42 3.79
Fourth quarter............................................ 12.96 5.25
Year ending December 31, 1997
First quarter............................................. $12.29 $ 6.83
Second quarter............................................ 15.33 8.46
Third quarter............................................. 42.50 15.21
</TABLE>

The last reported sale price of the Common Stock on September 30, 1997, as
reported on the AMEX, was $41.31. As of September 30, 1997, the Company had
approximately 1,050 stockholders of record.

The Company has not declared or paid any cash dividends on the Common Stock
and currently anticipates that, for the foreseeable future, any earnings will be
retained for the development of the Company's business. Accordingly, no cash
dividends are expected to be declared or paid on the Common Stock for the
foreseeable future. In addition, the terms of the Term Loan and Working Capital
Line prohibit the Company from paying cash dividends on the Common Stock, and
the Subordinated Notes restrict the ability of the Company to pay cash dividends
through limitations on dividends and restricted payments. The declaration of all
dividends is at the discretion of the Company's Board of Directors.

14
<PAGE> 15

CAPITALIZATION

The following table sets forth the historical consolidated capitalization
of the Company at June 30, 1997, and as adjusted to reflect the issuance of the
Common Stock offered by the Company hereby, the application of the net proceeds
to the Company therefrom and the exercise of warrants to purchase 1,590,000
shares of Common Stock by the Selling Stockholders in connection with the
Offering and the acquisition of JSM on September 11, 1997, for 618,748 shares of
Common Stock and approximately $2.6 million in cash, as if such transactions
occurred on June 30, 1997. This table should be read in conjunction with the
Consolidated Financial Statements of the Company, including the notes thereto,
contained elsewhere or incorporated by reference in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 49 $ 38,752
======= ========
Short-term borrowings and current portion of long-term
debt...................................................... 5,226 126
Long-term debt, less current portion........................ 48,520 23,180
Stockholders' equity:
Common stock, $.001 par value, 50,000,000 shares
authorized; 12,110,187 shares issued and outstanding
(16,121,515 shares as adjusted)(1)(2).................. 12 16
Capital in excess of par(2)............................... 28,816 114,064
Retained earnings......................................... 8,537 8,264
Restricted stock plan unearned compensation............... (76) (76)
------- --------
Total stockholders' equity........................ 37,289 122,268
------- --------
Total capitalization.............................. $91,035 $145,574
======= ========
</TABLE>

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

(1) Does not include an aggregate of 1,388,850 shares reserved for issuance
pursuant to outstanding options under the Company's various employee and
director stock option plans. The historical and as adjusted also exclude the
aggregate of 2,460,000 and 870,000 shares of Common Stock, respectively,
reserved for issuance for outstanding warrants.

(2) Adjusted to give effect to the Company's three-for-one stock split effected
on September 5, 1997.

15
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected historical consolidated financial information for
each of the years in the three-year period ended December 31, 1996, and the
unaudited consolidated financial information for the six-month periods ended
June 30, 1996 and 1997, are derived from the Company's audited and unaudited
Consolidated Financial Statements included elsewhere herein. The statement of
operations data for the six months ended June 30, 1997 is not necessarily
indicative of results that may be expected for the year ending December 31,
1997. The consolidated financial information for the six-month periods ended
June 30, 1996 and 1997 are derived from unaudited financial statements, which,
in the opinion of management, include all adjustments that are only of a normal
recurring nature and necessary for a fair presentation. The selected financial
data set forth in the table below should be read in conjunction with the
financial statements and related notes thereto of the Company, Viersen and the
acquired businesses of Quarles and Southland included elsewhere or incorporated
by reference herein and "Management's Discussion and Analysis of Financial
Condition and Results of Operations". The historical financial statements of the
Company included herein have been restated to reflect the Company's
three-for-one stock split effected on September 5, 1997, and supersede the
Company's financial statements included in its Annual Report on Form 10-K for
the year ended December 31, 1996, and Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, that have been incorporated herein by reference.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues................................................. $36,275 $40,124 $97,301 $40,065 $76,808
Cost of sales............................................ 27,857 32,685 78,257 32,702 60,462
Selling, general and administrative expenses............. 4,958 5,082 7,768 3,447 5,174
Depreciation and amortization............................ 2,302 2,552 4,292 1,979 4,020
------- ------- ------- ------- -------
Operating income (loss).................................. 1,158 (195) 6,984 1,937 7,152
Other income............................................. 461 293 1,341 854 254
Interest expense......................................... (260) (265) (1,148) (432) (1,754)
Income taxes (benefit)................................... 293 (592) 2,324 678 2,031
------- ------- ------- ------- -------
Income from continuing operations........................ 1,066 425 4,853 1,681 3,621
Income from discontinued operations (less applicable
income taxes)(1)....................................... 26 38 -- -- --
Loss on disposal of discontinued operations (less
applicable tax benefit)(1)............................. -- (361) -- -- --
------- ------- ------- ------- -------
Net income........................................ $ 1,092 $ 102 $ 4,853 $ 1,681 $ 3,621
======= ======= ======= ======= =======
EARNINGS PER SHARE (FULLY DILUTED):
Continuing operations.................................... $ 0.11 $ 0.04 $ 0.42 $ 0.15 $ 0.26
Discontinued operations.................................. -- -- -- -- --
Loss on disposal of discontinued operations.............. -- (0.03) -- -- --
------- ------- ------- ------- -------
Earnings per common share(2)............................... $ 0.11 $ 0.01 $ 0.42 $ 0.15 $ 0.26
======= ======= ======= ======= =======
Weighted average shares outstanding (fully diluted)(2)..... 9,732 9,899 11,559 10,888 13,683
======= ======= ======= ======= =======
OTHER DATA:
EBITDA(3)................................................ $ 3,460 $ 2,357 $11,276 $ 3,916 $11,172
Capital expenditures..................................... 1,343 1,910 4,311 2,074 6,767
Cash flow from operations................................ 5,177 (508) 6,323 2,336 3,573
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------- --------
1994 1995 1996 1997
------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $22,474 $33,990 $61,870 $116,953
Long-term debt, less current portion...................... 2,211 8,701 14,658 48,520
Working capital........................................... 8,179 5,427 5,761 8,408
Stockholders' equity...................................... 13,745 14,990 22,696 37,289
</TABLE>

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

(1) Attributable to the Company's oilfield distribution segment that was sold in
September 1995.

(2) Share and per share amounts have been restated to reflect the Company's
three-for-one stock split effected on September 5, 1997.

16
<PAGE> 17

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

The following tables set forth the unaudited pro forma condensed
consolidated statements of income for the Company for the year ended December
31, 1996 and the six months ended June 30, 1997, after giving effect to the
Company's acquisition of Viersen and the contract drilling assets of Quarles and
Southland (collectively, the "Acquisitions") and this Offering. The pro forma
financial information assumes that the Acquisitions and this Offering occurred
on January 1, 1996. The Acquisitions were accounted for using the purchase
method of accounting. The pro forma information does not give effect to the
recent acquisition of JSM.

The following unaudited pro forma condensed consolidated statements of
income should be read in conjunction with the Consolidated Financial Statements
of the Company and the related notes thereto included elsewhere herein as well
as the audited balance sheets as of December 31, 1995 and 1994 and the related
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1995 of Viersen incorporated by
reference herein, the audited statement of net assets acquired as of December
31, 1996 and the historical statement of gross drilling contract revenues,
direct operating expenses and depreciation of the drilling operations of
Quarles, for the year ended December 31, 1996, incorporated by reference herein,
and the audited historical statement of net assets acquired as of April 11, 1997
and historical statement of revenues and direct and indirect operating expenses
(excluding depreciation) of the contract drilling operations of Southland for
the years ended December 31, 1996 and 1995, incorporated by reference herein.
The pro forma information is not necessarily indicative of the results that
might have occurred had the Acquisitions taken place at the beginning of the
period specified and is not intended to be a projection of future results.

17
<PAGE> 18

UTI ENERGY CORP.

PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
(1) (2) PRO
UTI QUARLES SOUTHLAND FORMA PRO FORMA
AS AS AS ACQUISITION FOR OFFERING AS ADJUSTED
REPORTED REPORTED REPORTED ADJUSTMENTS ACQUISITIONS ADJUSTMENTS FOR OFFERING
---------- -------- --------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 76,808 $3,407 $7,347 $ -- $ 87,562 -- 87,562
Costs and Expenses
Cost of sales.................... 60,462 4,081 5,611 (90)A 70,064 -- 70,064
Selling, general and
administrative................. 5,174 -- 294 90A 5,558 -- 5,558
Depreciation and amortization.... 4,020 66 -- 691B 4,777 -- 4,777
---------- ------ ------ ------- ---------- ---------- ----------
69,656 4,147 5,905 691 80,399 -- 80,399
---------- ------ ------ ------- ---------- ---------- ----------
Operating Income (Loss)............ 7,152 (740) 1,442 (691) 7,163 -- 7,163
Other Income (Expense)
Interest expense................. (1,754) -- -- (1,077)C (2,831) 683F (2,148)
Other............................ 254 -- -- 254 -- 254
---------- ------ ------ ------- ---------- ---------- ----------
(1,500) -- -- (1,077) (2,577) 683 (1,894)
---------- ------ ------ ------- ---------- ---------- ----------
Income (Loss) Before Income
Taxes............................ 5,652 (740) 1,442 (1,768) 4,586 683 5,269
Income Taxes....................... 2,031 -- -- (380)D 1,651 246D 1,897
---------- ------ ------ ------- ---------- ---------- ----------
Net Income (Loss).................. $ 3,621 $ (740) $1,442 $(1,388) $ 2,935 437 3,372
========== ====== ====== ======= ========== ========== ==========
Earnings per common share
Primary.......................... $ 0.27 $ .22 .21
========== ========== ==========
Fully diluted.................... $ 0.26 $ .21 .21
========== ========== ==========
Average common shares outstanding
Primary.......................... 13,403,994 72,183E 13,476,177 2,743,293G 16,219,470
Fully diluted.................... 13,682,508 50,172E 13,732,680 2,565,600G 16,298,280
</TABLE>

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

(1) This Statement reflects the historical gross drilling contract revenues,
direct operating expenses, and depreciation directly related to the assets
acquired.

(2) This Statement reflects the historical revenues and direct and indirect
operating expenses directly related to the assets acquired (excluding
depreciation).

See accompanying notes to Pro Forma Condensed Consolidated Financial Statements.

18
<PAGE> 19

UTI ENERGY CORP.

PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME (UNAUDITED)
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO
FORMA
(1) (2) AS
UTI VIERSEN QUARLES SOUTHLAND PRO FORMA ADJUSTED
AS AS AS AS ACQUISITION FOR OFFERING FOR
REPORTED REPORTED REPORTED REPORTED ADJUSTMENTS ACQUISITIONS ADJUSTMENTS OFFERING
---------- -------- -------- --------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................. $ 97,301 $3,248 $24,228 $25,659 (1,522)A $ 148,914 -- $ 148,914
Costs and Expenses
Cost of sales........... 78,257 1,842 24,711 21,109 (420)B 125,499 -- 125,499
Selling, general and
administrative........ 7,768 747 -- 1,217 (209)B 9,523 -- 9,523
Depreciation and
amortization.......... 4,292 88 847 -- 3,504C 8,731 -- 8,731
---------- ------ ------- ------- -------- --------- --------- ----------
90,317 2,677 25,558 22,326 2,875 143,753 143,753
---------- ------ ------- ------- -------- --------- --------- ----------
Operating Income (Loss)... 6,984 571 (1,330) 3,333 (4,397) 5,161 5,161
Other Income (Expense)
Interest expense........ (1,148) -- -- -- (4,806)D (5,954) 2,324G (3,630)
Other................... 1,341 -- -- -- -- 1,341 1,341
---------- ------ ------- ------- -------- --------- --------- ----------
193 -- -- -- (4,806) (4,613) 2,324 (2,289)
---------- ------ ------- ------- -------- --------- --------- ----------
Income (Loss) Before
Income Taxes............ 7,177 571 (1,330) 3,333 (9,203) 548 2,324 2,872
Income Taxes.............. 2,324 -- -- -- (2,149)E 175 774E 919
---------- ------ ------- ------- -------- --------- --------- ----------
Net Income (Loss)......... $ 4,853 $ 571 $(1,330) $ 3,333 (7,054) $ 373 1,580 1,953
========== ====== ======= ======= ======== ========= ========= ==========
Earnings per common share
Primary................. $ 0.42 $ 0.03 .13
========== ========= ==========
Fully diluted........... $ 0.42 $ 0.03 .13
========== ========= ==========
Average common shares
outstanding
Primary................. 11,439,186 733,776F 12,172,962 3,044,118H 15,217,080
Fully diluted........... 11,559,492 768,474F 12,327,966 2,974,380H 15,302,346
</TABLE>

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

(1) This Statement reflects the historical gross drilling contract revenues,
direct operating expenses, and depreciation directly related to the assets
acquired.

(2) This Statement reflects the historical revenues and direct and indirect
operating expenses directly related to the assets acquired.

See accompanying notes to Pro Forma Condensed Consolidated Financial Statements.

19
<PAGE> 20

UTI ENERGY CORP.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Adjustments to Pro Forma Condensed Consolidated Statement of Income (Unaudited)
for the six months ended June 30, 1997.

(A) Eliminate selling, general and administrative expenses which the Company
believes will not be incurred on an ongoing basis. Selling, general and
administrative expenses directly related to the acquired assets are included
in the numbers as reported. The Company does not expect to incur any
incremental selling, general and administrative expenses as a result of the
Acquisitions. Additionally, costs and expenses related to selling activities
have been reclassified to conform to the Company's presentation.

(B) Adjust depreciation and amortization expense based upon the restated value
of the acquired property and equipment and goodwill.

(D) Adjust tax expense (benefit) at Company's marginal tax rate.

(E) The shares of Common Stock issued to Quarles effective January 27, 1997,
have been included in the average common shares outstanding for the Company
at June 30, 1997. The shares issued reflected in the Pro Forma Condensed
Consolidated Statement of Income assume the shares were issued effective
January 1, 1996.

(F) Eliminate interest expense related to debt retired from Offering proceeds.

(G) Issuance of shares of Common Stock pursuant to this Offering.

Adjustments to Pro Forma Condensed Consolidated Statement of Income (Unaudited)
for the year ended December 31, 1996.

(A) Eliminate gain on sale of assets.

(B) Eliminate selling, general and administrative expenses which the Company
believes will not be incurred on an ongoing basis. Selling, general and
administrative expenses directly related to the acquired assets are
included in the historical amounts as reported amounts. The Company does
not expect to incur any incremental selling, general and administrative
expenses as a result of the Acquisitions. Additionally, costs and expenses
related to selling activities have been reclassified to conform to the
Company's presentation.

(D) Increase interest expense resulting from acquisition debt offset by debt not
assumed.

(E) Adjust tax expense (benefit) at Company's marginal tax rate.

(F) The warrants issued in the Viersen Acquisition have been included in the
determination of average common shares outstanding for the Company at
December 31, 1996. Also includes stock issued pursuant to the Quarles
Acquisition and the dilutive effect of warrants issued in connection with
the 12% Subordinated Notes.

(G) Eliminate interest expense related to debt retired from the net Offering
proceeds.

(H) Issuance of shares of Common Stock pursuant to this Offering.

20
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

UTI is a leading provider of contract drilling services in the United
States. The Company's drilling operations are currently concentrated in the
prolific oil and natural gas producing basins of Oklahoma, Texas and the Gulf
Coast. The Company's rig fleet currently consists of 89 land drilling rigs with
effective depth capabilities ranging from 5,000 to 25,000 feet. The Company's
contract drilling services are performed through various regional drilling units
and are marketed under the names Triad, FWA, Southland, Cougar, JSM and
International Petroleum Service Company ("IPSCO"). The Company also provides
drilling and pressure pumping services in the Appalachian Basin.

Since November 1995, the Company has acquired 66 rigs in five transactions:
(i) FWA was acquired in November 1995 for $12.9 million net of working capital,
(ii) Viersen was acquired in August 1996 for approximately $6.0 million cash, a
two-year $8.0 million note and warrants to purchase 600,000 shares of Common
Stock at $5.00 per share, (iii) the contract drilling assets of Quarles were
acquired in January 1997 for $8.1 million cash and shares of Common Stock having
a value at the time of $8.1 million, (iv) the contract drilling business of
Southland was acquired in April 1997 for $27.1 million in cash and warrants to
purchase 300,000 shares of Common Stock at $16.00 per share and (v) JSM was
acquired on September 11, 1997, for 618,748 shares of Common Stock and
approximately $2.6 million in cash. These acquisitions have resulted in the
Company realizing substantial growth in its revenues and income.

The Company's results for the six months ended June 30, 1997, and the year
ended December 31, 1996, also reflect a strong improvement in market conditions
in the United States land drilling markets resulting from an increase in demand
for drilling services and industry consolidation. Fleet utilization (based on
total rigs owned) increased to 69% for the six months ended June 30, 1997, from
54% and 39% for the years ended December 31, 1996 and 1995, respectively. Of the
Company's available rigs, fleet utilization for the six months ended June 30,
1997 was 87%. The Company continues to focus on streamlining operations and
reducing its cost structure, which has further increased operating margins and
profitability.

The Company currently expects that its land drilling operations will
continue to benefit from improved market conditions and the effects of its prior
acquisitions. The Company intends to continue its strategy of growth through
acquisitions of rigs and equipment that can be integrated into its fleet and
operations and through acquisitions of other drilling contractors that may
provide opportunities for expansion of the Company's markets and services.

RESULTS OF OPERATIONS

The Company views the number of rigs actively drilling in the United States
as a barometer of the overall strength of the domestic oilfield service
industry. Without giving effect to acquisitions, variations in revenues and
gross margins of the Company's core business generally follow the rig count
trend.

21
<PAGE> 22

The following table presents certain results of operations data for the
Company and the average United States rig count as reported by Baker Hughes
Incorporated for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------ --------------
1994 1995 1996 1996 1997
----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Average U.S. land rig count(1)............ 637 601 673 754 614
Number of owned rigs (at end of period)... 27 55 65 55 82
Average number of owned rigs during
period.................................. 27 31 59 55 77
Utilization rate(2)....................... 40% 39% 54% 49% 69%
Operating days(3)......................... 3,931 4,405 11,912 4,920 9,571
</TABLE>

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

(1) Baker Hughes Incorporated is an international oilfield service and equipment
company which for more than 20 years has conducted and published a weekly
census of active drilling rigs. Its active rig count is generally regarded
as an industry standard for measuring industry activity levels.

(2) Utilization rates are based on a 365-day year and are calculated by dividing
the number of rigs utilized by the total number of rigs in the Company's
drilling fleet, including stacked rigs. For the six months ended June 30,
1997, the utilization rate of the Company's rigs, excluding stacked rigs,
was 87%. A rig is considered utilized when it is being operated, mobilized,
assembled or dismantled while under contract.

(3) An operating day is defined as a day during which a rig is being operated,
mobilized, assembled or dismantled while under contract.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996

Revenue increased 92% to $76.8 million for the first six months of 1997
from $40.1 million for the first six months of 1996, primarily due to the
increase in demand for drilling services and growth in the Company's rig fleet.
The revenue increase of $36.7 million consisted of a $33.9 million increase in
contract drilling revenue and an increase of $2.6 million in pressure pumping
revenue. The Company's rig fleet was employed for 9,571 days during the first
six months of 1997, compared to 4,920 days in the corresponding period of 1996.
The Company completed 1,395 pressure pumping jobs during the six months ended
June 30, 1997, as compared to 1,130 jobs during the six months ended June 30,
1996, an increase of approximately 24%. Revenue increases also reflected
improvements in average dayrates and prices received for footage and turnkey
contracts.

Gross profit increased 120% to $16.3 million for the first six months of
1997 compared to $7.4 million for the same period in 1996, due to higher
revenues, increased prices and consolidation savings. Contract drilling gross
profit as a percentage of revenue was 19.9% for the first six months of 1997 and
17.5% for the first six months of 1996. Pressure pumping gross profit as a
percentage of revenue was 33.0% for the first six months of 1997 and 22.2% for
the first six months of 1996.

Depreciation and amortization expense increased $2.0 million primarily due
to the acquisitions of Viersen, Quarles, and Southland. Depreciation and
amortization expense will increase in future periods as a result of the
Company's acquisitions of Quarles, Southland and JSM.

Selling, general, and administrative expenses increased $1.7 million for
the first six months of 1997 compared to the first six months of 1996, primarily
due to the acquisitions of Viersen and the contract drilling assets of Quarles
and Southland and a related increase in the average number of rigs operating
during the period. As a percentage of revenues, selling, general, and
administrative expenses decreased to 6.7% from 8.6% during the first six months
of 1997 compared to the first six months of 1996.

Other income decreased $600,000 for the first six months of 1997 compared
to the first six months of 1996, primarily because the prior period included a
one-time payment of $671,000 that the Company received as a result of a
favorable resolution of a dispute with the United States government over mineral
rights owned by the Company in southeastern New Mexico.

22
<PAGE> 23

Interest expense increased $1.3 million for the first six months of 1997
compared to the first six months of 1996 primarily due to interest on the debt
associated with the Viersen and Quarles acquisitions. Average outstanding debt
during the first six months of 1997 was $36.5 million, compared to $10.7 million
for the first six months of 1996.

Net income for the first six months of 1997 was $3.6 million, compared to
$1.7 million for the first six months of 1996. This increase reflects the
improved revenues and gross profit resulting from the Company's growth and
improved market conditions.

COMPARISON OF YEARS ENDED 1996 AND 1995

During the year ended December 31, 1996, the Company experienced
significant growth in its income, revenues and operating margins. This growth
reflected the successful implementation of the Company's growth strategy as well
as improvements in market conditions in the industry and a continued emphasis on
increasing operating efficiencies.

The Company's revenues for the year ended December 31, 1996, increased by
$57.2 million, or 143%, to a record $97.3 million, compared to $40.1 million for
the year ended December 31, 1995. This substantial increase in revenues
reflected a $52.8 million increase in contract drilling revenue and a $3.8
million increase in pressure pumping revenue. Of the $52.8 million increase in
contract drilling revenue, $45.8 million was attributable to the FWA
acquisition, with the remainder attributable to higher dayrates and rig
utilization. The Company's rig fleet was employed for 11,912 days during the
year ended December 31, 1996, compared to 4,405 days during the year ended
December 31, 1995. The Company completed 2,999 pressure pumping jobs during the
year ended December 31, 1996, up from 2,544 jobs during the year ended December
31, 1995.

The Company's gross profit increased 156% to $19.0 million for the year
ended December 31, 1996, from $7.4 million for the year ended December 31, 1995.
Contract drilling gross profit as a percentage of sales was 16.5% for the year
ended December 31, 1996, up from 13.4% for the year ended December 31, 1995.
This increase in gross profit percentage was attributable to higher dayrates and
rates received for footage and turn-key contracts and rig utilization. Pressure
pumping gross profit as a percentage of revenue was 33% for the year ended
December 31, 1996, up from 30% for the year ended December 31, 1995.

The Company's depreciation and amortization expense for the year ended
December 31, 1996, increased $1.7 million from the year ended December 31, 1995,
due to the FWA acquisition and, to a lesser extent, the acquisition of Viersen.

Selling, general and administrative expenses for the year ended December
31, 1996, increased $2.7 million from the year ended December 31, 1995. This
increase was a result of the FWA acquisition and higher performance-based bonus
accruals. Selling, general and administrative expense as a percentage of
revenues, however, decreased from 12.7% to 8.0% for the year ended December 31,
1996, compared to the year ended December 31, 1995, as a result of increased
utilization and revenues.

Other income for the year ended December 31, 1996, increased $1.0 million
compared to the year ended December 31, 1995. This increase was primarily due to
a favorable resolution of a dispute with the United States government over
mineral rights owned by the Company in southeastern New Mexico.

Interest expense for the year ended December 31, 1996, increased $883,000
from the year ended December 31, 1995. The increase in interest expense was due
to interest on the debt associated with the Company's acquisitions of FWA and
Viersen.

Income from continuing operations was $4.9 million for the year ended
December 31, 1996, compared to $425,000 for the year ended December 31, 1995.
This increase reflects the improved revenues and gross profit resulting from the
Company's growth and improved market conditions.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenues increased 10.6% to $40.1 million for the year ended December 31,
1995, from $36.3 million for the year ended December 31, 1994, as the revenues
from the acquisition of FWA offset a 4.2% decline in the

23
<PAGE> 24

revenues of the Company's other operations. The United States average onshore
rig count declined 5.7% from 637 in 1994 to 601 in 1995, primarily in response
to soft natural gas prices that prevailed during the first three quarters of
1995. The number of the Company's contract drilling operating days increased
12.1% during 1995 reflecting the acquisition of FWA. The number of the Company's
total pressure pumping jobs decreased 6.7% during 1995.

Gross profit declined 11.6% from $8.4 million for the year ended December
31, 1994, to $7.4 million for the year ended December 31, 1995. The decline in
gross profit resulted from $750,000 in losses suffered on a footage and a
turnkey well during the fourth quarter of 1995, competitive pricing pressure in
the Appalachian Basin and lower productivity in Appalachian drilling operations.

Depreciation and amortization expense for the year ended December 31, 1995,
increased $250,000 from the year ended December 31, 1994, due to the acquisition
of FWA.

Selling, general and administrative expense for the year ended December 31,
1995, increased $124,000 from the year ended December 31, 1994, primarily as a
result of the FWA acquisition.

Other income for the year ended December 31, 1995, decreased $168,000 from
the year ended December 31, 1994, primarily because 1994 included a one time
benefit of $200,000 from an antitrust settlement.

Interest expense was essentially flat period to period as the interest on
the debt financing associated with the purchase of FWA in 1995 was offset by the
decline in interest on short-term debt. The Company had no short-term debt
outstanding during 1995.

Income tax declined from an expense of $293,000 for the year ended December
31, 1994, to a benefit of $592,000 for the year ended December 31, 1995. The
1995 income tax benefit resulted from the reduction of a valuation allowance
against the Company's deferred tax asset consisting primarily of prior year tax
credits. The valuation was reduced based on the Company's expectation that the
deferred tax asset will be realized from future taxable income.

Income from continuing operations was $425,000 for the year ended December
31, 1995, a $641,000 decline from the year ended December 31, 1994, primarily as
a result of the decline in gross profit.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

The Company's primary cash needs for operations historically have been to
fund working capital requirements and to make capital expenditures to replace
and expand its drilling rig fleet and for acquisitions. The Company's ongoing
operations have been funded through existing cash, cash provided from operations
and borrowings under the Working Capital Line. To date, acquisitions have been
funded with available cash, borrowings and issuances of Common Stock and
warrants to purchase Common Stock.

During the six months ended June 30, 1997, and the year ended December 31,
1996, cash balances, net cash provided by operations and borrowings under the
Working Capital Line were utilized to fund the Company's normal recurring cash
requirements. The maximum borrowing availability under the Working Capital Line
was increased during the second quarter of 1997 from $8.4 million to $12.0
million. At June 30, 1997, the Company's borrowing availability under the
Working Capital Line was $5.3 million. The Company intends to utilize a portion
of the net proceeds to the Company from this Offering to repay all outstanding
borrowings under the Working Capital Line, after which the Company will have the
entire $12.0 million of borrowing available. See "Use of Proceeds".

The Working Capital Line is secured by a pledge of the Company's accounts
receivable and inventory and includes financial covenants covering tangible net
worth, interest coverage and debt service coverage and prohibits the payment of
cash dividends by the Company. Advances under the line are limited by levels of
accounts receivable and inventory. Interest under the facility is calculated at
the lower of the prime rate or

24
<PAGE> 25

such other rate options available at the time of borrowing, depending upon the
Company's financial performance. The facility expires on June 30, 1998.

Long-Term Debt Facilities

On April 11, 1997, the Company issued $25.0 million principal amount of the
Subordinated Notes and entered into the Term Loan. The net proceeds of the two
financings were used to fund the Southland acquisition in the amount of $27.1
million and to refinance approximately $18.4 million of debt incurred in
connection with the prior acquisitions of FWA and Viersen and the contract
drilling assets of Quarles. The Company incurred a one-time prepayment penalty
of approximately $132,000 in connection with such refinancing. In addition to
funding the Southland acquisition and the refinancing, the Company also repaid
$4.1 million of its borrowings under the Working Capital Line with the net
proceeds from the financing.

Subordinated Notes. The Subordinated Notes were issued at a 2% discount
along with seven-year warrants to purchase 1,200,000 shares of Common Stock at
an exercise price of $10.83 per share. The 12% Subordinated Notes contain
various affirmative and negative covenants customary in such private placements,
including restrictions on additional indebtedness unless certain pro forma
financial coverage ratios are met and restrictions on dividends, distributions
and other restricted payments.

Term Loan. The Term Loan bears interest at prime rate and is secured by
substantially all of the Company's rig assets, inventory and accounts
receivable. As of September 1, 1997, indebtedness outstanding under the Term
Loan was $22.9 million. The Term Loan contains various customary affirmative and
negative covenants, including restrictions on incurrence of additional
indebtedness, restrictions on dividends and distributions and acquisitions and
capital expenditures, and various financial covenants. Indebtedness under the
Term Loan is required to be repaid in monthly installments through June 1, 2000.
In addition, the Company is required to prepay the Term Loan without penalty
utilizing the net proceeds to the Company from any public offering of Common
Stock in full, including this Offering. The Company intends to utilize a portion
of the net proceeds to the Company from this Offering to repay in full the
outstanding indebtedness and accrued interest on the Term Loan. See "Use of
Proceeds".

Other

On September 11, 1997, the Company acquired JSM for 618,748 shares of
Common Stock, including 61,874 escrow shares, and $2.6 million cash, subject to
adjustment. The acquisition provided the Company with seven actively marketed
and fully manned high-quality land drilling rigs having depth capabilities
ranging from 10,000 to 14,000 feet. The acquisition also provided the Company
with an additional office and warehouse in Odessa, Texas, various spare
equipment and supplies and $950,000 in net working capital. Under the terms of
the JSM acquisition agreement, the Company granted to the prior shareholders of
JSM demand and piggyback registration rights exercisable beginning December 10,
1997. The Company also agreed to provide the prior JSM shareholders with the
right, exercisable for a period of 30 days beginning December 10, 1997, to
require the Company to purchase one-half of the shares of Common Stock issued in
the transaction for a purchase price of $21.66 per share, which price
represented the average closing price of the Common Stock during a 30 day period
prior to the closing less $.75 and was the price used for calculating the
purchase price.

The Company is continuing to review potential acquisitions of rigs and rig
contractors. Although there can be no assurance that such acquisitions will be
completed or as to the terms thereof, such acquisitions would further expand the
Company's rig fleet and operations. The Company believes that following the
application of the net proceeds to the Company from this Offering, it will have
significant borrowing capacity and intends to utilize such capacity to fund
additional acquisitions. Acquisitions may also be financed with existing cash
and, depending on the size and scope of any future acquisition or group of
acquisitions, through additional Common Stock and warrants.

Management believes its internally generated cash, availability under the
Working Capital Line, and the net proceeds to the Company from this Offering
will be sufficient to meet its working capital, capital expenditure, and debt
service requirements for the next twelve months. Acquisitions are expected to be
funded

25
<PAGE> 26

with available cash, borrowings under the Working Capital Line and issuances of
Common Stock. In addition, depending on the number and size of any acquisitions
consummated by the Company, the Company may be required to obtain additional
capital through public or private offerings of debt or equity securities.

INFLATION

Inflation has not had a significant impact on the Company's comparative
results of operations.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, ("FAS No. 128") which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact is expected to
result in an increase in primary earnings per share for the three months and six
months ended June 30, 1997 of $0.02 and $0.04 per share, respectively, and an
increase to the three months and six months ended June 30, 1996 of $.01 for each
period. The impact of FAS No. 128 on the calculation of fully diluted earnings
per share for these quarters is not expected to be material.

26
<PAGE> 27

BUSINESS

INTRODUCTION

Since 1994, the Company's financial results, including revenues, net income
and EBITDA, have increased substantially as a result of its acquisitions,
improved market conditions and higher margins associated with increased day and
contract rates. Revenues have grown from $36.3 million for the year ended
December 31, 1994 to $97.3 million for the year ended December 31, 1996. Over
the same period, net income and EBITDA have grown from $1.1 million to $4.9
million and from $3.5 million to $11.3 million, respectively. For the six months
ended June 30, 1997, the Company's revenues, net income and EBITDA were $76.8
million, $3.6 million and $11.2 million, respectively. In addition, the number
of wells drilled by the Company has increased from 287 in 1994 to 625 in 1996
and 403 for the first six months of 1997.

The Company is a Delaware corporation formed in 1986 for the purpose of
acquiring certain operating subsidiaries of UGI Corporation that provided
onshore contract drilling and other oil field services and owned certain oil and
gas properties. The Company's corporate offices are located at 16800 Greenspoint
Park, Suite 225N, Houston, Texas 77060 and its telephone number is (281)
873-4111.

INDUSTRY CONDITIONS

27
<PAGE> 28

BUSINESS STRATEGY

Disciplined Pricing Approach. The Company maintains a disciplined approach
to bidding on drilling contracts, with a focus on profitability rather than on
the maximization of rig utilization.

RECENT ACQUISITIONS

J.S.M. & Associates, Inc. On September 11, 1997, the Company acquired JSM,
a West Texas land drilling contractor, for 618,748 shares of Common Stock
(including 61,874 escrow shares to be issued following a contractual
post-closing adjustment period) and $2.6 million in cash, subject to adjustment.
The acquisition provided the Company with seven actively marketed and fully
manned high-quality land drilling rigs having depth capabilities ranging from
10,000 to 14,000 feet. The acquisition also provided the Company with an
additional office and warehouse in Odessa, Texas, various spare equipment and
supplies and $950,000 in net working capital. The JSM acquisition makes the
Company one of the two largest land drilling contractors in the Permian Basin
with a rig fleet of 33 rigs.

Southland Drilling Company. In April 1997, the Company completed the
acquisition of the contract drilling assets of Southland for $27.1 million in
cash and warrants to purchase 300,000 shares of Common Stock at $16.00 per
share. The acquisition provided eight actively marketed high-quality land
drilling rigs having depth capabilities ranging from 12,000 feet to 16,000 feet
and experienced rig crews. During 1996, these eight rigs operated at an average
utilization rate of approximately 90%. The Southland acquisition provided the
Company with an operating base in South Texas and expanded the Company's
presence in the South Texas and Gulf Coast markets.

28
<PAGE> 29

Quarles Drilling Corporation. In January 1997, the Company completed the
acquisition of the contract drilling assets of Quarles for $8.1 million in cash
and 733,779 shares of Common Stock having a value at the time of $8.1 million.
The assets acquired from Quarles consisted of nine actively marketed
high-quality land drilling rigs, including three electric deep drilling rigs.
This acquisition expanded the Company's operations in Oklahoma and East Texas
and allowed the Company to enter the Texas Gulf Coast market with the electric
deep drilling rigs.

Viersen and Cochran Drilling Corporation. In August 1996, the Company
completed the acquisition of Viersen for $6.0 million in cash, a two-year $8.0
million note and warrants to purchase 600,000 shares of Common Stock at $5.00
per share. Viersen's assets consisted of 13 high-quality land drilling rigs, two
of which were electric deep drilling rigs, over 500,000 feet of spare drill
pipe, over 800 drill collars and other spare drilling equipment. Since the
Viersen acquisition, the Company has redeployed eight of the Viersen rigs into
the Company's Texas and Oklahoma operations and is utilizing the acquired drill
pipe and related drilling equipment throughout its operations as needed.

FWA Drilling Company. In November 1995, the Company completed the
acquisition of FWA for $14.0 million ($12.9 million net of working capital). The
FWA acquisition added 29 land drilling rigs to the Company's fleet and expanded
the Company's operations into the East and West Texas markets where it had
previously not been operating.

CONTRACT DRILLING SERVICES

General

The Company's contract drilling fleet currently consists of 89 land
drilling rigs having effective depth capabilities ranging from 5,000 to 25,000
feet. As of June 30, 1997, the Company had a total of 68 rigs available for
contract, up from 50 rigs available for contract at December 31, 1996. The
Company's rig utilization rate (based on total owned rigs) was 54% for the year
ended December 31, 1996 and 69% for the six months ended June 30, 1997. The
Company believes that its excess capacity provides substantial potential for
growth.

The Company's contract drilling services are performed through various
regional drilling units and marketed under the names Triad Drilling Company
("Triad"), FWA, Southland, Cougar, JSM and IPSCO. The Company's drilling
operations currently are concentrated in the prolific oil and natural gas
producing regions of Texas, Oklahoma and the Gulf Coast. The Company also
markets five smaller rigs in the Appalachian Basin in Ohio, Pennsylvania and New
York. Drilling operations are managed through regional offices located in
Oklahoma City, Oklahoma, Midland, Odessa, Tyler, Houston and Victoria, Texas and
Sheffield, Pennsylvania. Rigs and equipment are deployed and allocated among the
various drilling units based on regional need and profitability. The Company's
contract drilling customers include major oil companies and independent
producers, both large and small. For the year ended December 31, 1996, one
customer represented 25% of the Company's total revenues.

Day-to-day drilling operations are managed at the Company's regional
offices through a team of unit managers who are responsible for designated rigs
and locations and clients at those locations. Drilling contracts are bid on the
basis of profitability and local market conditions and not to maximize rig
utilization at the expense of profitability.

The Company maintains an incentive compensation plan for its managerial and
key employees based on operating and budgeted results. The Company believes that
this plan provides the Company with the ability to attract and retain qualified
managers and key operating employees. The Company also provides incentive
compensation to its rig workers based on operating results and safety records.

Drilling Rigs and Other Contract Drilling Assets

A land drilling rig consists of various components including engines,
drawworks or hoist, derrick or mast, pumps, blowout preventers and drill pipe.
Rig size and configuration vary with depth, terrain and operator requirements.
An active maintenance program during the life of a drilling rig permits the
maintenance, replacement and upgrading of its components on an individual basis.
Over the life of a typical drilling rig,

29
<PAGE> 30

major components, such as engines, pumps, drawworks and drill pipe are replaced
or rebuilt on a periodic basis as required while other components, such as the
mast and substructure, can be utilized for extended periods of time with proper
maintenance. The Company follows a policy of keeping its drilling rigs well
maintained and technologically competitive for the regions in which they
operate.

As of September 12, 1997, the Company had an inventory of 89 land drilling
rigs, 67 of which were active. The Company's rig fleet is configured to suit
local requirements in the Company's various operating regions with drilling
depths capabilities ranging to 25,000 feet. The Company allocates its rigs among
its operating regions based upon market conditions and in accordance with the
needs of its customers and the capabilities of its rigs. The Company maintains a
disciplined approach to bidding on drilling contracts, with a focus on
profitability rather than the maximization of rig utilization.

The following table sets forth certain information with respect to the
Company's rig fleet and the current distribution of rigs among the Company's
operating regions as of September 12, 1997.

<TABLE>
<CAPTION>
AVERAGE
RATED
STACKED IDLE ACTIVE TOTAL DRILLING
REGION RIGS(1) RIGS(1) RIGS(1) RIGS DEPTHS
------ ------- ------- ------- ----- ---------
<S> <C> <C> <C> <C> <C>
Arklatex................................... -- -- 11 11 15,000 ft.
Permian.................................... 1 7 25 33 12,500 ft.
Gulf Coast/South Texas..................... 1 -- 11 12 17,000 ft.
Mid Continent.............................. 11 -- 15 26 13,000 ft.
Northeast.................................. 1 1 4 6 8,500 ft.
Other(2)................................... -- -- 1 1 25,000 ft.
-- -- -- --
Total............................ 14 8 67 89
</TABLE>

(1) A rig is considered active when under contract. An idle rig is one that is
not under contract but is available and being marketed. A stacked rig is not
currently being marketed and cannot be made available without incurring
refurbishing expenses.

(2) Located in Wyoming.

The Company's 14 stacked rigs can be placed into operation at an average
capital cost per rig of $250,000. The Company intends to place its stacked rigs
into service in an orderly basis as regional market conditions merit and trained
crews are retained. See "Risk Factors -- Labor Shortages".

The following table sets forth for the periods indicated certain data
concerning the utilization of the Company's drilling rigs based on the Company's
total fleet, including stacked and idle rigs:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------ -----------------
1994 1995 1996 1996 1997
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Drilling rigs owned (at end of period)..... 27 55 65 55 82
Average number of owned rigs during
period................................... 27 31 59 55 77
Utilization rate(1)........................ 40% 39% 54% 49% 69%
Number of wells drilled.................... 287 231 625 259 403
Average revenue per day(2)................. $4,915 $4,790 $5,390 $5,380 $6,050
Operating days(3).......................... 3,931 4,405 11,912 4,920 9,571
</TABLE>

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

(3) An operating day is defined as a day during which a rig is being operated,
mobilized, assembled or dismantled while under contract.

30
<PAGE> 31

The Company currently owns yards in Woodward and Oklahoma City, Oklahoma,
Midland, Tyler, Odessa and Victoria, Texas and Sheffield, Pennsylvania. The
Company also maintains a fleet of trucks that are utilized in certain regions to
mobilize and demobilize its drilling rigs among its various regional operating
units.

As a result of the Company's acquisition of Viersen, the Company had an
inventory as of September 1, 1997, of more than 250,000 feet of spare drill pipe
available for its operations. The price of drill pipe recently has increased
substantially and many contractors are subject to allocations and back orders.
The Company estimates that its inventory of spare drill pipe should satisfy the
drill pipe needs of its current fleet for the next two years based on the
Company's current size and level of operations. The Company believes that the
availability of this large inventory of drill pipe provides it with a
competitive advantage over many of its competitors who may have difficulty in
securing drill pipe and whose cost of drill pipe is substantially in excess of
the amounts paid by the Company for the pipe acquired by it in the Viersen
acquisition.

Drilling Contracts

The Company's drilling rigs are employed under individual contracts which
extend either over a stated period of time or the time required to drill a well
or a number of wells. Drilling contracts are generally obtained through
competitive bidding, although some may be obtained by negotiation. Contracts
generally are subject to termination by the customer on short notice, but can be
firm for a number of wells or years. Drilling contracts may provide for
compensation on a footage, turnkey or dayrate basis. For the six months ended
June 30, 1997, approximately 74%, 8% and 18% of the Company's contracts were on
a footage basis, turnkey and dayrate basis, respectively. The Company estimates
that approximately 50% of the Company's contract drilling revenues were
attributable to dayrate contracts during the first six months of 1997. Footage
contracts are primarily limited to shallow wells that can be drilled in less
than 15 days, while turnkey contracts are pursued on a limited basis considering
the risks and potential benefits of the contracts. Dayrate contracts are used
primarily for deeper wells and wells that present higher risks.

The Company maintains a disciplined approach to bidding. Contracts are bid
on the basis of profitability rather than on the maximization of rig
utilization. Footage and turnkey contracts are bid based on the Company
experience and expertise in the geological and operational aspects of the
project and when the Company believes that the anticipated benefits of the
contract merit the risk.

A dayrate contract provides for a basic rate per day when drilling and for
lower rates when the rig is moving, or when drilling operations are interrupted
or restricted by equipment breakdowns, actions of the customer or adverse
weather conditions or other conditions beyond the control of the Company. In
addition, the dayrate contracts typically provide for a lump sum fee for the
mobilization and demobilization of the drilling rig. The dayrate depends on
market and competitive conditions, the nature of the operations to be performed,
the duration of the work, the equipment and services to be provided, the
geographic area involved and other variables.

In a turnkey contract, the Company undertakes to drill a well to a
specified depth for a fixed price. In a footage contract, the Company undertakes
to drill a well to a specified depth at a fixed price per foot of hole. In both
turnkey and footage contracts, the Company must bear the cost of performing the
drilling services until the well has been drilled, and accordingly, such
contracts require significant cash commitments by the Company. In both turnkey
and footage contracts, the Company generally agrees to furnish services such as
testing, coring and casing the hole and other services which are not normally
provided by a drilling contractor working under a dayrate contract. In both
situations, compensation is earned upon completion of the well to the specified
depth. If the well is not completed to the specified depth, the Company may not
receive the fixed turnkey or footage price. Although the Company seeks to
minimize the risks associated in the footage and turnkey contracts by generally
limiting these contracts to shallower and lower risk wells such as those drilled
by the Company in West Texas, footage and turnkey contracts nevertheless involve
a higher degree of risk to the Company than dayrate contracts because the
Company assumes greater risks and bears the cost of unanticipated downhole
problems and cost escalation.

31
<PAGE> 32

PRESSURE PUMPING SERVICES AND OTHER OPERATIONS

Pressure Pumping

The Company through its Universal Well Services Inc. ("Universal") unit is
the leading provider of pressure pumping services in the northern Appalachian
Basin. Pressure pumping services consist primarily of well stimulation and
cementing for the completion of new wells and remedial work on existing wells.
Generally, all completed Appalachian Basin wells require cementing services
before production commences. In addition, substantially all completed wells
drilled in the Appalachian Basin require some form of fracturing or other
stimulation to enhance the flow of gas and oil to the well bore. With the
purchase of proprietary technology and equipment in 1995, Universal has added
the capability to fracture wells using liquid carbon dioxide and sand. Under
certain conditions, this technology is believed to produce superior results
relative to fracturing methods that use water or other fluids in the fracturing
process.

Universal maintains four base camps in the Appalachian Basin: one each in
Punxsutawney, Bradford and Meadville, Pennsylvania and Wooster, Ohio. These
camps typically consist of an office area, an equipment maintenance facility, a
bulk storage facility and a storage yard for vehicles and other materials.
Universal also maintains a portable, temporary facility which is available for
special projects.

The Company's pressure pumping equipment consists of cement, fracturing and
nitrogen pumpers, blenders, and cement, sand, acid, connection and nitrogen
transport trucks. The Company maintains its pressure pumping equipment in good
condition. Virtually all of the Company's pressure pumping equipment is in use
on a regular basis. At September 1, 1997, the Company owned or leased the
following equipment:

<TABLE>
<CAPTION>
EQUIPMENT TYPE NUMBER OF UNITS
-------------- ---------------
<S> <C>
Pumper Trucks............................................... 37
Blender Trucks.............................................. 9
Bulk Cement Trucks.......................................... 14
Sand Trucks................................................. 17
Acid Trucks................................................. 11
Connection Trucks........................................... 7
Miscellaneous Trucks........................................ 5
---
Total............................................. 100
===
</TABLE>

Other Operations

The Company also operates a horizontal hard rock boring division
("Boring"). Boring applies vertical drilling technology to bore horizontal
holes, using a patented process and equipment, for the placement of pipelines
and cables, including fiber optic cables, under obstacles such as highways and
railroads when hard rock conditions are encountered. Boring currently markets it
services in the eastern half of the United States.

In addition to its operating activities, the Company has invested in
working interests in gas and oil wells from time to time, principally in the
Appalachian and Permian Basins. The net book value of such investments at
December 31, 1996 and June 30, 1997 was $351,000 and $367,000, respectively.

VOLATILITY OF OIL AND GAS INDUSTRY

Demand and prices for the Company's services depend upon the level of
activity in the onshore oil and gas exploration and production industry in the
United States, which in turn depends upon numerous factors over which the
Company has no control, including the level of oil and gas prices, expectations
about future oil and gas prices, the ability of OPEC to set and maintain
production levels and prices, the cost of exploring for, producing and
delivering oil and gas, the level and price of foreign imports of oil and
natural gas, the discovery rate of new oil and gas reserves, available pipeline
and other oil and gas transportation capacity, worldwide weather conditions,
international political, military, regulatory and economic conditions and the
ability of oil and gas companies to raise capital. Domestic exploration activity
also has been particularly affected by an increase in the exploration and demand
for natural gas. The level of drilling activity in the onshore oil and gas

32
<PAGE> 33

exploration and production industry in the United States has been volatile and
no assurance can be given that current levels of oil and gas exploration
activities in the Company's markets will continue or that demand for the
Company's services will correspond to the level of activity in the industry
generally. Further, any material changes in the demand for or supply of natural
gas could materially impact the demand for the Company's services. Prices for
oil and gas are expected to continue to be volatile and to affect the demand for
and pricing of the Company's services. A material decline in oil or gas prices
or industry activity in the United States could have a material adverse effect
on the Company's results of operations and financial condition.

COMPETITION AND SEASONALITY

The contract drilling, workover and well servicing industry is a
highly-fragmented, intensely competitive and cyclical business. Since 1982, the
contract drilling business has been severely impacted by the decline and
continued instability in the prices of oil and natural gas. Though these
depressed economic conditions have resulted in a consolidation of the number of
competitors and the reduction of the number of rigs available, the supply of
available rigs, particularly in the domestic land markets, still exceeds the
demand for those rigs. This excess capacity in the industry has resulted in
substantial competition. Competition for services in a particular market is
based on price, location, type and condition of available equipment and quality
of service. A number of large and small contractors provide competition for
drilling contracts in all areas of the Company's business. Although no single
drilling competitor operates in all such areas, certain competitors are present
in more than one of those areas and drilling rigs are mobile and can be moved
from one region to another in response to increased demand. During the last two
years, prices for land drilling rigs have started to increase. Seasonality is
not a significant factor with respect to the overall operations of the Company,
although the Company's drilling pressure pumping services in Appalachia are
subject to a period downturn during spring months.

OPERATING RISKS AND INSURANCE

The Company's drilling operations and fleet are subject to the many hazards
inherent in the onshore drilling industry, such as blowouts, explosions,
cratering, well fires and spills. These hazards can result in personal injury
and loss of life, severe damage to or destruction of property and equipment,
pollution or environmental damage and suspension of operations. The Company
maintains insurance protection as it deems appropriate. Such insurance coverage,
however, may not in all situations provide sufficient funds to protect the
Company from all liabilities that could result from its operations, and claims
will be subject to various retentions and deductibles. The Company generally
seeks to obtain indemnity agreements whenever possible from the Company's
customers requiring its customers to hold the Company harmless in the event of
loss of production or reservoir damage. Even when obtained, however, contractual
indemnification may not be supported by adequate insurance maintained by the
customer. There can be no assurance that the Company's insurance or contractual
indemnity protection will be sufficient or effective under all circumstances or
against all hazards to which the Company may be subject. The occurrence of a
significant event not fully insured or indemnified against or the failure of a
customer to meet its indemnification obligations could have a material adverse
effect on the Company's results of operations and financial condition. Moreover,
no assurance can be given that the Company will be able to maintain insurance in
the future at rates it considers reasonable.

ENVIRONMENTAL REGULATION

The Company's activities are subject to existing federal, state and local
laws and regulations governing environmental quality and pollution control. It
is not anticipated that compliance with existing laws and regulations regulating
the release of materials into the environment or otherwise relating to the
protection of the environment will have a material adverse effect upon the
operations, capital expenditures or earnings of the Company in the foreseeable
future, absent the occurrence of an extraordinary event. The Company cannot
predict what effect additional regulation or legislation, enforcement policies
thereunder and claims for damages to property, employees, other persons and the
environment could have on its activities.

The Company's operations routinely involve the handling of various
materials, some of which are classified as hazardous materials. The Company's
operations and facilities are subject to numerous state and federal
environmental laws, rules and regulations, including, but not limited to, laws
concerning the

33
<PAGE> 34

containment and disposal of hazardous materials, oil field waste, other waste
materials and acids, and the use of underground storage tanks. Laws protecting
the environment have generally become more restrictive in recent years. In
addition, environmental laws and regulations may impose strict liability whereby
the Company could be liable for clean-up costs, even if the situation resulted
from previous conduct of the Company that was lawful at the time conducted or
from improper conduct of, or conditions caused by, previous property owners or
other persons not associated with the Company. From time to time, claims may be
made and litigation might be brought against the Company under these laws. Such
clean-up costs or costs associated with changes in environmental laws and
regulations could be substantial and could have a material adverse effect on the
Company's financial condition. However, the cost of environmental compliance has
not had any material adverse effect on the Company's financial condition in the
past. The Company is unable to predict the effect of new regulations and
amendments to existing regulations governing its operations, and therefore is
unable to determine the ultimate costs of complying with environmental laws and
regulations.

The Oil Pollution Act of 1990 ("OPA") amends certain provisions of the
federal Water Pollution Control Act of 1972, commonly referred to as the Clean
Water Act ("CWA"), and other statutes as they pertain to the prevention of and
response to oil spills into navigable waters. The OPA subjects owners of
facilities to strict, joint and several liability for all containment and
cleanup costs and certain other damages arising from a spill, including, but not
limited to, the costs of responding to a release of oil to surface waters. The
CWA provides penalties for any discharges of petroleum products in reportable
quantities and imposes substantial liability for the costs of removing a spill.
State laws for the control of water pollution also provide varying civil and
criminal penalties and liabilities in the case of releases of petroleum or its
derivatives into surface waters or into the ground. The Environmental Protection
Agency ("EPA") is also authorized to seek preliminary and permanent injunctive
relief and, in certain cases, criminal penalties and fines. In the event that a
discharge occurs at a well site at which the Company is conducting drilling or
pressure pumping operations, the Company may be exposed to claims that it is
liable under the CWA.

Certain of the Company's facilities are also subject to regulations of the
EPA, including regulations that require the preparation and implementation of
spill prevention control and countermeasure plans relating to the possible
discharge of oil into navigable waters.

The Comprehensive Environmental Response, Compensation and Liability Act,
as amended ("CERCLA"), also known as the "Superfund" law, imposes liability,
without regard to fault or the legality of the original conduct, on certain
classes of persons with respect to the release of any "hazardous substance" into
the environment. These persons include the owner and operator of a site and
persons that disposed of or arranged for the disposal of the hazardous
substances found at the site. CERCLA currently exempts crude oil, and the
Resource Conservation and Recovery Act, as amended, currently exempts certain
drilling materials, such as drilling fluids and production waters, from the
definitions of hazardous substances. There can be no assurance that such
exemptions will be preserved in future amendments of such acts, if any, or that
more stringent laws and regulations protecting the environment will not be
adopted. In addition, the Company's operations may involve the use or handling
of acids currently classified as hazardous substances and other materials that
may in the future be classified as hazardous substances.

The operations of the Company are subject to local, state and federal
regulations for the control of emissions and air pollution. Legal and regulatory
requirements in this area are increasing, and there can be no assurance that
significant costs and liabilities will not be incurred in the future as a result
of new regulatory developments. In particular, regulations promulgated under the
Clean Air Act Amendments of 1990 may impose additional compliance requirements
that could affect the Company's operations. The Company may in the future be
subject to civil or administrative enforcement actions for failure to comply
strictly with air regulations and permits. These enforcement actions are
generally resolved by payment of monetary fines and correction of any identified
deficiencies. Alternatively, regulatory agencies could require the Company to
forego construction or operation of certain air emission sources.

Management believes that the Company is in substantial compliance with
environmental laws and regulations.

34
<PAGE> 35

EMPLOYEES

At September 12, 1997, the Company had approximately 1,815 full-time
employees, of which 1,690 were rig personnel and 125 were employed in support
and administrative capacities.

Increases in domestic drilling demand since mid-1995 and increases in
contract drilling activity have resulted in a shortage in many areas of
qualified drilling rig personnel in the industry. These shortages make it more
difficult for the Company and other contractors to return stacked rigs to the
market and to retain crews. If the Company is unable to attract and retain
sufficient qualified personnel, its ability to market and operate its active
drilling rigs and return its 14 currently stacked rigs to the market will be
restricted, which could have a material adverse effect on the Company's results
of operations. Further, wage rates of qualified rig crews have begun to rise in
the land drilling industry in response to the increasing number of active rigs
in service, which could ultimately have the effect of reducing the Company's
operating margins and results of operations.

In addition to the services of its employees, the Company employs the
services of consultants as required. None of the Company's employees is
represented by a labor union. There have been no work stoppages or strikes
during the last three years which have resulted in the loss of production or
production delays. The Company believes its relations with its employees are
good.

LEGAL PROCEEDINGS

The Company is involved in several claims arising in the ordinary course of
business. In the opinion of management, all of these claims are covered by
insurance and these matters will not have a material adverse effect on the
Company's financial position.

The Company and its operating subsidiaries are sometimes named as a
defendant in litigation usually relating to personal injuries alleged to result
from negligence. The Company maintains insurance coverage against such claims to
the extent deemed prudent by management.

There can be no assurance that the Company will be able to maintain
adequate insurance in the future at rates it considers reasonable, and there can
be no assurance that insurance will continue to be available on terms as
favorable as those that currently exist. The occurrence of an adverse claim in
excess of the coverage limits maintained by the Company could have a material
adverse effect on the Company's financial condition and results of operations.

35
<PAGE> 36

MANAGEMENT

Set forth below is certain information concerning the executive officers
and directors of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Mark S. Siegel...... 46 Chairman of the Board and Director
Vaughn E. Drum...... 51 President, Chief Executive Officer and Director
Karl W. Benzer...... 46 Vice President; President and Chief Operating Officer
of FWA
P. Blake Dupuis..... 44 Vice President, Secretary, Treasurer and Chief
Financial Officer
Gerald J. Guz....... 56 Senior Vice President; President and Chief Operating
Officer of Universal Well Services, Inc.
Terry L. Pope....... 45 Vice President; President and Chief Operating Officer
of Triad
Willard E. White.... 64 Vice President; President and Chief Operating Officer
of IPSCO
Kenneth N. Berns.... 37 Director
Terry H. Hunt....... 49 Director
Nadine C. Smith..... 40 Director
Robert B. Spears.... 71 Director
</TABLE>

Mr. Siegel was appointed to serve as a director on March 14, 1995, by a
vote of the remaining directors. Mr. Siegel has been President of Remy
Consultants since 1993. From 1992 to 1993, Mr. Siegel was President, Music
Division, Blockbuster Entertainment Corp. From 1988 through 1992, Mr. Siegel was
an Executive Vice President of Shamrock Holdings, Inc. and Managing Director of
Shamrock Capital Advisors, Incorporated. Mr. Siegel holds a B.A. from Colgate
University and a J.D. from the University of California at Berkeley (Boalt Hall)
School of Law.

Mr. Drum has served as President, Chief Executive Officer and a director of
the Company since its founding in 1986. From 1980 through November 1986, Mr.
Drum served in various capacities for UGI Development Company ("UGIDC"), a
subsidiary of UGI Corporation ("UGI"). Mr. Drum holds a B.S. in Petroleum
Engineering from Marietta College.

Mr. Benzer has served as a Vice President of the Company since August 1994
and President of its FWA since January 1997. From 1991 through July 1994, he was
President of S. W. Jack Drilling Company. From 1986 to 1991, Mr. Benzer was
President of Cubby Drilling Company and from 1984 through 1986 was Operations
Manager of Hinton Drilling Company. From 1974 through 1984, Mr. Benzer served in
a number of operations management positions with Noble Drilling Company. Mr.
Benzer holds a B.S. Degree in Mechanical Engineering and a M.B.A. from the
University of Rhode Island.

Mr. Dupuis has served as Vice President and Chief Financial Officer of the
Company since August 1996. From April 1996 to September 1996, Mr. Dupuis served
as Chief Financial Officer of ADCOR-Nicklos Drilling Company and from December
1993 to April 1996 he served as Chief Financial Officer of Coastwide Energy
Services, Inc. From September 1989 to December 1993, Mr. Dupuis served as Chief
Financial Officer of EVI, Inc. Mr. Dupuis is a Certified Public Accountant and
holds a B.S. in Business Administration from the University of Southwestern
Louisiana.

Mr. Guz has served as Senior Vice President of the Company and President of
Universal, a wholly owned subsidiary of the Company, since December 1986. From
1986 to 1994, Mr. Guz also served as a director of the Company. From 1981
through 1986, he served in various capacities for UGIDC. Mr. Guz holds a B.S. in
Business Management from St. Vincent College.

36
<PAGE> 37

Mr. Pope has served as President of Triad, a wholly owned subsidiary of the
Company since January 1996. From 1987 through January 1996, Mr. Pope served as
President of IPSCO. From 1980 through 1987, he served in various capacities for
IPSCO and Triad.

Mr. White has served as President of IPSCO since September 1994. From 1988
until September 1994, he was President of W. E. White, Inc., Petroleum
Consultants. Prior to 1988, Mr. White held a number of positions including
President of Belden and Blake Corporation, President of Resource Exploration,
Inc. and served as a private consultant to the oil field industry. Mr. White
holds a B.S. in Petroleum Engineering from Marietta College.

Mr. Berns was appointed to serve as a director on May 24, 1995, by a vote
of the remaining directors. Mr. Berns has been an employee of Remy Consultants
since 1994. From 1990 through 1994, Mr. Berns was employed by affiliated real
estate development and management companies, including Ridge Properties, Ltd.,
Ridge Development, Ltd. and Spound Company. Prior to 1990, Mr. Berns was a
senior manager of Spicer & Oppenheim and a Vice President of Cantor Fitzgerald
Financial Corporation. Mr. Berns is the majority stockholder of RD Management,
Inc., which is the general partner of Ridge Properties, Ltd. Mr. Berns is a
Certified Public Accountant and holds a Bachelors Degree in Business
Administration from San Diego State University and a Masters Degree in Taxation
from Golden Gate University.

Mr. Hunt has served as the President and Chief Executive Officer of Penn
Fuel Gas, Inc., a natural gas and propane distribution company since 1992. From
1989 to 1992, Mr. Hunt was the President and Chairman of Carnegie Natural Gas
Company, a gas distribution and transportation company, and of Apollo Gas
Company, a natural gas distributor. From 1984 through 1988, he served as Vice
President of Delhi Gas Pipeline Corporation, a gas distribution company. He has
served as a director of UTI since 1994.

Ms. Smith is President and Chief Executive Officer of Enidan Capital, an
investment company that makes equity investments in public and privately held
companies. Prior to co-founding Enidan Capital in 1997, Ms. Smith was an
investment banker and principal with NC Smith & Co. and The First Boston
Corporation and a management consultant with McKinsey & Co. Ms. Smith also is
President and Chief Executive Officer of Sirrom Resource Funding LP, which
finances environmental companies. Ms. Smith is a director of American Retirement
Corporation, Sirrom Partners, L.P. and Carson Resources, Inc. Ms. Smith earned a
Bachelors Degree in Economics from Smith College and a Masters Degree in
Business Administration from Yale University. She has served as a director since
1995.

Mr. Spears has served as the Chairman and Vice President, Business
Development of Spears & Associates, Inc. since 1989. Spears & Associates is a
leading research-based consulting firm to the oil and natural gas industry
worldwide. He has served as a director of UTI since 1994.

37
<PAGE> 38

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership and voting power of the Common Stock at September 30, 1997 (except as
otherwise noted) before and after the Offering and after giving effect to the
issuance of 618,748 shares of Common Stock in the JSM acquisition with respect
to (i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) the Selling Stockholders, (iii) each
named executive officer and director and (iv) all executive officers and
directors as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE OFFERING SHARES OWNED AFTER OFFERING
---------------------- TO BE ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
------------------------ ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Remy Capital Partners III, L.P...................... 5,383,650(1) 41.0% 1,772,888 3,610,762 22.4%
Remy Investors and Consultants, Incorporated........ 5,548,650(1) 41.8 1,772,888 3,775,762 23.2
Quarles Drilling Corporation........................ 733,779(2) 5.7 733,779 -- --
Shamrock Holdings of California, Inc................ 666,666(3) 5.1 533,333 133,333 *
Sam Viersen Family Foundation, Inc.................. 200,000(4) 1.5 200,000 -- --
Sam K. Viersen, Jr. Trust dated September 9, 1986... 400,000(4) 3.0 400,000 -- --
Canpartners Investments IV, L.L.C................... 1,200,000(5) 8.5 720,000 480,000 2.9
Neil E. Hanson...................................... 95,040(6) * 31,800 63,240 *
Chris N. Hanson..................................... 72,000(6) * 30,000 42,000 *
Kurt M. Hanson...................................... 14,400(6) * 14,400 -- --
Erik G. Hanson...................................... 28,800(6) * 28,800 -- --
Four Flags Holding Company.......................... 111,000(7) 1.2 60,000 51,000 *
Mark S. Siegel...................................... 5,848,650(1) 43.0 1,772,888 4,075,762 24.6
Vaughn E. Drum...................................... 438,360(8) 3.3 -- 438,360 2.7
Kenneth N. Berns.................................... 75,000(9) * -- 75,000 *
Terry H. Hunt....................................... 7,500(10) * -- 7,500 *
Nadine C. Smith..................................... 10,500(10) * -- 10,500 *
Robert B. Spears.................................... 8,400(10) * -- 8.400 *
P. Blake Dupuis..................................... 45,000(8) * -- 45,000 *
Gerald J. Guz....................................... 261,573(8) 2.0 -- 261,573 1.6
Terry L. Pope....................................... 130,788(8) 1.0 -- 130,788 *
Karl W. Benzer...................................... 3,000(8) * -- 3,000 *
(All Directors and Executive Officers as a group --
11 persons)....................................... 6,828,771(11) 48.2 1,772,888 5,055,883 29.4
</TABLE>

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

* Less than 1%.

(1) Remy's ownership includes 5,218,650 shares of Common Stock owned of record
by Remy and 165,000 shares of Common Stock underlying warrants held by
Remy. The Common Stock beneficially owned by Remy Consultants, which is the
General Partner of Remy, includes the 5,383,650 shares of Common Stock and
warrants owned by Remy as well as presently exercisable warrants to
purchase 165,000 shares of Common Stock held by Remy. The Common Stock
beneficially owned by Mr. Siegel, who is the President and sole stockholder
of Remy Consultants, includes the 5,548,650 shares of Common Stock and
warrants beneficially owned by Remy Consultants; as well as presently
exercisable options to purchase 300,000 shares of Common Stock held by Mr.
Siegel. The address of Remy, Remy Consultants and Mr. Siegel is 1801
Century Park East, Suite 1111, Los Angeles California 90067. Remy and Remy
Consultants have granted to the Underwriters a 30-day overallotment option
with respect to 192,675 and 165,000 shares of Common Stock, respectively.
If such options are exercised, Remy and Remy Consultants would beneficially
own 3,418,087 shares of Common Stock after the Offering, representing 20.9%
of the outstanding shares of Common Stock after the Offering.

(2) The address for Quarles Drilling Corporation is 6506 South Lewis, Suite
204, Tulsa, Oklahoma 74136.

(3) The address for Shamrock Holdings of California, Inc. is 4444 Lakeside
Drive, Burbank, California 91505.

38
<PAGE> 39

(4) Represents presently exercisable shares pursuant to the Stock Purchase
Warrant to Purchase Shares of Common Stock of UTI Energy Corp. held by such
entities at $5.00 per share. The addresses of the Sam Viersen Family
Foundation, Inc. and Sam K. Viersen, Jr. Trust dated September 9, 1986 is
c/o the Trust Company of Oklahoma, P.O. Box 3627, Tulsa, Oklahoma
74101-3627.

(5) Represents 1,200,000 shares of Common Stock underlying warrants to purchase
Common Stock at a price of $10.83 per share. Based solely upon a Schedule
13D dated April 11, 1997, Canpartners Investments IV, LLC is controlled by
Canpartners Incorporated ("Canpartners"), which is deemed to have sole
voting and dispositive power over the shares underlying such warrant.
Canpartners Investments IV, L.L.C. holds the warrants on behalf of funds
and managed accounts advised by Canyon Capital Management, L.P. ("CCM").
Canpartners and CCM are controlled by Joshua S. Friedman, Mitchell R. Julis
and R. Christian Evensen, whose Schedule 13D states, are deemed as a group
to have sole voting and dispositive power of the shares underlying such
warrant.

(6) Represents presently exercisable options to purchase shares at $16.00 per
share pursuant to outstanding warrants.

(7) The address for Four Flags Holding Company ("Four Flags") is 200 Webster
Building, 3411 Silverside Road, Wilmington, Delaware 19810.

(8) Includes shares underlying presently exercisable stock options held by the
following individuals in the following amounts: Mr. Drum, 291,960 shares;
Mr. Guz, 115,173 shares; Mr. Pope, 42,588 shares; Mr. Benzer, 3,000 shares;
and Mr. Dupuis, 45,000 shares. Does not include shares underlying stock
options held by the following individuals which options are not presently
exercisable and will not become exercisable within 60 days in the following
amounts: Mr. Drum, 30,000 option shares; Mr. Guz, 128,787 shares; Mr. Pope,
58,392 shares; Mr. Benzer 12,000 shares; and Mr. Dupuis 180,000 shares. Mr.
Drum has granted to the Underwriter a 30-day overallotment option with
respect to 112,500 shares of Common Stock held by him. If this option is
exercised, Mr. Drum would beneficially own 325,860 shares of Common Stock
or 1.9% of the outstanding shares of Common Stock after the Offering.

(9) Represents presently exercisable warrants and options to purchase 75,000
shares. Does not include shares of Common Stock or warrants beneficially
owned by Remy Consultants, by whom Mr. Berns is employed. Mr. Berns
disclaims beneficial ownership of such shares and warrants. Mr. Berns has
granted to the Underwriters a 30-day overallotment option with respect to
30,000 shares underlying options of Common Stock held by him. If this
option is exercised, Mr. Berns would beneficially own 45,000 shares of
Common Stock after the Offering.

(10) Includes presently exercisable options to purchase 7,500 shares owned by
each of Mr. Hunt, Ms. Smith and Mr. Spears. Does not include options to
purchase 3,750 shares owned by such individuals, which are not exercisable
within 60 days.

(11) Includes presently exercisable warrants and options to purchase 1,225,221
shares.

Except as stated herein, there are no arrangements known to the Company
that may result in a change in control of the Company and each stockholder has
sole voting and investment power with respect to the securities included in the
above table.

The Company will pay the expenses of registering the shares of Common Stock
to be offered by the Selling Stockholders under the Securities Act, including
the registration and filing fees, printing expenses and the fees and
disbursements of counsel and accountants for the Company.

Included in the shares offered by the Selling Stockholders are 1,772,888
shares of Common Stock underlying warrants or shares held by Remy, an investment
fund in which Remy Consultants is the general partner. Remy, Remy Consultants,
Ken Berns and Vaughn Drum have also granted to the several Underwriters 30-day
over-allotment options to purchase up to 192,675, 165,000, 30,000 and 112,500
shares of Common Stock, respectively. The options from Remy Consultants and Ken
Berns will be effected through an option to purchase their warrants covering
their shares at the public offering price, less the underwriting discounts and
commissions and the warrant exercise price. The options from Remy and Mr. Drum
will be to purchase shares of Common Stock at the public offering price, less
underwriting discounts and commissions.

39
<PAGE> 40

Mark Siegel, Chairman of the Board of the Company, is the President and sole
stockholder of Remy Consultants. Ken Berns is a director of the Company and an
employee of Remy Consultants. Vaughn Drum is a director and the President of the
Company. The shares subject to the option granted by Remy, Remy Consultants and
Mr. Berns were received by them in connection with prior services provided by
Remy Consultants for the Company.

Included in the shares offered by the Selling Stockholders are 30,000,
shares of Common Stock underlying warrants held by Chris Hanson, an employee of
the Company, that were received by him in connection with the Company's
acquisition of the contract drilling assets of Southland.

40
<PAGE> 41

DESCRIPTION OF CAPITAL STOCK

The Company's Restated Certificate of Incorporation (as amended,
"Certificate of Incorporation") authorizes the issuance of up to 50,000,000
shares of Common Stock, par value $.001 per share and 5,000,000 shares of
preferred stock, $.01 par value ("Preferred Stock"). The summary description of
the Company's securities below is qualified in its entirety by the provisions of
the Company's Certificate of Incorporation.

COMMON STOCK

As of September 30, 1997, the Company had outstanding 12,956,515 shares of
Common Stock and had 3,848,850 shares reserved for issuance for outstanding
options and warrants. Each holder of Common Stock is entitled to one vote per
share on all matters submitted to a vote of stockholders. Subject to the rights
of the holders of Preferred Stock, the holders of shares of Common Stock are
entitled to receive dividends when, as and if declared by the Board of
Directors, out of funds legally available therefor, and in the event of the
liquidation, dissolution or winding up of the Company to share ratably in all
assets remaining after the payment of liabilities. There are no preemptive or
other subscription rights, conversion rights or redemption or sinking fund
provisions with respect to shares of Common Stock. All the shares of Common
Stock outstanding upon consummation of the Offering will be fully paid and
nonassessable.

PREFERRED STOCK

The Board of Directors of the Company is empowered, without approval of the
stockholders, to authorize the issuance of up to 5,000,000 shares of Preferred
Stock, in one or more series, to establish the number of shares to be included
in each such series, and to fix the rights, powers, preferences and limitations
of each series. As a result, the Board of Directors has the power to afford the
holders of any series of Preferred Stock preferences, powers and rights, voting
or otherwise, senior to or greater than the rights of holders of Common Stock.
The ability of the Board of Directors to establish such rights, powers and
preferences to issue the Preferred Stock could be used as an anti-takeover
devise without further action on the part of the holders of Common Stock. The
Company currently has no plans to issue any Preferred Stock.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION

The Company's Certificate of Incorporation includes certain provisions
which may render more difficult or tend to discourage attempts to acquire the
Company. Under such provisions, the Company's Board of Directors is divided into
three classes serving staggered three year terms. These provisions also preclude
the removal of a director, except for cause. These provisions cannot be amended
without the approval of holders of at least 66 2/3% of the Company's outstanding
capital stock entitled to vote thereon.

Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by the Company of stock or any transaction
from which the director derived an improper personal benefit. The Company's
Certificate of Incorporation provides that the Company's directors are not
liable to the Company or its stockholders for monetary damages for breach of
their fiduciary duty, subject to the above described exceptions specified by
Delaware law.

As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) following the transaction
in which such person became an interested stockholder, the business

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<PAGE> 42

combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of two-thirds of the outstanding voting stock of the corporation not owned by
the interested stockholder. Prior to Remy's acquisition of 5,218,650 shares of
the Company's Common Stock in March 1995, the Board of Directors approved such
acquisition, thus, exempting Remy from the operation of Section 203.

Under Section 203, the restrictions described above also do not apply to
certain business combinations proposed by an interested stockholder following
the announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors, if
such extraordinary transaction is approved or not opposed by a majority of the
directors who were directors prior to any person becoming an interested
stockholder during the previous three years or were recommended for election or
elected to succeed such directors by a majority of such directors.

WARRANTS

The Company currently has outstanding warrants to purchase an aggregate of
2,460,000 shares of Common Stock, including warrants (the "Remy Warrants") to
purchase 360,000 shares of Common Stock at $1.90 per share owned by Remy and
affiliates of Remy. The outstanding warrants have an average exercise price of
$8.73 per share and expiration dates ranging from August 14, 1998 to April 11,
2004. Following this Offering, and assuming the overallotment options are not
exercised, the Company will have outstanding warrants, including the Remy
Warrants, to purchase an aggregate of 870,000 shares of Common Stock at an
average exercise price of $9.99 per share. All outstanding warrants contain
customary anti-dilution provisions.

REGISTRATION RIGHTS

The Company currently has outstanding registration rights covering an
aggregate of 9,227,843 shares of Common Stock (5,067,843 shares following this
Offering), including 1,888,000 shares of Common Stock underlying warrants to
purchase Common Stock (663,000 shares following this Offering).

Remy has registration rights covering 5,209,650 shares of Common Stock
(3,601,762 shares following this Offering) that require the Company on up to
three separate occasions to register all or a portion of such shares at the
request of Remy. The Company also is obligated to offer to Remy the right to
include such shares of Common Stock in certain registration statements filed by
the Company subject to certain limitations on timing, the size of the
contemplated offering and the number of shares owned by Remy at such time.

Quarles, Shamrock, Four Flags and the prior shareholders of JSM each have
registration rights covering 733,779, 666,666, 111,000 and 618,748 shares of
Common Stock, respectively (zero, 133,333, 51,000 and 618,748 shares,
respectively, following this Offering) and Canpartners Investments IV, L.L.C.
("Canpartners"), the Sam Viersen Jr. Trust dated September 9, 1986 (the "Viersen
Trust") and the prior Southland partners (the "Southland Parties") each have
registration rights covering 1,200,000, 400,000 and 288,000 shares underlying
warrants to purchase shares of Common Stock (480,000, zero and 183,000 shares
following this Offering). The Company is required to register the shares owned
or underlying warrants owned by each of Canpartners, the Viersen Trust,
Southland Parties and Four Flags at such parties request, subject to certain
limitations relating to timing and size of such offerings. The Company also has
the ability to delay such registrations under certain circumstances. In
addition, such parties, including Shamrock, Quarles, the prior shareholders of
JSM and Four Flags, are entitled to include the shares owned by or underlying
warrants owned by them in certain registration statements filed by the Company,
subject to certain limitations on timing and the size of the contemplated
offering. The registration rights of the prior shareholders of JSM may only be
exercised after December 10, 1997.

The Company is obligated to pay all expenses incidental to any registration
of Common Stock pursuant to the above described registration rights, excluding
fees of counsel to the selling stockholders, underwriters' discounts and
commissions and transfer taxes.

TRANSFER AGENT

The registrar and transfer agent for the Common Stock is Chase Mellon
Shareholder Services, New York, New York.

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<PAGE> 43

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering and giving effect to the issuance of the
618,748 shares issued or issuable in the JSM acquisition, the Company will have
16,121,515 shares of Common Stock outstanding (16,731,340 shares if the
Underwriters' over-allotment options are exercised in full), of which 10,835,975
shares (11,453,975 shares if the Underwriters' over-allotment options are
exercised in full) will be freely tradeable without substantial restriction or
the requirement of future registration under the Securities Act. Of the
remaining 5,285,540 shares, 3,995,662 shares will be held by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act ("Rule
144"), and may be sold subject to the provisions of Rule 144. Of these 3,995,662
shares, 3,601,762 shares will be held by Remy and be subject to registration
rights. In addition, other securityholders will hold registration rights
covering 1,466,081 shares of Common Stock, including 663,000 shares underlying
warrants. See "Description of Common Stock -- Registration Rights". The Company
has reserved an aggregate of 2,379,000 shares of Common Stock for issuance of
options granted or that may be granted under the Company's stock option plans
(collectively, the "Benefit Plans"), and has filed registration statements on
Form S-8 to register the issuance of such shares under the Benefit Plans, thus
permitting the sale of such shares by non-affiliates of the Company in the
public market without restrictions under the Securities Act.

The Company, the executive officers and directors of the Company and the
Selling Stockholders have agreed that they will not, for a period of 90 days
from the date of this Prospectus, directly or indirectly, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer of sale, pledge, contract of
sale, grant of any option to purchase or other sale or disposition) of any
shares of Common Stock or other capital stock of the Company or any securities
convertible into, or exercisable or exchangeable for, any shares of Common Stock
or other capital stock of the Company without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, except that
such agreement does not prevent the Company from granting additional options
under any of the Benefit Plans or additional shares or rights to acquire shares
in connection with acquisitions of businesses or assets or other business
combinations, provided that the Company will not grant any demand registration
rights covering any shares of Common Stock issued in connection with any such
acquisitions or other business combinations that are exercisable prior to 90
days following the date of this Prospectus. Upon the expiration of the lockup
agreements, 8,398,773 shares (which include 2,379,900 shares reserved for
issuance of options granted or that may be granted pursuant to the Benefit Plans
and warrants to purchase 870,000 shares) held by such executive officers,
directors and Selling Stockholders will become eligible for sale in the public
market, subject to the applicable volume and manner-of-sale limitations of Rule
144 and vesting requirements with respect to options or the filing of a
registration statement pursuant to demand registration rights. Prudential
Securities Incorporated may, in its sole discretion, at any time and without
notice, release all or any portion of the shares of Common Stock subject to such
agreements.

Under Rule 144, the volume limitations permit the sale of a number of
shares during any three month period by each seller (aggregated into sales of
certain related persons) that does not exceed the greater of (a) 1% of the then
outstanding shares of Common Stock (approximately 161,000 shares immediately
after this Offering, assuming no exercise of the over-allotment options) or (b)
the average weekly trading volume of the Common Stock on the AMEX during the
four calendar weeks preceding the sale, subject to the filing of a Form 144 with
respect to such sale and certain other limitations and restrictions.

Sales of substantial amounts of Common Stock in the public market could
adversely affect the prevailing market price and could impair the Company's
future ability to raise capital through an offering of its equity securities.

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<PAGE> 44

UNDERWRITING

The Underwriters named below (the "Underwriters") for whom Prudential
Securities Incorporated, Lehman Brothers Inc., Rauscher Pierce Refsnes, Inc. and
Simmons & Company International are acting as representatives (collectively, the
"Representatives") have severally agreed, subject to the terms and conditions
contained in the Underwriting Agreement, to purchase from the Company and the
Selling Stockholders the number of shares of Common Stock set forth below
opposite their respective names.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Prudential Securities Incorporated.......................... 804,250
Lehman Brothers Inc......................................... 804,250
Rauscher Pierce Refsnes, Inc................................ 804,250
Simmons & Company International............................. 804,250
Bear, Stearns & Co. Inc..................................... 124,000
BT Alex Brown Incorporated.................................. 124,000
Credit Suisse First Boston Corporation...................... 124,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 124,000
Goldman, Sachs & Co......................................... 124,000
Howard, Weil, Labouisse, Friedrichs Incorporated............ 124,000
Jefferies & Company, Inc.................................... 124,000
Lazard Freres & Co. LLC..................................... 124,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 124,000
J P Morgan Securities Inc................................... 124,000
Morgan Stanley & Co. Incorporated........................... 124,000
Oppenheimer & Co., Inc...................................... 124,000
PaineWebber Incorporated.................................... 124,000
Salomon Brothers Inc........................................ 124,000
SBC Warburg Dillon Read Inc................................. 124,000
Schroder & Co. Inc.......................................... 124,000
Smith Barney Inc............................................ 124,000
Advest, Inc................................................. 62,000
Crowell, Weedon & Co........................................ 62,000
Janney Montgomery Scott Inc................................. 62,000
McDonald & Company Securities, Inc.......................... 62,000
Morgan Keegan & Company, Inc................................ 62,000
Petrie Parkman & Co......................................... 62,000
Principal Financial Securities, Inc......................... 62,000
Sutro & Co. Incorporated.................................... 62,000
Tucker Anthony Incorporated................................. 62,000
George K. Baum & Company.................................... 31,000
Brean Murray & Co., Inc..................................... 31,000
First Southwest Company..................................... 31,000
Hoak Breedlove Wesneski & Co................................ 31,000
Johnson Rice & Company L.L.C................................ 31,000
Pennsylvania Merchant Group Ltd............................. 31,000
Southcoast Capital Corporation.............................. 31,000
---------
Total............................................. 6,100,000
=========
</TABLE>

The Company and the Selling Stockholders are obligated to sell, and the
Underwriters are obligated to purchase, all the shares of Common Stock offered
hereby if any are purchased.

The Underwriters, through their Representatives, have advised the Company
and the Selling Stockholders that they propose to offer the Common Stock
initially at the public offering price set forth on the cover

44
<PAGE> 45

page of this Prospectus; that the Underwriters may allow to selected dealers a
concession of $1.05 per share; and that such dealers may reallow a concession of
$0.10 per share to certain other dealers. After the public offering, the public
offering price and the concessions may be changed by the Representative.

The Company and certain Selling Stockholders have granted the Underwriters
over-allotment options, exercisable for 30 days from the date of this
Prospectus, to purchase up to 915,000 additional shares of Common Stock,
including warrants to purchase shares of Common Stock, at the public offering
price, less underwriting discounts and commissions and the exercise price of any
warrants, as set forth on the cover page of this Prospectus. See "Principal and
Selling Stockholders". The Underwriters may exercise such options solely for the
purpose of covering over-allotments incurred in the sale of the shares of Common
Stock offered hereby. To the extent such options to purchase are exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number set
forth next to such underwriter's name in the preceding table bears to 6,100,000.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters or contribute to losses arising out of certain liabilities,
including liabilities under the Securities Act.

The Company, its executive officers and directors and the Selling
Stockholders have agreed that they will not, directly or indirectly, offer,
sell, contract to sell, grant any option to sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or securities convertible
into or exchangeable for, or any rights to purchase or acquire, Common Stock),
for a period of 90 days after the date of this Prospectus, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, except that such agreement does not prevent the Company from
granting additional options under any of the Benefit Plans or issuing additional
shares or rights to acquire shares in connection with acquisitions of businesses
or assets or other business combinations, provided that the Company will not
grant any demand registration rights covering any shares issued in connection
with any such acquisition or other business combination that are exercisable
prior to 90 days following the date of this Prospectus. Prudential Securities
Incorporated may, in its sole discretion, at any time and without prior notice,
release all or any portion of the shares of Common Stock subject to such
agreements.

In connection with this Offering, certain Underwriters and selling group
members (if any) and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company and the Selling Stockholders,
and in such case may purchase Common Stock in the open market following
completion of the Offering to cover all or a portion of such short position. The
Underwriters may also cover all or a portion of such short position, up to
915,000 shares of Common Stock, by exercising the Underwriters' over-allotment
options referred to above. In addition, Prudential Securities Incorporated, on
behalf of the Underwriters, may impose "penalty bids" under contractual
arrangements with the Underwriters whereby it may reclaim from an Underwriter
(or any selling group member participating in the Offering) for the account of
the other Underwriters, the selling concession with respect to Common Stock that
is distributed in this Offering but subsequently purchased for the account of
the Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph are required and, if they are
undertaken, they may be discontinued at any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Fulbright & Jaworski
L.L.P., Houston, Texas. Certain legal matters will be passed upon for the
Underwriters by Baker & Botts, L.L.P., Houston, Texas.

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<PAGE> 46

EXPERTS

The consolidated financial statements of UTI Energy Corp. at December 31,
1996 and 1995, and for each of the three years in the period ended December 31,
1996, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

The financial statements of Viersen & Cochran Drilling Company for the
years ended December 31, 1995 and 1994 and the statements of operations and cash
flows for the year ended December 31, 1993, appearing in UTI Energy Corp.'s
Current Report on Form 8-K dated August 28, 1996, as amended by the Form 8-K/A
dated October 28, 1996, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

The statement of net assets acquired as of December 31, 1996 and the
historical statement of gross contract drilling revenues, direct operating
expenses and depreciation of the drilling operations of Quarles Drilling
Corporation for the year ended December 31, 1996, incorporated by reference into
this Prospectus, have been incorporated herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.

The statement of net assets acquired as of April 11, 1997 and the
historical statement of revenues and direct and indirect operating expenses
(excluding depreciation) for the years ended December 31, 1996 and 1995 of
Southland Drilling Company, Ltd. appearing in UTI Energy Corp.'s Current Report
on Form 8-K dated April 11, 1997, as amended by the Form 8-K/A dated June 27,
1997 for the years ended December 31, 1996 and 1995, have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed by the Company with the
Commission can be inspected at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Regional Offices of the Commission at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621-2511, and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material also can be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains an Internet Website that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission (http://www.sec.gov). Such reports, proxy and
information statements and other information concerning the Company also can be
inspected and copied at the offices of the AMEX, 86 Trinity Place, New York, New
York 10005, on which the Common Stock is listed.

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act, with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
which may be inspected without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Regional Offices of the Commission, and copies of which may be

46
<PAGE> 47

obtained from the Commission at prescribed rates. Statements made in this
Prospectus concerning the contents of any document referred to herein are not
necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are incorporated herein by reference:

(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996;

(b) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997;

(c) The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, as amended by Amendment No. 1 thereto dated September 15, 1997;

(d) The Company's Current Report on Form 8-K dated August 28, 1996, as
amended by Amendment No. 1 thereto dated October 28, 1996;

(e) The Company's Current Report on Form 8-K dated January 27, 1997, as
amended by Amendment No. 1 thereto dated April 14, 1997;

(f) The Company's Current Report on Form 8-K dated April 11, 1997, as
amended by Amendment No. 1 thereto dated June 27, 1997; and

(g) The Company's Current Report on Form 8-K dated September 15, 1997.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock pursuant hereto
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of the filing of such documents. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
herein, other than the exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to the
Company at 16800 Greenspoint Park, Suite 225N, Houston, Texas 77060, Attention:
Corporate Secretary (Telephone number: (281) 873-4111).

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<PAGE> 48

UTI ENERGY CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<S> <C>
Report of Independent Auditors.............................. F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and
1996................................................... F-3
Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996....................... F-4
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1994, 1995, and
1996................................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996....................... F-6
Notes to Consolidated Financial Statements................ F-7
Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheet as of December 31,
1996 and June 30, 1997................................. F-17
Condensed Consolidated Statements of Income for the three
months and six months ended June 30, 1996 and June 30,
1997................................................... F-18
Condensed Consolidated Statements of Changes in
Shareholders' Equity for the six months ended June 30,
1997................................................... F-19
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1997................ F-20
Notes to Condensed Consolidated Financial Statements...... F-21
</TABLE>

F-1
<PAGE> 49

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
UTI Energy Corp.

We have audited the accompanying consolidated balance sheets of UTI Energy
Corp. as of December 31, 1995 and 1996, and the related consolidated statements
of income, changes in shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
UTI Energy Corp. at December 31, 1995 and 1996, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

/S/ ERNST & YOUNG LLP

Philadelphia, Pennsylvania
February 28, 1997, except for Note 13,
as to which the date is September 5, 1997

F-2
<PAGE> 50

UTI ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash...................................................... $ 2,273 $ 570
Accounts receivable, net of allowance for doubtful
accounts of $193 in 1995 and $305 in 1996.............. 9,370 17,831
Other receivables......................................... 669 598
Materials and supplies.................................... 803 874
Prepaid expenses.......................................... 2,261 1,749
------- -------
15,376 21,622
Property and Equipment:
Land...................................................... 775 749
Buildings and improvements................................ 1,792 1,760
Machinery and equipment................................... 33,504 58,421
Oil and gas working interests............................. 1,690 1,732
Construction in process................................... 292 338
------- -------
38,053 63,000
Less accumulated depreciation and amortization............ 20,269 23,149
------- -------
17,784 39,851
Deferred Income Taxes....................................... 551 --
Other Assets................................................ 279 397
------- -------
$33,990 $61,870
======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 2,542 $ 4,507
Accounts payable.......................................... 4,244 7,945
Accrued payroll costs..................................... 1,399 2,445
Other accrued expenses.................................... 1,764 964
------- -------
9,949 15,861
Long-Term Debt, less current portion........................ 8,701 14,658
Deferred Income Taxes....................................... -- 8,305
Other Liabilities........................................... 350 350
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares
authorized on August 28, 1997, none issued or
outstanding in 1995 and 1996........................... -- --
Common stock, $.001 par value, 50,000,000 (10,000,000
prior to August 28, 1997) shares authorized, 10,398,666
shares issued and outstanding in 1995, 10,807,008
shares issued and outstanding in 1996.................. 10 11
Additional capital........................................ 15,088 17,870
Retained earnings......................................... 63 4,916
Restricted stock plan unearned compensation............... (171) (101)
------- -------
14,990 22,696
------- -------
$33,990 $61,870
======= =======
</TABLE>

See accompanying notes.

F-3
<PAGE> 51

UTI ENERGY CORP.

CONSOLIDATED STATEMENTS OF INCOME

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1994 1995 1996
----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND
SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues:
Oilfield service...................................... $ 35,831 $ 39,844 $ 96,628
Other................................................. 444 280 673
----------- ---------- ----------
36,275 40,124 97,301
Costs and Expenses:
Cost of sales
Oilfield service................................... 27,710 32,507 77,891
Other.............................................. 147 178 366
Selling, general and administrative................... 4,958 5,082 7,768
Depreciation and amortization......................... 2,302 2,552 4,292
----------- ---------- ----------
35,117 40,319 90,317
----------- ---------- ----------
Operating Income (Loss)................................. 1,158 (195) 6,984
Other Income (Expense)
Interest expense...................................... (260) (265) (1,148)
Other, net............................................ 461 293 1,341
----------- ---------- ----------
201 28 193
----------- ---------- ----------
Income (Loss) from Continuing Operations Before Income
Taxes................................................. 1,359 (167) 7,177
Income Taxes............................................ 293 (592) 2,324
----------- ---------- ----------
Income from Continuing Operations....................... 1,066 425 4,853
Income from Discontinued Operations..................... 26 38 --
Loss on Disposal of Discontinued Operations............. -- (361) --
----------- ---------- ----------
Net Income.............................................. $ 1,092 $ 102 $ 4,853
=========== ========== ==========
Primary Earnings Per Common Share:
Continuing operations................................. $ 0.11 $ 0.04 $ 0.42
Discontinued operations............................... -- -- --
Loss on disposal of discontinued operations........... -- (0.03) --
----------- ---------- ----------
$ 0.11 $ 0.01 $ 0.42
=========== ========== ==========
Fully Diluted Earnings Per Common Share:
Continuing operations................................. $ 0.11 $ 0.04 $ 0.42
Discontinued operations............................... -- -- --
Loss on disposal of discontinued operations........... -- (0.03) --
----------- ---------- ----------
$ 0.11 $ 0.01 $ 0.42
=========== ========== ==========
Average Common Shares Outstanding:
Primary............................................... 9,732,000 9,898,668 11,439,186
Fully Diluted......................................... 9,732,000 9,898,668 11,559,492
</TABLE>

See accompanying notes.

F-4
<PAGE> 52

UTI ENERGY CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
COMMON STOCK RESTRICTED
---------------------- RETAINED STOCK PLAN
NUMBER ADDITIONAL EARNINGS UNEARNED
OF SHARES PAR $.001 CAPITAL (DEFICIT) COMPENSATION TOTAL
---------- --------- ---------- --------- ------------ -------
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993...... 9,732,000 $10 $14,109 $(1,131) $(400) $12,588
Net income...................... -- -- 1,092 -- 1,092
Vesting of restricted stock
plan......................... -- (15) -- 80 65
---------- --- ------- ------- ----- -------
Balance at December 31, 1994...... 9,732,000 10 14,094 (39) (320) 13,745
Net income...................... -- -- 102 -- 102
Issuance of common stock........ 666,666 -- 994 -- -- 994
Vesting of restricted stock
plan......................... -- -- -- 149 149
---------- --- ------- ------- ----- -------
Balance at December 31, 1995...... 10,398,666 10 15,088 63 (171) 14,990
Net income...................... -- -- 4,853 -- 4,853
Warrants issued................. -- 710 -- -- 710
Exercise of options............. 408,342 1 1,838 -- -- 1,839
Vesting of restricted stock
plan......................... -- 234 -- 70 304
---------- --- ------- ------- ----- -------
Balance at December 31, 1996...... 10,807,008 $11 $17,870 $ 4,916 $(101) $22,696
========== === ======= ======= ===== =======
</TABLE>

See accompanying notes.

F-5
<PAGE> 53

UTI ENERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1994 1995 1996
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows From Operating Activities
Income from continuing operations......................... $ 1,066 $ 425 $ 4,853
Adjustments to reconcile income from continuing operations
to net cash provided by continuing operations:
Depreciation and amortization........................ 2,302 2,552 4,292
Deferred income taxes................................ (187) (650) 799
Amortization of debt discount........................ -- -- 68
Stock compensation expense........................... 65 149 304
Provision (recovery) for bad debts................... 70 (10) 112
Gain on disposal of fixed assets..................... (142) (63) (517)
Change in operating assets and liabilities, net of
effect of business acquired:
Accounts receivable and prepaids.................. 956 (2,316) (7,990)
Materials and supplies............................ (82) 35 (71)
Accounts payable, accrued expenses and accrued
payroll costs................................... (824) 564 4,647
Other............................................. (38) (86) (174)
------- -------- -------
Net cash provided by continuing operations................ 3,186 600 6,323
Net cash provided (used) by discontinued operations....... 1,991 (1,108) --
------- -------- -------
Net cash provided (used) by operating
activities...................................... 5,177 (508) 6,323
Cash Flows from Investing Activities
Capital expenditures...................................... (1,343) (1,910) (4,311)
Acquisitions of businesses................................ -- (12,946) (6,000)
Proceeds from sale of discontinued operations............. -- 4,870 --
Proceeds from sale of property and equipment.............. 350 304 1,113
------- -------- -------
Net cash used by investing activities............. (993) (9,682) (9,198)
Cash Flows From Financing Activities
Proceeds from issuance of long-term debt.................. 264 9,264 2,600
Repayments of long-term debt.............................. (892) (1,580) (2,467)
Proceeds from issuance of common stock.................... -- 994 1,039
------- -------- -------
Net cash provided (used) by financing
activities...................................... (628) 8,678 1,172
------- -------- -------
Net Increase (Decrease) in Cash............................. 3,556 (1,512) (1,703)
Cash at Beginning of Year................................... 229 3,785 2,273
------- -------- -------
Cash at End of Year......................................... $ 3,785 $ 2,273 $ 570
======= ======== =======
</TABLE>

See accompanying notes.

F-6
<PAGE> 54

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

UTI Energy Corp. (the "Company") is engaged in the businesses of contract
drilling, providing oil and gas well stimulation, and cementing and completion
services. The primary market for the Company's services is the domestic onshore
oil and gas industry, and the customers consist primarily of major oil
companies, and independent oil and gas producers.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. Intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Inventories

Materials and supplies are stated at the lower of cost (first-in, first-out
method) or market.

Property and Equipment

Property and equipment are stated on the basis of cost. Improvements are
capitalized and depreciated over the period of benefit. Amortization of assets
acquired under capital leases is included in depreciation expense. The provision
for depreciation was determined by the straight-line method over the estimated
useful lives of the related assets which are as follows: buildings -- 30 years,
building improvements -- 7-10 years, machinery and equipment -- 2-15 years.

Working Interests in Oil and Gas Wells

The Company accounts for its oil and gas operations under the successful
efforts method of accounting.

The Company recognizes oil and gas revenue from its working interests based
upon the sales method. Working interests in wells are included in property and
equipment and are stated at cost less accumulated amortization. Amortization is
based on the units of production method utilizing estimated reserves and sales
of oil and gas from the wells.

Revenue Recognition

Revenues are recognized when services have been performed. Revenues from
footage and turnkey drilling contracts are recognized using the percentage of
completion method of accounting. Losses, if any, are provided for in the period
in which the loss is determined.

Earnings Per Share

Earnings per common share is calculated by dividing net income by the
aggregate of the weighted average shares outstanding during the period and the
dilutive effect, if any, of common stock equivalents that are outstanding.

F-7
<PAGE> 55

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

Stock-Based Compensation

The Company follows the method of accounting for employee stock
compensation plans prescribed by APB No. 25, which is permitted by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
("SFAS No. 123"). In accordance with APB No. 25, the Company has not recognized
compensation expense for stock options because in each case the exercise price
of the options equals the market price of the underlying stock on the date of
grant, which is the measurement date.

Changes in Accounting Principles

Effective January 1, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This statement
requires companies to write down to estimated fair value long-lived assets that
are impaired. This change did not have a significant effect on the Company's
financial statements.

Reclassifications

Certain items in the prior years' financial statements have been
reclassified to conform with the presentation in the current year.

2. ACQUISITIONS

Effective November 1, 1995, the Company purchased all of the capital stock
of FWA Drilling Company, Inc. ("FWA") for $14,000,000 in cash. FWA is engaged in
contract drilling in Texas. The acquisition was accounted for using the purchase
method, and FWA's operating results since November 1, 1995, have been
consolidated with the operating results of the Company. The estimated fair
market value of the assets acquired exceeded the purchase price by $4.9 million,
which reduced long-term assets acquired.

On August 14, 1996, the Company purchased all of the capital stock of the
Viersen & Cochran Drilling Company ("Viersen"). Viersen was engaged in contract
drilling in Oklahoma but had suspended its operations prior to the closing date.
The consideration paid for Viersen consisted of (i) $6,000,000 in cash paid on
August 14, 1996; (ii) a two-year $8,000,000 promissory note executed by the
Company in favor of the Seller; and (iii) stock warrants with a two-year term to
purchase 600,000 shares of the Company's common stock, $.001 par value, at $5
per share. The acquisition was accounted for using the purchase method, and
Viersen's operating results since August 14, 1996, have been consolidated with
the operating results of the Company.

The following pro forma operating results reflect the inclusion of FWA for
1994 and 1995, and the inclusion of Viersen for 1995 and 1996:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue................................................. $72,715 $77,405 $99,027
======= ======= =======
Income from continuing operations....................... $ 2,343 $ 151 $ 3,935
======= ======= =======
Earnings per share from continuing operations........... $ .24 $ .02 $ .34
======= ======= =======
</TABLE>

F-8
<PAGE> 56

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

3. DISCONTINUED OPERATIONS

On September 29, 1995, the Company sold its oilfield supply business for
cash of $4,870,000. The net results of the oilfield supply business for all
periods presented are reported separately in the Consolidated Statement of
Income as "Income from discontinued operations." Prior period financial
statements have been restated to report the oilfield supply business as a
discontinued operation.

The following is a summary of the results of operations of the Company's
oilfield supply business:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revenue..................................................... $18,617 $13,407
======= =======
Income from operations (net of income taxes of $13, and
$14)...................................................... $ 26 $ 38
Loss on disposal (net of income tax benefit of $129)........ -- (361)
------- -------
Income (loss) from discontinued operations.................. $ 26 $ (323)
======= =======
</TABLE>

4. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31, 1995 and
1996, are as follows:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Alternative minimum tax credits........................... $ 1,056 $ 675
Investment tax credits.................................... 531 232
Fuel tax credit........................................... 73 --
Accrued liabilities....................................... 646 780
Valuation allowance....................................... (636) (232)
------- -------
Total deferred tax asset.......................... 1,670 1,455
Deferred tax liabilities:
Depreciation.............................................. (1,119) (9,760)
------- -------
Net deferred tax asset (liability).......................... $ 551 $(8,305)
======= =======
</TABLE>

SFAS No. 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some or all of the deferred tax
assets will not be realized. During 1995 and 1996, the Company decreased its
valuation allowance since management believes that it is more likely than not
that the deferred tax asset will be realized primarily from future taxable
income over the next several years. Management assesses the realizability of the
Company's deferred tax asset on a continuous basis and adjusts the valuation
allowance in the event that circumstances affecting the realization of the
deferred tax asset change.

At December 31, 1996, the Company has available approximately $232,000 of
investment tax credit carryforwards for which a valuation allowance has been
provided in as much as it is the Company's opinion that these credits will not
be available to reduce future tax payments. The credits expire between 1998 and
2001. The Company utilizes the flow-through method for recognizing investment
tax credits.

F-9
<PAGE> 57

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

The components of the provision for income taxes from continuing operations
are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1995 1996
----- ----- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes:
Current:
Federal................................................. $ 442 $ 57 $1,372
State................................................... 38 1 153
----- ----- ------
480 58 1,525
Deferred:
Federal................................................. (95) (622) 740
State................................................... (92) (28) 59
----- ----- ------
(187) (650) 799
----- ----- ------
$ 293 $(592) $2,324
===== ===== ======
</TABLE>

The difference between tax expense on continuing operations computed at the
federal income tax rate of 34% and actual tax expense is as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1995 1996
----- ----- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Taxes at 34% applied to pre-tax income (loss)............. $ 462 $ (57) $2,440
State income tax.......................................... (36) (17) 141
Permanent differences, principally nondeductible
expenses................................................ 125 81 123
Change in valuation allowance and realization of tax
credit carryforwards.................................... (217) (577) (404)
Other..................................................... (41) (22) 24
----- ----- ------
$ 293 $(592) $2,324
===== ===== ======
</TABLE>

5. WARRANTS

As part of the consideration for redemption of its Series A Preferred Stock
in December 1993, the Company issued warrants to purchase up to 486,000 shares
of Common Stock at an exercise price of $2.67 per share. The warrants are
exercisable in whole or in part for the three years beginning December 14, 1995.

As part of the consideration paid to acquire Viersen & Cochran Drilling
Company, the Company issued warrants to purchase up to 600,000 shares of Common
Stock at an exercise price of $5 per share. The warrants are exercisable in
whole or part for two years beginning August 14, 1996.

F-10
<PAGE> 58

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

6. LEASES

Future minimum payments, for each year and in the aggregate, under capital
leases and noncancelable operating leases with initial or remaining terms of one
year or more consist of the following at December 31, 1996:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
(IN THOUSANDS)
<S> <C> <C>
1997........................................................ $225 $297
1998........................................................ 54 236
1999........................................................ 2 116
2000........................................................ -- 90
2001 and thereafter......................................... -- 83
---- ----
Total minimum lease payments................................ 281 $822
====
Amounts representing interest............................... 22
----
Present value of net minimum lease payments................. $259
====
</TABLE>

Rental expense for all operating leases was approximately $221,000,
$181,000 and $448,000 for the years ended December 31, 1994, 1995 and 1996,
respectively.

7. SUPPLEMENTAL CASH FLOW INFORMATION

On August 14, 1996, the Company purchased all of the capital stock of
Viersen & Cochran Drilling Company. In connection with the acquisition, the
Company incurred deferred tax liabilities, assumed certain other liabilities and
issued debt and Common Stock warrants to the seller as follows (in thousands):

<TABLE>
<S> <C>
Cash paid for the capital stock............................. $ 6,000
Long-term debt issued....................................... 8,000
Less: discount............................................ (312)
Deferred tax liabilities.................................... 8,057
Other directly related liabilities.......................... 100
Common Stock warrants issued................................ 710
-------
Total purchase price........................................ $22,555
=======
</TABLE>

Other non-cash investing and financing activities for 1996 are as follows
(in thousands):

<TABLE>
<S> <C>
Tax benefit of exercised options reflected as additional
capital................................................... $ 800
Long-term debt issued for equipment acquisitions............ 34
</TABLE>

Interest paid amounted to approximately $388,000, $427,000 and $893,000 for
the years ended December 31, 1994, 1995 and 1996, respectively.

Income taxes of approximately $329,000, $339,000 and $1,389,000 were paid
in the years ended December 31, 1994, 1995 and 1996, respectively.

F-11
<PAGE> 59

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

8. LONG-TERM DEBT

The Company's long-term debt at December 31, 1995 and 1996, consisted of
the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Promissory note, other, dated August 14, 1996, fixed rate
(6.0%), due in two installments of $1,500,000 due August
1997 and February 1998, with the final installment of
$5,000,000 due August 1998................................ $ -- $ 8,000
</TABLE>

Promissory notes, financial institution, dated November 20,
1995, variable rate (7.975% at December 31, 1996) due in
$150,000 monthly installments through 2000................ 8,850 7,050
Revolving credit agreement, bank, effective December 7,
1995, up to $8,400,000 through June 30, 1998, at the lower
of the prime rate or other rate options available at the
time of borrowing (8.25% at December 31, 1996)............ -- 2,600
Promissory note, other, dated December 15, 1993, fixed rate
(5.75%), due in minimum annual installments of $500,000
through 1999.............................................. 2,000 1,500
Capital lease obligations, interest at fixed (ranging from
5.5% to 9.5%) and variable (8.25% at December 31, 1996)
rates, due in varying amounts through February 1999....... 393 259
------- -------
11,243 19,409
Less unamortized discount................................... -- 244
Less current portion........................................ 2,542 4,507
------- -------
$ 8,701 $14,658
======= =======

Maturities of long-term debt, excluding unamortized discount, for the
succeeding five years as of December 31, 1996, are as follows:

<TABLE>
<CAPTION>
LONG-TERM CAPITAL
DEBT LEASES TOTAL
--------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
1997.......................................... $ 4,300 $207 $ 4,507
1998.......................................... 11,400 50 11,450
1999.......................................... 1,800 2 1,802
2000.......................................... 1,650 -- 1,650
</TABLE>

The promissory note dated August 14, 1996, is guaranteed by a subsidiary of
the Company and is secured by certain assets of that subsidiary.

The promissory notes dated November 20, 1995, are secured by certain
drilling equipment owned by subsidiaries of the Company and the Company is a
guarantor of these notes. The notes also include certain financial covenants
covering tangible net worth, debt service coverage and leverage ratios.

The revolving credit agreement, which is to be used for working capital and
general corporate purposes, is secured by the pledge of Company accounts
receivable and inventory. Maximum borrowings under this facility in 1996 were
$6,000,000, with average borrowings during the year of $1,116,308 and a weighted
average interest rate on borrowings during the year of 8.32%. A standby letter
of credit of $400,000 is issued under this agreement. The agreement also
includes certain financial covenants covering tangible net worth, debt service

F-12
<PAGE> 60

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

coverage and prohibits the payment of cash dividends by the Company. The entire
outstanding balance at December 31, 1996 has been treated as long-term, as at
that date it was the Company's intention not to pay this amount down until June
1998.

The promissory note dated December 15, 1993, requires annual mandatory
prepayments not exceeding $500,000 per year of principal, commencing on April 1,
1995, until the note is fully repaid in an amount equal to the Company's excess
cash flow as defined. Excess cash flow is generally net income adjusted for
noncash expenditures, less the Company's $500,000 required annual redemption and
the lesser of $1,750,000 or actual capital expenditures. The Company will make a
mandatory prepayment of $500,000 on April 1, 1997.

9. STOCK PLANS

In December 1993, the Company established a Restricted Stock Plan and a
Non-Qualified Stock Option Plan.

Under the Restricted Plan, 150,000 shares of Common Stock were awarded to
certain full-time employees of the Company. Common Stock awarded under the
Restricted Stock Plan vests in five equal annual installments contingent upon
the beneficiaries' continued employment by the Company. As of December 31, 1996,
38,010 shares were unvested.

Under the Non-Qualified Stock Option Plan, the Company awarded options to
senior management to purchase 1,459,800 shares of Common Stock with an exercise
price of $2.67 per share. The options vest in five equal annual installments
contingent upon continued employment by the Company. On December 15, 1995, the
options were repriced from $2.67 to prices ranging from $1.77 (the fair market
value on December 15, 1995) to $2.13 depending upon the individual as well as
the vesting date of the option. In addition, the term of each option was reduced
from ten years from the original date of grant to five years from date of
repricing. As of December 31, 1996, options to purchase 540,522 shares were
exercisable and options to purchase 350,358 shares were unvested.

In July 1996, the Company's shareholders approved the award of options to
purchase 360,000 shares of the Company's common stock at a price equal to the
fair market value of the stock at the date of grant to Remy Investors and
Consultants, Inc., general partner of Remy Capital Partners III, L.P., an owner
of 48.2% of the Company's common stock. These options expire five years from the
date of grant. The options were awarded in December of 1995 as a result of the
services Remy Investors and Consultants, Inc. rendered in connection with the
acquisition and related financing of FWA and the Company's sale of the assets of
Union Supply Company.

In July 1996, the Company's shareholders approved the Non-Employee Director
Stock Option Plan ("Director Plan"), a non-qualified stock option plan. Under
the Director Plan, options to purchase up to an aggregate of 300,000 shares of
Common Stock of the Company may be granted to non-employee directors of the
Company. The Director Plan provides for the grant of an option to purchase 7,500
shares of Common Stock to each non-employee director as of December 19, 1995 and
to each future non-employee director as of the date he is first elected. Options
granted pursuant to the Director Plan stipulate that the purchase price per
share be equal to the fair market value of the Common Stock as of the date of
grant. Commencing on December 31, 1996, each non-employee director who has
served for a period of at least one year will automatically be granted on each
December 31 an option to purchase 3,750 shares of Common Stock at a purchase
price equal to the fair market value of the Common Stock as of the date of
grant. At December 31, 1996, 266,250 shares were available for granting of such
options. No options under this plan will be granted after December 18, 2005. All
options issued expire five years from the date of grant.

In July 1996, the Company's shareholders approved the UTI Energy Corp. 1996
Employee Stock Option Plan. Under the plan, the Company can award options on up
to 900,000 shares of Common Stock to certain full-time employees at a price
equal to the fair market value of the stock at the date the option is granted.

F-13
<PAGE> 61

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

During 1996, the Company awarded options to purchase 285,000 shares of Common
Stock at an exercise price of $4.58 per share. The options vest over one to five
years, with no options being exercisable at December 31, 1996.

FASB Statement 123 requires that pro forma information regarding net income
and earnings per share be determined as if the Company had accounted for its
employee stock options under the fair value method as defined in that Statement
for options granted or modified after December 31, 1994. The fair value for
applicable options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1995
and 1996, respectively: risk-free interest rates of 5.38% and 6.70%; dividend
yield of 0%; volatility factors of the expected market price of the Company's
common stock of .307 and .438 and a weighted average expected life of the option
of 2.64 and 3.52 years.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands except for earnings per share
information):

<TABLE>
<CAPTION>
1995 1996
----- ------
<S> <C> <C>
Pro forma net income (loss)................................ $(107) $4,739
Pro forma earnings (loss) per share:
Primary.................................................. $(.01) $ .41
Fully diluted............................................ $(.01) $ .41
</TABLE>

A summary of the Company's stock option activity and related information
for the years ended December 31 follows:

<TABLE>
<CAPTION>
WEIGHTED-
SHARES AVERAGE
UNDER EXERCISE
OPTION PRICE
--------- ---------
<S> <C> <C>
Outstanding, December 31, 1993 and 1994..................... 1,459,800 $2.67
Granted................................................... 1,303,380 $1.85
Cancelled................................................. (920,880) $2.67
---------
Outstanding, December 31, 1995.............................. 1,842,300 $2.09
Granted................................................... 296,250 $4.86
Exercised................................................. (408,342) $2.54
Cancelled................................................. (160,578) $2.67
---------
Outstanding, December 31, 1996.............................. 1,569,630 $2.43
=========
Exercisable, December 31,
1994...................................................... 291,960 $2.67
1995...................................................... 1,133,700 $2.12
1996...................................................... 923,040 $1.88
</TABLE>

F-14
<PAGE> 62

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

Weighted-average fair value of options granted during 1995 and 1996 were
$.44 per share and $1.86 per share, respectively.

Exercise prices for options outstanding as of December 31, 1996, ranged
from $1.77 per share to $11.79 per share. The weighted-average remaining
contractual life of those options is 4.25 years.

10. DEFINED CONTRIBUTION PLANS

The Company maintains two defined contribution plans. Employees who have
completed one year of service (1,000 active work hours) and are age 21 or older
are eligible to participate. Company matching provisions and vesting schedules
vary by plan. For the years ended December 31, 1994, 1995 and 1996, the Company
made matching contributions totaling approximately $189,000, $156,000 and
$406,000, respectively. Effective January 1, 1997, the two plans were combined.

11. CONTINGENCIES

The Company is partially self-insured for employee health insurance claims
and for workers' compensation. The Company incurs a maximum of $75,000 per
employee under medical claims and a maximum of $250,000 per event for workers'
compensation claims. Although the Company believes that adequate reserves have
been provided for expected liabilities arising from its self-insured
obligations, it is reasonably possible that management's estimates of these
liabilities will change over the near term as circumstances develop.

12. FINANCIAL INSTRUMENTS

Concentrations of credit risk:

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash balances and trade
accounts receivable.

In 1996, one customer accounted for approximately 25% of the revenue and
approximately 20% of accounts receivable at December 31, 1996.

The Company performs ongoing credit evaluations of its customers and
generally does not require material collateral. The Company provides allowances
for potential credit losses when necessary.

The Company maintains cash balances with various financial institutions.
These financial institutions are located throughout the country and Company
policy is designed to limit exposure to any one institution. However, at
December 31, 1996, the Company had cash in one institution in excess of insured
limits. The Company performs periodic evaluations of the relative credit
standing of those financial institutions that are considered in the Company's
investment strategy to ensure high credit quality.

Cash, accounts receivable and accounts payable: The carrying amounts
reported in the balance sheets approximate fair value.

Long and short-term debt: The carrying amounts of the Company's borrowings
under its short-term revolving credit arrangements and all promissory notes
approximate their fair value. The fair value of debt was estimated by management
based upon current interest rates available to the Company at the respective
balance sheet dates for similar issues.

F-15
<PAGE> 63

UTI ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

13. SUBSEQUENT EVENTS

On January 27, 1997, the Company acquired the contract drilling assets of
Quarles Drilling Corporation ("Quarles") for $16.2 million, consisting of $8.1
million in cash and 733,779 shares of Common Stock as adjusted pursuant to the
purchase agreement. The Acquisition was accounted for using the purchase method,
and Quarles operating results since January 27, 1997 have been consolidated with
the operating results of the Company.

On February 13, 1997, the Company exercised its option to purchase a leased
facility for $485,000.

On April 11, 1997, the Company acquired the land drilling operations of
Southland Drilling Company Ltd., ("Southland") for approximately $27.1 million
in cash and a five-year warrant to purchase 300,000 shares of Common Stock, at
an exercise price of $16 per share (the "Southland Acquisition"). The acquired
assets included eight land drilling rigs, various equipment and rig components,
and other equipment used in Southland's contract drilling business. The Company
also assumed various drilling contracts of Southland and hired Southland's rig
crews. The Acquisition was accounted for using the purchase method, and
Southland's operating results since April 11, 1997 have been consolidated with
the operating results of the Company.

The Southland Acquisition was financed with a combination of the Company's
existing cash, the net proceeds from the private placement of $25 million
principal amount of its 12% Senior Subordinated Notes due 2001 (the
"Subordinated Notes") and the net proceeds from a new $25 million 38-month term
loan facility. The Company also increased the amount available under its line of
credit from $8.4 million to $12.0 million. The Subordinated Notes were issued by
the Company at a discount of 2% together with a seven-year warrant to purchase
1,200,000 shares of Common Stock at an exercise price of $10.83 per share. The
warrants are subject to call at $.08 per warrant after six months under certain
circumstances if the market price of the Common Stock is greater than $15 per
share over a 90 day period. The Company utilized a portion of the net proceeds
from the term loan to refinance approximately $18.6 million in indebtedness that
was incurred in connection with its prior acquisitions of FWA, Viersen and the
contract drilling assets of Quarles. The indebtedness under the term loan is
secured by substantially all of the Company's rig assets, inventory and accounts
receivable.

On July 28, 1997 the Company's Board of Directors approved a 3 for 1 stock
split subject to receiving stockholder approval of an increase in the number of
authorized shares of the Company's common stock from 10 million to 50 million
shares. On August 28, 1997 the Company's stockholders approved the increase in
authorized shares of the Company's Common Stock and also approved an amendment
to the Company's Restated Certificate of Incorporation to authorize the issuance
of up to 5,000,000 shares of preferred stock. The stock split has been given
retroactive effect in these financial statements.

F-16
<PAGE> 64

UTI ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
(SEE NOTE) (UNAUDITED)
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets
Cash...................................................... $ 570 $ 49
Accounts receivable, net of allowance for doubtful
accounts of $305 in 1996 and $413 in 1997.............. 17,831 27,838
Other receivables......................................... 598 688
Materials and supplies.................................... 874 1,109
Prepaid expenses.......................................... 1,749 1,213
-------- --------
21,622 30,897
Property and Equipment
Land...................................................... 749 899
Buildings and improvements................................ 1,760 2,196
Machinery and equipment................................... 58,421 96,736
Oil and gas working interests............................. 1,732 1,813
Construction in process................................... 338 923
-------- --------
63,000 102,567
Less accumulated depreciation and amortization............ 23,149 26,704
-------- --------
39,851 75,863

Goodwill, less amortization of $0 in 1996 and $166 in
1997...................................................... -- 9,772
Other Assets................................................ 397 421
-------- --------
$ 61,870 $116,953
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt......................... $ 4,507 $ 5,226
Accounts payable.......................................... 7,945 10,070
Accrued payroll costs..................................... 2,445 3,468
Other accrued expenses.................................... 964 3,725
-------- --------
15,861 22,489
Long-Term Debt, less current portion........................ 14,658 48,520
Deferred Income Taxes....................................... 8,305 8,305
Other Liabilities........................................... 350 350

Commitments and Contingencies
Shareholders' Equity
Preferred stock $.01 par value, 5,000,000 shares
authorized on August 28, 1997, none issued or
outstanding in 1996 and 1997........................... -- --
Common stock, $.001 par value, 50,000,000 (10,000,000
prior to August 28, 1997) shares authorized,10,807,008
shares issued and outstanding in 1996, 12,110,187
shares issued and outstanding in 1997.................. 11 12
Additional capital........................................ 17,870 28,816
Retained earnings......................................... 4,916 8,537
Restricted stock plan unearned compensation............... (101) (76)
-------- --------
22,696 37,289
-------- --------
$ 61,870 $116,953
======== ========
</TABLE>

See notes to condensed consolidated financial statements.
- ---------------
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements but does not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. See Note 1 to condensed consolidated
financial statements.

F-17
<PAGE> 65

UTI ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1997 1996 1997
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues
Oilfield service........................ $19,586 $42,139 $39,906 $76,434
Other................................... 73 301 159 374
------- ------- ------- -------
19,659 42,440 40,065 76,808
Costs and Expenses
Cost of sales
Oilfield service..................... 16,107 33,056 32,645 60,385
Other................................ 26 44 57 77
Selling, general and administrative..... 1,774 2,840 3,447 5,174
Depreciation and amortization........... 1,006 2,475 1,979 4,020
------- ------- ------- -------
18,913 38,415 38,128 69,656
------- ------- ------- -------
Operating Income.......................... 746 4,025 1,937 7,152
Other Income (Expense)
Interest................................ (209) (1,275) (432) (1,754)
Other, net.............................. 107 27 854 254
------- ------- ------- -------
(102) (1,248) 422 (1,500)
------- ------- ------- -------
Income Before Income Taxes................ 644 2,777 2,359 5,652
Income Taxes.............................. 163 1,000 678 2,031
------- ------- ------- -------
Net Income................................ $ 481 $ 1,777 $ 1,681 $ 3,621
======= ======= ======= =======
Earnings Per Common Share:
Primary................................. $ 0.04 $ 0.13 $ 0.15 $ 0.27
======= ======= ======= =======
Fully Diluted........................... $ 0.04 $ 0.13 $ 0.15 $ 0.26
======= ======= ======= =======
Average Common Shares Outstanding
Primary................................. 11,305,881 13,540,446 10,852,275 13,403,994
Fully Diluted........................... 11,378,907 14,097,471 10,888,188 13,682,508
</TABLE>

See notes to condensed consolidated financial statements.

F-18
<PAGE> 66

UTI ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
RESTRICTED
STOCK PLAN
NUMBER PAR ADDITIONAL RETAINED UNEARNED
OF SHARES $.001 CAPITAL EARNINGS COMPENSATION TOTAL
--------- ----- ---------- -------- ------------ -------
(IN THOUSANDS, EXCEPT NUMBER OF SHARES)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996......... 10,807,008 $11 $17,870 $4,916 $(101) $22,696
Net income......................... -- -- 3,621 -- 3,621
Issuance of common stock........... 733,779 1 8,099 -- -- 8,100
Exercise of options................ 83,400 -- 141 -- -- 141
Exercise of warrants............... 486,000 -- 1,296 -- -- 1,296
Warrants issued.................... -- 1,410 -- -- 1,410
Vesting of restricted stock plan... -- -- -- 25 25
----------- --- ------- ------ ----- -------
Balance at June 30, 1997............. 12,110,187 $12 $28,816 $8,537 $ (76) $37,289
=========== === ======= ====== ===== =======
</TABLE>

See notes to condensed consolidated financial statements.

F-19
<PAGE> 67

UTI ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1997
------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash Flows From Operating Activities
Income from operations.................................... $ 1,681 $ 3,621
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 1,979 4,020
Deferred income taxes.................................. 97 --
Amortization of debt discount.......................... -- 115
Stock compensation expense............................. 21 25
Provision for bad debts................................ 17 108
Gain on disposal of fixed assets....................... (38) (290)
Change in operating assets and liabilities, net of
effect of businesses acquired:
Accounts receivable and prepaids..................... (2,624) (9,669)
Materials and supplies............................... (171) (235)
Accounts payable, accrued expenses and accrued
payroll costs....................................... 1,233 5,909
Other................................................ 141 (31)
------- --------
Net cash provided by operating activities......... 2,336 3,573
Cash Flows From Investing Activities
Capital expenditures...................................... (2,074) (6,767)
Acquisition of businesses................................. -- (35,247)
Proceeds from sale of property and equipment.............. 163 617
------- --------
Net cash used by investing activities............. (1,911) (41,397)
Cash Flows From Financing Activities
Proceeds from issuance of long-term debt.................. 34 57,190
Repayments of long-term debt.............................. (1,041) (20,324)
Proceeds from issuance of common stock, options and
warrants............................................... -- 437
------- --------
Net cash provided (used) by financing
activities...................................... (1,007) 37,303
------- --------
Net Decrease in Cash........................................ (582) (521)
Cash at Beginning of Period................................. 2,273 570
------- --------
Cash at End of Period....................................... $ 1,691 $ 49
======= ========
</TABLE>

See notes to condensed consolidated financial statements.

F-20
<PAGE> 68

UTI ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

1. INTERIM FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements at June 30,
1997, have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of the financial position and operating
results for the interim periods have been included. The results of operations
for the three and six months ended June 30, 1997, are not necessarily indicative
of the results for the entire year ending December 31, 1997. For further
information, refer to the Consolidated Financial Statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.

2. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact is expected to result in an
increase in primary (renamed basic) earnings per share for the three months and
six months ended June 30, 1997 of $.02 and $.04 per share, respectively, and an
increase to the three months and six months ended June 30, 1996 of $.01 per
share for each period. The impact of Statement 128 on the calculation of fully
diluted earnings per share for these quarters is not expected to be material.

3. ACQUISITIONS AND DISPOSITIONS

On August 14, 1996, the Company purchased all of the capital stock of the
Viersen & Cochran Drilling Company ("Viersen"). Viersen was engaged in contract
drilling in Oklahoma but had suspended its operations prior to the closing date.
The consideration paid for Viersen consisted of (i) $6,000,000 in cash paid on
August 14, 1996 (a portion of which the Company borrowed under its existing
credit agreement); (ii) a two-year $8,000,000 promissory note (the "Promissory
Note") executed by the Company in favor of the Seller; and (iii) stock warrants
with a two-year term to purchase 600,000 shares of the Company's common stock,
$.001 par value, at $5 per share. On April 11, 1997, the Company prepaid the
Promissory Note at a contractually agreed upon discounted balance of $7,655,000
plus accrued interest incurring an immaterial penalty. The acquisition of
Viersen was accounted for using the purchase method, and Viersen's operating
results since August 14, 1996, have been consolidated with the operating results
of the Company.

On January 27, 1997, the Company acquired the contract drilling assets of
Quarles Drilling Corporation ("Quarles") for $16.2 million, consisting of $8.1
million in cash and 733,779 shares of Common Stock as adjusted pursuant to the
purchase agreement. The acquisition was accounted for using the purchase method,
and Quarles' operating results since January 27, 1997 have been consolidated
with the operating results of the Company.

F-21
<PAGE> 69

UTI ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
JUNE 30, 1997

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

hired Southland's rig crews. The acquisition was accounted for using the
purchase method, and Southland's operating results since April 11, 1997 have
been consolidated with the operating results of the Company. Goodwill of $9.9
million has been recorded related to this acquisition.

Provision for amortization of goodwill was determined by the straight-line
method over 15 years.

The Southland Acquisition was financed with a combination of the Company's
existing cash, the net proceeds from the private placement of $25 million
principal amount of its 12% Senior Subordinated Notes due 2001 (the
"Subordinated Notes") and the net proceeds from a new $25 million 38-month term
loan facility. The Company also increased the amount available under its line of
credit from $8.4 million to $12.0 million. The Subordinated Notes were issued by
the Company at a discount of 2% together with a seven-year warrant to purchase
1,200,000 shares of Common Stock at an exercise price of $10.83 per share. The
1,200,000 warrants were valued at $1,400,000 at the date of issuance. The
warrants are subject to call at $.08 per warrant after six months under certain
circumstances if the market price of the Common Stock is greater than $15 per
share over a 90 day period. The Company utilized a portion of the net proceeds
from the term loan to refinance approximately $18.6 million in indebtedness that
was incurred in connection with its prior acquisitions of FWA Drilling Company,
Inc., Viersen and the contract drilling assets of Quarles. The indebtedness
under the term loan is secured by substantially all of the Company's rig assets,
inventory and accounts receivable. The Subordinated Notes contain restrictions
on the Company's ability to declare dividends and other limitations typical in
this type of financing.

The following pro forma operating results reflect the inclusion of Viersen
in 1996, and the inclusion of Quarles and Southland for 1996 and 1997 as if the
acquisitions occurred on January 1, 1996:

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------- -------------------
1996 1997 1996 1997
------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue.......................... $28,388 $44,207 $66,428 $87,562
======= ======= ======= =======
Net income (loss)................ $(1,183) $ 1,946 $(1,233) $ 2,935
======= ======= ======= =======
Earnings per share:
-- Primary..................... $ (.10) $ .14 $ (.11) $ .22
======= ======= ======= =======
-- Fully diluted............... $ (.10) $ .14 $ (.11) $ .21
======= ======= ======= =======
</TABLE>

4. SUPPLEMENTAL CASH FLOW INFORMATION

On January 27, 1997, the Company acquired the contract drilling division of
Quarles for cash and stock as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Cash paid for assets........................................ $ 8,100
Common stock issued......................................... 8,100
-------
Total purchase price................................... $16,200
=======
</TABLE>

F-22
<PAGE> 70

UTI ENERGY CORP.

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
JUNE 30, 1997

(ALL PER SHARE AND SHARE AMOUNTS REFLECT THE 3:1 STOCK SPLIT EFFECTIVE SEPTEMBER
5, 1997)

On April 11, 1997, the Company acquired the contract operations of
Southland for cash and a warrants as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Cash paid for assets........................................ $27,147
Warrants issued............................................. 10
-------
Total purchase price................................... $27,157
=======
</TABLE>

On May 15, 1997, a warrant holder redeemed 375,000 warrants for an equal
amount of shares of common stock. The warrant holder cancelled an outstanding
promissory note from the Company totaling $1 million, an amount equal to the
exercise price.

5. COMMITMENTS AND CONTINGENCIES

6. SUBSEQUENT EVENTS

F-23
<PAGE> 71

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDERS OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK 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 ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
Use of Proceeds....................... 13
Price Range of Common Stock and
Dividend Policy..................... 14
Capitalization........................ 15
Selected Consolidated Financial
Data................................ 16
Pro Forma Condensed Consolidated
Statements of Income................ 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
Business.............................. 27
Management............................ 36
Principal and Selling Stockholders.... 38
Description of Capital Stock.......... 41
Shares Eligible for Future Sale....... 43
Underwriting.......................... 44
Legal Matters......................... 45
Experts............................... 46
Available Information................. 46
Incorporation of Certain Documents by
Reference........................... 47
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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6,100,000 Shares

[UTI ENERGY CORP. LOGO]

UTI ENERGY CORP.

Common Stock

------------------------
PROSPECTUS
------------------------
PRUDENTIAL SECURITIES INCORPORATED

LEHMAN BROTHERS

RAUSCHER PIERCE REFSNES, INC.

SIMMONS & COMPANY
INTERNATIONAL
September 30, 1997
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