<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
--------------- ---------------
COMMISSION FILE NUMBER 1-12542
UTI ENERGY CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 23-2037823
- ------------------------------------ ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
Suite 225 N
16800 Greenspoint Park
Houston, Texas 77060
- --------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (281) 873-4111
- --------------------------------------------------------------------------------
(Former Address)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each class of issuer's common
stock, as of the latest practicable date. 16,456,115 shares of Common Stock at
October 31, 1997.
<PAGE> 2
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Income for the
Three and Nine Months ended September 30, 1997 and 1996 . . 4
Condensed Consolidated Statement of Changes in Shareholders'
Equity for the Nine Months ended September 30, 1997 . . . . . 5
Condensed Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1997 and 1996 . . . . . . . 6
Notes to Condensed Consolidated Financial Statements . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 18
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 18
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 20
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
- 2 -
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UTI ENERGY CORP.
Condensed Consolidated Balance Sheets
(All share amounts reflect the 3:1 stock split,
effective September 5, 1997).
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(Unaudited) (See Note)
------------- --------------
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,718 $ 570
Accounts receivable, net of allowance for doubtful accounts of
$533 in 1997 and $305 in 1996 . . . . . . . . . . . . . . . . . . . . . . . . 33,481 17,831
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528 598
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,697 874
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346 1,749
------------- -------------
37,770 21,622
PROPERTY AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949 749
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . 2,431 1,760
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,892 58,421
Oil and gas working interests . . . . . . . . . . . . . . . . . . . . . . . . . 1,843 1,732
Construction in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,910 338
------------- -------------
120,025 63,000
Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . 29,368 23,149
------------- -------------
90,657 39,851
GOODWILL, less amortization of $337 in 1997 and $0 in 1996 . . . . . . . . . . . . 18,072 -
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535 397
------------- -------------
$ 147,034 $ 61,870
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . $ 13,212 $ 4,507
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,138 7,945
Accrued payroll costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,237 2,445
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,905 964
------------- -------------
32,492 15,861
LONG-TERM DEBT, less current portion . . . . . . . . . . . . . . . . . . . . . . . 41,085 14,658
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,277 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 1997 and 1996 . . . . . . . . -- --
Common stock, $.001 par value, 50,000,000 (10,000,000 prior to
August 28, 1997) shares authorized, 12,956,515 shares issued and
outstanding in 1997, 10,807,008 shares issued and outstanding in 1996 . . . . 13 11
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,450 17,870
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,431 4,916
Restricted stock plan unearned compensation . . . . . . . . . . . . . . . . . . (64) (101)
------------- -------------
57,830 22,696
------------- -------------
$ 147,034 $ 61,870
============= =============
</TABLE>
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.
- 3 -
<PAGE> 4
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 Nine Months
Ended September 30, Ended September 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
(In thousands, except share and per share amounts)
<S> <C> <C> <C> <C>
REVENUES
Oilfield service . . . . . . . . . . . . . . . . $ 50,257 $ 26,204 $ 126,691 $ 66,110
Other . . . . . . . . . . . . . . . . . . . . . . 53 65 427 224
------------ ------------ ------------ ------------
50,310 26,269 127,118 66,334
COSTS AND EXPENSES
Cost of sales
Oilfield service . . . . . . . . . . . . . . 36,790 20,566 97,175 53,211
Other . . . . . . . . . . . . . . . . . . . 18 278 95 335
Selling, general and administrative . . . . . . . 3,279 1,900 8,453 5,347
Depreciation and amortization . . . . . . . . . . 3,009 1,087 7,029 3,066
------------ ------------- ------------ ------------
43,096 23,831 112,752 61,959
------------ ------------- ------------ ------------
OPERATING INCOME . . . . . . . . . . . . . . . . . . 7,214 2,438 14,366 4,375
OTHER INCOME (EXPENSE)
Interest . . . . . . . . . . . . . . . . . . . . (1,639) (284) (3,393) (716)
Other, net . . . . . . . . . . . . . . . . . . . 91 166 345 1,020
------------ ------------- ------------ ------------
(1,548) (118) (3,048) 304
------------ ------------- ------------ ------------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 5,666 2,320 11,318 4,679
INCOME TAXES . . . . . . . . . . . . . . . . . . . . 1,772 710 3,803 1,388
------------ ------------- ------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 3,894 $ 1,610 $ 7,515 $ 3,291
============ ============= ============ ===========
EARNINGS PER COMMON SHARE:
Primary . . . . . . . . . . . . . . . . . . . . . $ 0.26 $ 0.14 $ 0.54 $ 0.30
============ ============= ============ ============
Fully Diluted . . . . . . . . . . . . . . . . . . $ 0.25 $ 0.14 $ 0.52 $ 0.29
============ ============= ============ ============
AVERAGE COMMON SHARES OUTSTANDING:
Primary . . . . . . . . . . . . . . . . . . . . . 15,197,907 11,579,928 14,001,965 11,094,825
Fully Diluted . . . . . . . . . . . . . . . . . . 15,703,462 11,704,902 14,356,159 11,160,825
</TABLE>
See notes to condensed consolidated financial statements.
- 4 -
<PAGE> 5
UTI ENERGY CORP.
Condensed Consolidated Statement of Changes
In Shareholders' Equity (Unaudited)
For the Nine Months Ended September 30, 1997
(All 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
--------- ----- ------- -------- ------------ -----
<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 . . . . . . . . - - 7,515 - 7,515
Issuance of Common Stock . . 2,149,507 2 26,170 - - 26,172
Warrants Issued . . . . . . . - 1,410 - - 1,410
Vesting of Restricted Stock
Plan . . . . . . . . . . - - - 37 37
---------- -------- ---------- ----------- ---------- ------------
Balance at September 30, 1997. . 12,956,515 $ 13 $ 45,450 $ 12,431 $ (64) $ 57,830
========== ======== ========== =========== ========== ============
</TABLE>
See notes to condensed consolidated financial statement.
- 5 -
<PAGE> 6
UTI ENERGY CORP.
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------------------
1997 1996
------------- ------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,515 $ 3,291
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . 7,029 3,066
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 97
Amortization of debt discount . . . . . . . . . . . . . . . . . . . . . . . . . 258 23
Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 61
Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 14
Gain on disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . (356) (62)
Change in operating assets and liabilities, net of
effect of businesses acquired:
Accounts receivable and prepaids . . . . . . . . . . . . . . . . . . . . . . (11,508) (4,479)
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . (823) (239)
Accounts payable, accrued expenses, accrued
payroll costs and deferred income taxes . . . . . . . . . . . . . . . . . 6,567 3,618
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (149) (28)
------------- ------------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . 9,744 5,362
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,122) (2,931)
Acquisition of businesses, net of cash . . . . . . . . . . . . . . . . . . . . . . . (37,542) (6,000)
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . 808 183
------------- ------------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . . (46,856) (8,748)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . 58,900 3,628
Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,626) (1,521)
Proceeds from issuance of Common Stock, options and warrants . . . . . . . . . . . 986 -
------------- ------------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . 38,260 2,107
------------- ------------
NET INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,148 (1,279)
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 2,273
------------- ------------
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,718 $ 994
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
- 6 -
<PAGE> 7
UTI ENERGY CORP.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
September 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 condensed consolidated financial statements
at September 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 nine months ended September 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
nine months ended September 30, 1997 of $.05 and $.09 per share,
respectively. The impact of Statement 128 on the calculation of fully
diluted (renamed diluted) earnings per share results in an increase to
the three months and nine months ended September 30, 1997 of $.01 and
$.02 per share, respectively.
3. Acquisitions
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) $6.0 million cash paid on August 14, 1996 (a
portion of which the Company borrowed under its existing credit
agreement); (ii) a two-year $8.0 million 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, at $5 per share. On April 11, 1997,
the Company prepaid the Promissory Note at a contractually agreed upon
discounted balance of $7.7 million plus accrued interest. Viersen's
assets consisted of 13 land drilling rigs, over 500,000 feet of spare
drill pipe, over 800 drill collars and other spare drilling equipment.
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.
- 7 -
<PAGE> 8
UTI ENERGY CORP.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
September 30, 1997
(All per share and share amounts reflect the 3:1 stock split
effective September 5, 1997).
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 cash and 733,779 shares of Common Stock as
adjusted pursuant to the purchase agreement. The acquired assets
consisted of nine land drilling rigs, various equipment, rig
components and other equipment used in Quarles' contract drilling
business. The acquisition was accounted for using the purchase
method.
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
acquired assets include eight land drilling rigs, various equipment,
components and other equipment used in Southland's contract drilling
business. 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. Estimated
goodwill totaling $9.9 million has been recorded relating to this
acquisition.
On September 11, 1997, the Company acquired J.S.M. & Associates, Inc.
("JSM") for 618,748 shares of Common Stock (including 61,874 shares to
be issued following a contractual post-closing adjustment period) and
$2.6 million in cash, subject to adjustment. JSM's assets at the time
of acquisition included seven land drilling rigs, an office and
warehouse in Odessa, Texas and approximately $950,000 in net working
capital. The acquisition was accounted for using the purchase method of
accounting. Estimated goodwill totaling $8.5 million has been recorded
related to this acquisition.
Provision for amortization of goodwill is determined by the
straight-line method over 15 years.
The following pro forma operating results reflect the inclusion of
Viersen in 1996, and the inclusion of Quarles and Southland for 1996
and 1997:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------- --------- ------------- ------------ --------- -----------
1997 1996 1997 1996
-------------- -------------- --------------- ---------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenue . . . . . . . . . . . . . $ 50,310 $ 35,820 $ 137,872 $ 102,248
========== ============ ============ ============
Net income (loss) . . . . . . . . $ 3,894 $ 1,135 $ 6,829 $ (98)
========== ============ ============ ============
Earnings per share:
- Primary . . . . . . . . . . . . $ 0.26 $ 0.10 $ 0.49 $ (0.01)
========== ============ ============ ============
- Fully diluted . . . . . . . . . $ 0.25 $ 0.09 $ 0.48 $ (0.01)
========== ============ ============ ============
</TABLE>
- 8 -
<PAGE> 9
UTI ENERGY CORP.
Notes To Condensed Consolidated Financial Statements (Unaudited)
September 30, 1997
(All per share and share amounts reflect the 3:1 stock split effective
September 5, 1997).
4. Supplemental Cash Flow Information
On January 27, 1997, the Company acquired the contract drilling
division of Quarles for cash and Common 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>
On April 11, 1997, the Company acquired the contract drilling
operations of Southland for cash and 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 September 11, 1997, the Company acquired JSM for cash and Common
Stock as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Cash paid for asset . . . . . . . . . . . . $ 2,550
Common Stock issued . . . . . . . . . . . . 16,086
Net cash acquired . . . . . . . . . . . . . (255)
--------------
Total Purchase Price . . . . . . . . . . . . $ 18,381
==============
</TABLE>
On May 15, 1997, a warrant holder exercised 486,000 warrants for an
equal amount of shares of Common Stock using a $1.0 million promissory
note of the Company and cash of $296,000.
5. Commitments and 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.
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.
- 9 -
<PAGE> 10
UTI ENERGY CORP.
Notes To Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1997
(All per share and share amounts reflect the 3:1 stock split
effective September 5, 1997).
6. Subsequent Events
In October of 1997, the Company sold 1,792,600 shares of Common Stock
in a public offering at $39.50 per share (less an underwriting discount
of $1.78 per share). Various holders of warrants to purchase Common
Stock exercised warrants to purchase an aggregate of 1,707,000 shares
of Common Stock for sale by them in the public offering. The offering
resulted in net proceeds, including proceeds from the exercise of
warrants by the selling stockholders, to the Company of approximately
$80.0 million. Following the public offering by the Company, the
Company repaid the outstanding balances under its existing line of
credit ($8.0 million at September 30, 1997) and term loan ($22.9
million at September 30, 1997). The Company plans to use the remaining
net proceeds from the offering, including the proceeds from warrants
exercised in the offering for general corporate purposes, including
the continuation of the Company's acquisition strategy.
- 10 -
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
UTI is a leading provider of onshore 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 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 the benefits arising from consolidation in the land
drilling industry. To effect this strategy, the Company disposed of its
oilfield distribution business in September 1995 and immediately embarked on a
directed acquisition program aimed at expanding the Company's presence in the
oil and gas producing regions of the United States.
Since November 1995, the Company has acquired 66 rigs in five transactions: (i)
FWA Drilling Company, Inc. ("FWA") was acquired in November 1995 for $12.9
million net of working capital; (ii) Viersen & Cochran Drilling Company
("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 per share; (iii) the contract drilling assets of Quarles Drilling
Corporation ("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 Drilling Company, Ltd. ("Southland") was
acquired in April 1997, for $27.1 million in cash and warrants to purchase
300,000 shares of Common Stock at $16 per share; and (v) J.S.M. & Associates,
Inc. ("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 earnings.
The Company's results for the three and nine months ended September 30, 1997
also reflect a strong improvement in market conditions in the United States
land drilling markets resulting from an increase in demand for drilling
services. Fleet utilization (based on total rigs owned) was 75% for the three
months ended September 30, 1997 compared to 63% for the three months ended
September 30, 1996.
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.
- 11 -
<PAGE> 12
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.
The following table presents certain results of operations data for the Company
and the average United States rig count as reported by Baker Hughes Inc.(1)
for the periods indicated:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------- --------------------------------
1997 1996 1997 1996
------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Average U.S. land rig count . . . . . 836 683 781 637
Number of owned rigs
(at end of period) . . . . . . . . . 89 55 89 55
Average number of rigs owned
during period . . . . . . . . . . . 84 55 79 55
Operating Days (2) . . . . . . . . . 5,810 3,176 15,381 8,096
Utilization rate (3) . . . . . . . . . 75% 63% 71% 54%
Pressure Pumping:
-------- -------
Cement jobs . . . . . . . . . . . . . 643 690 1,661 1,451
Stimulation jobs . . . . . . . . . . 295 288 672 657
Financial data (in thousands):
--------- ----
Revenues . . . . . . . . . . . . . . $ 50,310 $ 26,269 $ 127,118 $ 66,334
=========== ============ ============ ============
Gross profit . . . . . . . . . . . . $ 13,502 $ 5,425 $ 29,848 $ 12,788
=========== ============ ============ ============
As a percentage of sales . . . . . . 26.8% 20.7% 23.5% 19.3%
=========== ============ ============ ============
Operating income . . . . . . . . . . $ 7,214 $ 2,438 $ 14,366 $ 4,375
=========== ============ ============ ============
</TABLE>
- ----------------------------------
(1) Baker Hughes, Inc. is an international oilfield service and equipment
company which for more than twenty 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) An operating day is defined as a day during which a rig is being
operated, mobilized, assembled or dismantled while under contract.
(3) 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 three and nine months ended
September 30, 1997, the utilization rate of the Company's rigs,
excluding stacked rigs, was 90% and 88%, respectively.
- 12 -
<PAGE> 13
Comparison of Three Months Ended September 30, 1997 and 1996
Revenue
- -------
Revenue increased 91% to $50.3 million for the three months ended September 30,
1997 from $26.3 million for the three months ended September 30, 1996 primarily
due to the increase in demand for drilling services and growth in the Company's
rig fleet. The revenue increase of $24.0 million consisted of a $22.6 million
increase in contract drilling revenue, $1.7 million increase in pressure pumping
revenue and a $300,000 decrease in other revenue. The Company's rig fleet was
employed for 5,810 for the three months ended September 30, 1997 as compared to
3,176 days in the corresponding period of 1996. Revenue increases also
reflected improvements in contract rates.
Gross Profit
- ------------
Gross profit increased 150% to $13.5 million for the three months ended
September 30, 1997 compared to $5.4 million for the three months ended
September 30, 1996 due to higher revenues, increased prices and consolidation
savings. Contract drilling gross profit as a percentage of revenue was 23.4%
in 1997 and 17.1% in 1996. Pressure pumping gross profit as a percentage of
revenue was 48.3% in 1997 and 40.6% in 1996.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization expense for the three months ended September 30,
1997 increased $1.9 million compared to the three months ended September 30,
1996 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
- -----------------------------------
Selling, general and administrative expenses increased $1.4 million for the
three months ended September 30, 1997 compared to the three months ended
September 30, 1996 primarily due to the acquisitions of Viersen, 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 6.5% for the three months ended September 30, 1997 from
7.2% for the three months ended September 30, 1996.
Other Income
- ------------
Other income decreased $75,000 for the three months ended September 30, 1997
compared to the three months ended September 30, 1996 due to a reduction in
gains from sales of miscellaneous parts and equipment.
Interest Expense
- ----------------
Interest expense increased $1.4 million primarily due to interest on the debt
associated with the Viersen, Quarles and Southland acquisitions. Average
outstanding debt for the three months ended September 30, 1997 was $54.0
million compared to $15.6 million for the three months ended September 30, 1996.
- 13 -
<PAGE> 14
Net Income
- ----------
Net income for the three months ended September 30, 1997 was $3.9 million
compared to $1.6 million for the three months ended September 30, 1996. This
increase reflects the improved revenues and gross profit resulting from the
Company's growth and improved market conditions.
Comparison of Nine Months Ended September 30, 1997 and 1996
Revenue
- -------
Revenue increased 92% to $127.1 million for the first nine months of 1997 from
$66.3 million for the first nine months of 1996 primarily due to the increase in
demand for drilling services combined with growth in the Company's rig fleet.
The revenue increase of $60.8 million consisted of a $56.5 million increase in
contract drilling revenue and an increase of $4.3 million in pressure pumping
revenue. The Company's rig fleet was employed for 15,381 days during the first
nine months of 1997 compared to 8,096 days in the corresponding period of 1996.
The Company completed 2,333 pressure pumping jobs during the nine months ended
September 30, 1997 as compared to 2,108 jobs in the nine months ended September
30, 1996. Revenue increases also reflected improvements in contract rates.
Gross Profit
- ------------
Gross profit increased 133% to $29.8 million in the first nine months of 1997
compared to $12.8 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 21.3% in 1997 and 17.4% for the first nine months of
1996. Pressure pumping gross profit as a percentage of revenue was 39.8% for
the nine months ended September 30, 1997 and 30.8% for the corresponding period
of 1996.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization expense increased $4.0 million during the nine
months ended September 30, 1997, compared to the nine months ended September
30, 1996 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
- -----------------------------------
Selling, general and administrative expenses increased $3.1 million primarily
due to the acquisitions of Viersen, Quarles, Southland and the related increase
in the average number of rigs operating during the period. As a percentage of
revenues, selling, general and administrative expenses decreased to 6.6% for
the nine months ended September 30, 1997 from 8.1% for the nine months ended
September 30, 1996.
Other Income
- ------------
Other income decreased $675,000 during the nine months ended September 30, 1997,
compared to the nine months ended September 30, 1996 primarily because the prior
period included a one-time payment of $671,000. The Company received the payment
as a result of a favorable resolution of a dispute with the United States
government over mineral rights owned by the Company in Southeast New Mexico.
- 14 -
<PAGE> 15
Interest Expense
- ----------------
Interest expense increased $2.7 million during the nine months ended September
30, 1997, compared to the nine months ended September 30, 1996 primarily due to
interest on the debt associated with the Viersen and Quarles acquisitions.
Average debt outstanding during the first nine months of 1997 was $36.7 million
compared to $16.1 million for the first nine months of 1996. The Company also
incurred a one time prepayment penalty of $132,000 during the second quarter of
1997 in connection with a refinancing of indebtedness during the quarter.
Net Income
- ----------
Net income for the first nine months of 1997 was $7.5 million compared to $3.3
million for the corresponding period in 1996. This increase reflects the
improved revenues and gross profit resulting from the Company's growth and
improved market conditions.
Liquidity and Capital Resources
Working Capital
- ---------------
On October 1997, the Company sold in a public offering 1,792,600 shares of
Common Stock. Shares of Common Stock held by various shareholders of the
Company were also sold in this offering, including 1,707,000 shares of Common
Stock that were subject to outstanding warrants and options. The net proceeds
from this offering to the Company, including approximately $13.0 million from
the exercise of warrants and options to purchase shares of Common Stock that
were sold in the offering, were approximately $80.0 million. The Company
utilized approximately $27.9 million of the net proceeds to repay all of its
outstanding debt other than its 12% Senior Subordinated Notes due 2001 (the
"Subordinated Notes"). As a result, after giving effect to the offering and the
repayment of debt, the Company currently has in excess of $52.1 million cash and
cash equivalents and no borrowings under its working capital facility. The
Company intends to utilize these available cash resources, together with its
cash flow from operations, to continue its acquisition and growth strategy.
The Company has a working capital facility that provides a revolving line of
credit of $12.4 million. The revolving line of credit 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
such other rate options available at the time of borrowing, depending upon the
Company's financial performance. The facility expires on June 30, 1998.
Debt Facilities
- ---------------
In April 1997, in connection with the Company's acquisition of Southland and a
refinancing of various loans incurred to finance prior acquisitions, the Company
issued $25.0 million principal amount of Subordinated Notes and entered into a
$25.0 million term loan with its bank. The Subordinated Notes were issued at a
2% discount and carried with them seven year warrants to purchase 1.2 million
shares of Common Stock at an exercise price of $10.83 per share. The term note
was repaid following the Company's recent public offering and 720,000 of the
warrants to purchase Common Stock issued in connection with the Subordinated
Notes were exercised in connection with that offering. The Subordinated Notes
similarly 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.
- 15 -
<PAGE> 16
JSM
- ---
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 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.
Other
- -----
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 expects that such
acquisitions will be funded with a combination of its available cash,
borrowings where necessary or desirable and additional issuances of Common
Stock and rights to acquire Common Stock.
Management believes its existing cash, future internally generated cash and
availability under its revolving line of credit will be sufficient to meet its
working capital, capital expenditure and debt service requirements for the next
twelve months.
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
nine months ended September 30, 1997 of $.05 and $.09 per share, respectively.
The impact of Statement 128 on the calculation of fully diluted (renamed
diluted) earnings per share results in an increase to the three months and nine
months ended September 30, 1997 of $.01 and $.02 per share, respectively.
Inflation
Inflation has not had a significant impact on the Company's comparative results
of operations.
- 16 -
<PAGE> 17
Risks Associated With Forward-looking Statements
From time to time, the Company may make certain statements that contain
"forward-looking" information (as defined in the Private Securities Litigation
Reform Act of 1995). Words such as "anticipate", "believe", "expect",
"estimate", "project" and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements may be made by
management orally or in writing, including, but not limited to, in press
releases, as part of this "Management's Discussion and Analysis of Financial
Condition Results of Operation" contained in this Report, and in the Company's
other filings with the Securities and Exchange Commission under the Securities
Act of 1933 and the Securities Exchange Act of 1934.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Such forward-looking statements
are subject to certain risks, uncertainties and assumptions, including without
limitation those identified below. Should one or more of these risks or
uncertainties materialize, or should any of the underlying assumptions prove
incorrect, actual results of current and future operations may vary materially
from those anticipated, estimated, or projected. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of their dates.
Among the factors that will have a direct bearing on the Company's results of
operations and the contract drilling service industry in which it operates are
changes in the price of oil and natural gas and the volatility of the contract
drilling service industry in general; any difficulties associated with the
Company's ability to successfully integrate recent and any future acquisitions;
contractual risk associated with turnkey and footage contracts; the presence of
competitors with greater financial resources; operating risks inherent in the
contract drilling service industry, such as blowouts, explosions, cratering,
well fires and spills; labor shortages; domestic and world-wide political
stability and economic growth; and other risks associated with the Company's
successful execution of internal operating plans as well as regulatory
uncertainties and legal proceedings.
- 17 -
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
At the Company's annual stockholders meeting held August 28, 1997, the
stockholders approved a three-for-one stock split of the Company's Common Stock
through a stock dividend and related amendment to the Company's Restated
Certificate of Incorporation that increased the number of authorized shares of
Common Stock from 10 million to 50 million shares. The stock dividend was paid
on September 5, 1997 to stockholders of record on August 25, 1997. As a result
of the stock split, all share and per share data contained herein has been
restated to reflect the effect of the three-for-one stock split. In addition,
at the annual meeting, the stockholders approved an amendment to the Restated
Certificate of Incorporation that authorizes the Company to issue up to
5,000,000 of Preferred Stock, $.01 par value.
On September 11, 1997, the Company effected the acquisition of J.S.M. &
Associates, Inc., ("JSM"), through a merger (the "Merger") of J Acquisition
Corp., a wholly owned Texas subsidiary of the Company ("Sub"), with and into
JSM. The Merger was effected pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated September 11, 1997, between the Company, Sub, JSM,
Jim A. James and James F. Silhan. The Company acquired JSM for 618,748 shares of
Common Stock (including 61,874 shares to be issued following a contractual
post-closing adjustment period) and $2.6 million in cash, subject to adjustment.
The Purchase Price was determined by dividing $13.4 million by the contractual
agreed upon price. The sale of the shares of Common Stock in the merger was
exempt from registration under the Securities Act of 1933, as amended, pursuant
to Section 4(2) as a transaction not involving a public offering.
Under the terms of the Merger Agreement, the Company granted to Messrs. James
and Silhan the right to cause the Company to purchase one-half of the shares of
Common Stock issued to them in the transaction at the Agreed Stock Price (the
"Put Right"). The Put Right may only be exercised for a period of 30 days
beginning December 10, 1997. The Company also granted to Messrs. James and
Silhan demand and piggyback registration rights exercisable beginning December
10, 1997. The demand registration rights may not be exercised if Messrs. James
and Silhan exercise their Put Right.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on August 28, 1997, the
following members were elected to the Board of Directors in the class
specified:
<TABLE>
<CAPTION>
AFFIRMATIVE NEGATIVE VOTES
VOTES VOTES WITHHELD
(All share amounts do not reflect the 3:1, stock split
effective September 5, 1997).
<S> <C> <C> <C>
Class III Vaughn E. Drum 3,343,538 -0- 83,350
Robert B. Spears 3,343,288 -0- 83,600
</TABLE>
- 18 -
<PAGE> 19
In addition, the following proposals were approved at the Company's Annual
Meeting:
<TABLE>
<CAPTION>
AFFIRMATIVE NEGATIVE VOTES
VOTES NOTES ABSTAINED
(All share amounts do not reflect the 3:1, stock split
effective September 5, 1997).
<S> <C> <C> <C>
1. Approve the UTI Energy Corp. 1997 2,765,233 639,491 4,803
Long-Term Incentive Plan
2. Approve a three-for-one split of 2,750,650 673,888 2,350
the Company's Common Stock,
$.001 par value, through a stock
dividend and related amendment to
the Company's Restated Certificate
of Incorporation that would increase
the number of authorized shares of
the Common Stock from
10,000,000 to 50,000,000
3. Approve an amendment to the 2,215,854 819,788 4,750
Company's Restated Certificate of
Incorporation that would authorize
the issuance of up to 5,000,000
shares of Preferred Stock, $.01 par
value
</TABLE>
- 19 -
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on 8-K.
To report the acquisition of J.S.M. & Associates, Inc., pursuant to
Item 2 of Form 8-K, the Company filed a Form 8-K with the
Securities and Exchange Commission dated September 11, 1997.
<TABLE>
<CAPTION>
Exhibit
Number Title or Description
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
*2.1 - Agreement and Plan of Merger dated September 11, 1997 (the "Merger Agreement"), between UTI
Energy Corp., J Acquisition Corp., J.S.M. & Associates, Inc., Jim A. James and James F. Silhan.
Pursuant to Item 601(b) (2) of Regulation S-K, schedules and similar attachments to the Merger
Agreement have not been filed with this exhibit. The Disclosure Schedule contains information
relating to the representations and warranties contained in Article IV of the Merger Agreement.
The Company agrees to furnish supplementally any omitted schedule to the Securities and Exchange
Commission upon request.
3.1 - Amendment to the Company's Restated Certificate of Incorporation (incorporated by reference to
the Company's Registration Statement on Form 5-3, file no. 333-35109).
10.1 - 1997 Long-Term Incentive Plan
11.1 - Statement re: computation of earnings per share.
27.1 - Financial Data Schedule.
</TABLE>
*Previously filed with the Company's Current Report on Form 8-K
dated September 11, 1997.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
UTI ENERGY CORP.
(REGISTRANT)
Date: November 12, 1997 /s/ P. Blake Dupuis
---------------------------------------
P. Blake Dupuis
Vice President, Chief Financial Officer
and Chief Accounting Officer
Signed on behalf of the registrant and
as principal financial officer
- 21 -
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
*2.1 - Agreement and Plan of Merger dated September 11, 1997 (the "Merger Agreement"), between UTI
Energy Corp., J Acquisition Corp., J.S.M. & Associates, Inc., Jim A. James and James F. Silhan.
Pursuant to Item 601(b) (2) of Regulation S-K, schedules and similar attachments to the Merger
Agreement have not been filed with this exhibit. The Disclosure Schedule contains information
relating to the representations and warranties contained in Article IV of the Merger Agreement.
The Company agrees to furnish supplementally any omitted schedule to the Securities and Exchange
Commission upon request.
3.1 - Amendment to the Company's Restated Certificate of Incorporation (incorporated by reference to
the Company's Registration Statement on Form 5-3, file no. 333-35109).
10.1 - 1997 Long-Term Incentive Plan
11.1 - Statement re: computation of earnings per share.
27.1 - Financial Data Schedule.
</TABLE>
*Previously filed with the Company's Current Report on Form 8-K
dated September 11, 1997.
<PAGE> 1
EXHIBIT 10.1
ANNEX A
UTI ENERGY CORP.
1997 LONG-TERM INCENTIVE PLAN
ARTICLE I: GENERAL
SECTION 1.1 Purpose of the Plan. The Long-Term Incentive Plan (the
"Plan") of UTI Energy Corp. (the "Company") is intended to advance the best
interests of the Company, its subsidiaries and its stockholders in order to
attract, retain and motivate key employees by providing them with additional
incentives through (i) the grant of options ("Options") to purchase shares of
Common Stock, par value $.01 per share, of the Company ("Common Stock"), (ii)
the grant of stock appreciation rights ("Stock Appreciation Rights"), (iii) the
award of shares of restricted Common Stock ("Restricted Stock") and (iv) the
award of units payable in cash or shares of Common Stock based on performance
("Performance Awards"), thereby increasing the personal stake of such key
employees in the continued success and growth of the Company.
SECTION 1.2 Administration of the Plan. (a) The Plan shall be
administered either by the full Board of Directors of the Company (the "Board
of Directors") or by the Compensation Committee or other designated committee
of the Board of Directors. The Board of Directors or such committee is
referred to herein as the "Committee". The Committee shall have authority to
interpret conclusively the provisions of the Plan, to adopt such rules and
regulations for carrying out the Plan as it may deem advisable, to decide
conclusively all questions of fact arising in the application of the Plan, to
establish performance criteria in respect of Awards (as defined herein) under
the Plan, to certify that Plan requirements have been met for any participant
in the Plan, to submit such matters as it may deem advisable to the Company's
stockholders for their approval, and to make all other determinations and take
all other actions necessary or desirable for the administration of the Plan.
The Committee is expressly authorized to adopt rules and regulations limiting
or eliminating its discretion in respect of certain matters as it may deem
advisable to comply with or obtain preferential treatment under any applicable
tax or other law rule, or regulation. All decisions and acts of the Committee
shall be final and binding upon all affected Plan participants.
(b) The Committee shall designate the eligible employees, if any,
to be granted Awards and the type and amount of such Awards and the time when
Awards will be granted. All Awards granted under the Plan shall be on the
terms and subject to the conditions determined by the Committee consistent with
the Plan.
<PAGE> 2
SECTION 1.3 Eligible Participants. Key employees, including officers
and directors, of the Company and its subsidiaries (all such subsidiaries being
referred to as "Subsidiaries") shall be eligible for Awards under the Plan.
SECTION 1.4 Awards Under the Plan. Awards to key employees may be in
the form of (i) Options, (ii) Stock Appreciation Rights, which may be issued
independent of or in tandem with Options, (iii) shares of Restricted Stock,
(iv) Performance Awards, or (v) any combination of the foregoing (collectively,
"Awards").
SECTION 1.5 Shares Subject to the Plan. Initially, the aggregate
number of shares of Common Stock that may be issued under the Plan shall be
200,000, subject to adjustment as provided in the Plan. Shares distributed
pursuant to the Plan may consist of authorized but unissued shares or treasury
shares of the Company, as shall be determined from time to time by the Board of
Directors.
If any Award under the Plan shall expire, terminate or be canceled
(including cancellation upon an Option holder's exercise of a related Stock
Appreciation Right) for any reason without having been exercised in full, or if
any Award shall be forfeited to the Company, the unexercised or forfeited Award
shall not count against the above limits and shall again become available for
Awards under the Plan (unless the holder of such Award received dividends or
other economic benefits with respect to such Award, which dividends or other
economic benefits are not forfeited, in which case the Award shall count
against the above limits). Shares of Common Stock equal in number to the
shares surrendered in payment of the option price, and shares of Common Stock
which are withheld in order to satisfy Federal, state or local tax liability,
shall count against the above limits. Only the number of shares of Common
Stock actually issued upon exercise of a Stock Appreciation Right shall count
against the above limits, and any shares which were estimated to be used for
such purposes and were not in fact so used shall again become available for
Awards under the Plan. Cash exercises of Stock Appreciation Rights and cash
settlement of other Awards will not count against the above limits.
The aggregate number of shares of Common Stock subject to Options or
Stock Appreciation Rights that may be granted to any one participant in any one
year under the Plan shall be 100,000. The aggregate number of shares of Common
Stock that may be granted to any one participant in any one year in respect of
Restricted Stock shall be 100,000. The aggregate number of shares of Common
Stock that may be received by any one participant in any one year in respect of
a Performance Award shall be 100,000 and the aggregate amount of cash that may
be received by any one participant in any one year in respect to a Performance
Award shall be $500,000.
The total number of Awards (or portions thereof) settled in cash under
the Plan, based on the number of shares covered by such Awards (e.g., 100
shares for a Stock Appreciation Right with respect to 100 shares), shall not
exceed a number equal to (i) the number of shares initially available for
issuance under the Plan plus (ii) the number of shares that have become
available for issuance under the Plan pursuant to the first paragraph of this
Section 1.5.
<PAGE> 3
The aggregate number of shares of Common Stock that are available
under the Plan for Options granted in accordance with Section 2.4(i) ("ISOs")
is 200,000, subject to adjustments as provided in Section 5.2 of the Plan.
SECTION 1.6 Other Compensation Programs. Nothing contained in the
Plan shall be construed to preempt or limit the authority of the Board of
Directors to exercise its corporate rights and powers, including, but not by
way of limitation, the right of the Board of Directors (i) to grant incentive
awards for proper corporate purposes otherwise than under the Plan to any
employee, officer, director or other person or entity or (ii) to grant
incentive awards to, or assume incentive awards of, any person or entity in
connection with the acquisition (whether by purchase, lease, merger,
consolidation or otherwise) of the business or assets (in whole or in part) of
any person or entity.
ARTICLE II: STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
SECTION 2.1 Terms and Conditions of Options. Subject to the
following provisions, all Options granted under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such terms
and conditions as the Committee, in its discretion, may from time to time
determine consistent with the Plan.
(a) Option Price. The option price per share shall be determined
by the Committee, except that in the case of an Option granted in accordance
with Section 2.4(i) the option price per share shall not be less than the fair
market value of a share of Common Stock (as determined by the Committee) on the
date the Option is granted (other than in the case of substitute or assumed
Options to the extent required to qualify such Options for preferential tax
treatment under the Code as in effect at the time of such grant).
(b) Term of Option. The term of an Option shall be determined by
the Committee, except that in the case of an ISO the term of the Option shall
not exceed ten years from the date of grant, and, notwithstanding any other
provision of this Plan, no Option shall be exercised after the expiration of
its term.
(c) Exercise of Options. Options shall be exercisable at such
time or times and subject to such terms and conditions as the Committee shall
specify in the Option grant. Unless the Option grant specifies otherwise, the
Committee shall have discretion at any time to accelerate such time or times
and otherwise waive or amend any conditions in respect of all or any portion of
the Options held by any optionee. An Option may be exercised in accordance
with its terms as to any or all shares purchasable thereunder.
(d) Payment for Shares. The Committee may authorize payment for
shares as to which an Option is exercised to be made in cash, shares of Common
Stock, a combination thereof, by "cashless exercise" or in such other manner as
the Committee in its discretion may provide.
<PAGE> 4
(e) Stockholder Rights. The holder of an Option shall, as such,
have none of the rights of a stockholder.
(f) Termination of Employment. The Committee shall have
discretion to specify in the Option grant, or, with the consent of the
optionee, an amendment thereof, provisions with respect to the period, not
extending beyond the term of the Option, during which the Option may be
exercised following the optionee's termination of employment.
SECTION 2.2 Stock Appreciation Rights in Tandem with Options. (a)
The Committee may, either at the time of grant of an Option or at any time
during the term of the Option, grant Stock Appreciation Rights ("Tandem SARs")
with respect to all or any portion of the shares of Common Stock covered by
such Option. A Tandem SAR may be exercised at any time the Option to which it
relates is then exercisable, but only to the extent the Option to which it
relates is exercisable, and shall be subject to the conditions applicable to
such Option. When a Tandem SAR is exercised, the Option to which it relates
shall cease to be exercisable to the extent of the number of shares with
respect to which the Tandem SAR is exercised. Similarly, when an Option is
exercised, the Tandem SARs relating to the shares covered by such Option
exercise shall terminate. Any Tandem SAR which is outstanding on the last day
of the term of the related Option (as determined pursuant to Section 2.1(b))
shall be automatically exercised on such date for cash without any action by
the optionee.
(b) Upon exercise of a Tandem SAR, the holder shall receive, for
each share with respect to which the Tandem SAR is exercised, an amount (the
"Appreciation") equal to the difference between the option price per share of
the Option to which the Tandem SAR relates and the fair market value (as
determined by the Committee) of a share of Common Stock on the date of exercise
of the Tandem SAR. The Appreciation shall be payable in cash, Common Stock, or
a combination of both, at the option of the Committee, and shall be paid within
30 days of the exercise of the Tandem SAR.
SECTION 2.3 Stock Appreciation Rights Independent of Options.
Subject to the following provisions, all Stock Appreciation Rights granted
independent of Options ("Independent SARs") under the Plan to employees of the
Company and its Subsidiaries shall be in such form and shall have such terms
and conditions as the Committee, in its discretion, may from time to time
determine consistent with the Plan.
(a) Exercise Price. The exercise price per share shall be
determined by the Committee on the date the Independent SAR is granted.
(b) Term of Independent SAR. The term of an Independent SAR shall
be determined by the Committee, and, notwithstanding any other provision of
this Plan, no Independent SAR shall be exercised after the expiration of its
term.
(c) Exercise of Independent SARs. Independent SARs shall be
exercisable at such time or times and subject to such terms and conditions as
the Committee
<PAGE> 5
shall specify in the Independent SAR grant. Unless the Independent SAR grant
specifies otherwise, the Committee shall have discretion at any time to
accelerate such time or times and otherwise waive or amend any conditions in
respect of all or any portion of the Independent SARs held by any participant.
Upon exercise of an Independent SAR, the holder shall receive, for each share
specified in the Independent SAR grant, an amount (the "Appreciation") equal to
the difference between the exercise price per share specified in the
Independent SAR grant and the fair market value (as determined by the
Committee) of a share of Common Stock on the date of exercise of the
Independent SAR. The Appreciation shall be payable in cash, Common Stock, or a
combination of both, at the option of the Committee, and shall be paid within
30 days of the exercise of the Independent SAR.
(d) Stockholder Rights. The holder of an Independent SAR shall,
as such, have none of the rights of a stockholder.
(e) Termination of Employment. The Committee shall have
discretion to specify in the Independent SAR grant, or, with the consent of the
holder, an amendment thereof, provisions with respect to the period, not
extending beyond the term of the Independent SAR, during which the Independent
SAR may be exercised following the holder's termination of employment.
SECTION 2.4 Statutory Options. Subject to the limitations on Option
terms set forth in Section 2.1, the Committee shall have the authority to grant
(i) ISOs within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) Options containing such terms and
conditions as shall be required to qualify such Options for preferential tax
treatment under the Code as in effect at the time of such grant, including, if
then applicable, limits with respect to minimum exercise price, duration and
amounts and special limitations applicable to any individual who, at the time
the Option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any affiliate.
Options granted pursuant to this Section 2.4 may contain such other terms and
conditions permitted by Article II of this Plan as the Committee, in its
discretion, may from time to time determine (including, without limitation,
provision for Stock Appreciation Rights), to the extent that such terms and
conditions do not cause the Options to lose their preferential tax treatment.
If an Option intended to be an ISO ceases or is otherwise not eligible to be an
ISO, such Option (or portion thereof necessary to maintain the status of the
remaining portion of the Option as an ISO) shall remain valid but be treated as
an Option other than an ISO.
SECTION 2.5 Change of Control. Notwithstanding the exercisability
schedule governing any Option or Stock Appreciation Right, upon the occurrence
of a Change of Control (as defined in Section 5.9) all Options and Stock
Appreciation Rights outstanding at the time of such Change of Control and held
by participants who are employees of the Company or its subsidiaries at the
time of such Change of Control shall (unless specifically provided otherwise in
the grant thereof) become immediately exercisable and, unless the participant
agrees otherwise in writing, remain exercisable for three years (but not beyond
the term of the Option or Stock Appreciation Right) after the employee's
termination of employment for any reason other than termination by the Company
or a subsidiary of the Company for
<PAGE> 6
dishonesty, conviction of a felony, wilful unauthorized disclosure of
confidential information or wilful refusal to perform the duties of such
employee's position or positions with the Company or such subsidiary
(termination for "cause"); provided that this Section 2.5 shall not apply to
Awards granted to a participant if, in connection with a Change of Control
pursuant to clause (1) of Section 5.9, such participant is the Person or forms
part of the Person specified in such clause (1).
ARTICLE III: RESTRICTED STOCK
SECTION 3.1 Terms and Conditions of Restricted Stock Awards. Subject
to the following provisions, all Awards of Restricted Stock under the Plan to
employees of the Company and its Subsidiaries shall be in such form and shall
have such terms and conditions as the Committee, in its discretion, may from
time to time determine consistent with the Plan.
(a) Restricted Stock Award. The Restricted Stock Award shall
specify the number of shares of Restricted Stock to be awarded, the price, if
any, to be paid by the recipient of the Restricted Stock, and the date or dates
on which the Restricted Stock will vest. The vesting and number of shares of
Restricted Stock may be conditioned upon the completion of a specified period
of service with the Company or its Subsidiaries, upon the attainment of
specified performance objectives, or upon such other criteria as the Committee
may determine in accordance with the provisions hereof. Performance objectives
will be based on increases in share prices, operating income, net income or
cash flow thresholds on a company wide, subsidiary or division or group basis,
rig utilization, safety records, return on common equity or any combination of
the foregoing.
(b) Restrictions on Transfer. Stock certificates representing the
Restricted Stock granted to an employee shall be registered in the employee's
name. Such certificates shall either be held by the Company on behalf of the
employee, or delivered to the employee bearing a legend to restrict transfer of
the certificate until the Restricted Stock has vested, as determined by the
Committee. The Committee shall determine whether the employee shall have the
right to vote and/or receive dividends on the Restricted Stock before it has
vested. No share of Restricted Stock may be sold, transferred, assigned, or
pledged by the employee until such share has vested in accordance with the
terms of the Restricted Stock Award. Unless the grant of a Restricted Stock
Award specifies otherwise, in the event of an employee's termination of
employment before all the employee's Restricted Stock has vested, or in the
event other conditions to the vesting of Restricted Stock have not been
satisfied prior to any deadline for the satisfaction of such conditions set
forth in the Award, the shares of Restricted Stock that have not vested shall
be forfeited and any purchase price paid by the employee shall be returned to
the employee. At the time Restricted Stock vests (and, if the employee has
been issued legended certificates of Restricted Stock, upon the return of such
certificates to the Company), a certificate for such vested shares shall be
delivered to the employee or the employee's estate, free of all restrictions.
(c) Accelerated Vesting. Notwithstanding the vesting conditions
set forth in the Restricted Stock Award, (i) unless the Restricted Stock grant
specifies
<PAGE> 7
otherwise, the Committee may in its discretion at any time accelerate the
vesting of Restricted Stock or otherwise waive or amend any conditions of a
grant of Restricted Stock, and (ii) all shares of Restricted Stock shall vest
upon a Change of Control of the Company; provided that clause (ii) above shall
not apply to Awards granted to a participant if, in connection with a Change of
Control pursuant to clause (1) of Section 5.9, such participant is the Person
or forms part of the Person specified in such clause (1).
ARTICLE IV: PERFORMANCE AWARDS
SECTION 4.1 Terms and Conditions of Performance Awards. The
Committee shall be authorized to grant Performance Awards, which are payable in
stock, cash or a combination thereof, at the discretion of the Committee.
(a) Performance Period. The Committee shall establish with
respect to each Performance Award a performance period over which the
performance goal of such Performance Award shall be measured. The performance
period for a Performance Award shall be established prior to the time such
Performance Award is granted and may overlap with performance periods relating
to other Performance Awards granted hereunder to the same employee.
(b) Performance Objectives. The Committee shall establish a
minimum level of acceptable achievement for the holder at the time of each
Award. Each Performance Award shall be contingent upon future performances and
achievement of objectives described either in terms of Company-wide performance
or in terms that are related to performance of the employee or of the division,
subsidiary, department or function within the Company in which the employee is
employed. The Committee shall have the authority to establish the specific
performance objectives and measures applicable to such objectives. Such
objectives, however, shall be based on increases in share prices, operating
income, net income or cash flow thresholds on a company wide, subsidiary or
division or group, rig utilization, safety records, return on common equity or
any combination of the foregoing.
(c) Size, Frequency and Vesting. The Committee shall have the
authority to determine at the time of the Award the maximum value of a
Performance Award, the frequency of Awards and the date or dates when Awards
vest.
(d) Payment. Following the end of each performance period, the
holder of each Performance Award will be entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Award, based on the
achievement of the performance measures for such performance period, as
determined by the Committee. If at the end of the performance period the
specified objectives have been attained, the employee shall be deemed to have
fully earned the Performance Award. If the employee exceeds the specified
minimum level of acceptable achievement but does not fully attain such
objectives, the employee shall be deemed to have partly earned the Performance
Award, and shall become entitled to receive a portion of the total Award, as
determined by the Committee. If a Performance Award is granted after the start
of a performance period, the Award shall be reduced to reflect the portion of
the performance period during which the Award
<PAGE> 8
was in effect. Unless the Award specifies otherwise, including restrictions in
order to satisfy the conditions under Section 162(m) of the Code, the Committee
may adjust the payment of Awards or the performance objectives if events occur
or circumstances arise which would cause a particular payment or set of
performance objectives to be inappropriate, as determined by the Committee.
(e) Termination of Employment. A recipient of a Performance Award
who, by reason of death, disability or retirement, terminates employment before
the end of the applicable performance period shall be entitled to receive, to
the extent earned, a portion of the Award which is proportional to the portion
of the performance period during which the employee was employed. A recipient
of a Performance Award who terminates employment for any other reason shall not
be entitled to any part of the Award unless the Committee determines otherwise;
however, the Committee may in no event pay the employee more than that portion
of the Award which is proportional to his or her period of actual service.
(f) Accelerated Vesting. Notwithstanding the vesting conditions
set forth in a Performance Award, (i) unless the Award specifies otherwise, the
Committee may in its discretion at any time accelerate vesting of the Award or
otherwise waive or amend any conditions (including but not limited to
performance objectives) in respect of a Performance Award, and (ii) all
Performance Awards shall vest upon a Change of Control of the Company. In
addition, each participant in the Plan shall receive the maximum Performance
Award he or she could have earned for the proportionate part of the performance
period prior to the Change of Control, and shall retain the right to earn any
additional portion of his or her Award if he or she remains in the Company's
employ. However, clause (ii) above shall not apply to Awards granted to a
participant if, in connection with a Change of Control pursuant to clause (1)
of Section 5.9, such participant is the Person or forms part of the Person
specified in such clause (1).
(g) Stockholder Rights. The holder of a Performance Award shall,
as such, have none of the rights of a stockholder.
ARTICLE V: ADDITIONAL PROVISIONS
SECTION 5.1 General Restrictions. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any
state or Federal law, or (ii) the consent or approval of any government
regulatory body, or (iii) an agreement by the recipient of an Award with
respect to the disposition of shares of Common Stock, is necessary or desirable
(in connection with any requirement or interpretation of any Federal or state
securities law, rule or regulation) as a condition of, or in connection with,
the granting of such Award or the issuance, purchase or delivery of shares of
Common Stock thereunder, such Award may not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
<PAGE> 9
SECTION 5.2 Adjustments for Changes in Capitalization. In the event
of any stock dividends, stock splits, recapitalizations, combinations,
exchanges of shares, mergers, consolidation, liquidations, split-ups,
split-offs, spin- offs, or other similar changes in capitalization, or any
distribution to stockholders, including a rights offering, other than regular
cash dividends, changes in the outstanding stock of the Company by reason of
any increase or decrease in the number of issued shares of Common Stock
resulting from a split-up or consolidation of shares or any similar capital
adjustment or the payment of any stock dividend, any share repurchase at a
price in excess of the market price of the Common Stock at the time such
repurchase is announced or other increase or decrease in the number of such
shares, the Committee shall make appropriate adjustment in the number and kind
of shares authorized by the Plan (including shares available for ISOs), in the
number, price or kind of shares covered by the Awards and in any outstanding
Awards under the Plan; provided, however, that no such adjustment shall
increase the aggregate value of any outstanding Award.
In the event of any adjustment in the number of shares covered by any
Award, any fractional shares resulting from such adjustment shall be
disregarded and each such Award shall cover only the number of full shares
resulting from such adjustment.
SECTION 5.3 Amendments. (a) The Board of Directors may at any time
and from time to time and in any respect amend or modify the Plan.
(b) The Committee shall have the authority to amend any Award to
include any provision which, at the time of such amendment, is authorized under
the terms of the Plan; however, no outstanding Award may be revoked or altered
in a manner unfavorable to the holder without the written consent of the
holder.
SECTION 5.4 Cancellation of Awards. Any Award granted under the Plan
may be canceled at any time with the consent of the holder and a new Award may
be granted to such holder in lieu thereof, which Award may, in the discretion
of the Committee, be on more favorable terms and conditions than the canceled
Award.
SECTION 5.5 Withholding. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the
Company shall have the right to require the holder to pay an amount in cash or
to retain or sell without notice, or demand surrender of, shares of Common
Stock in value sufficient to satisfy any Federal, state or local withholding
tax liability ("Withholding Tax") prior to the delivery of any certificate for
such shares (or remainder of shares if Common Stock is retained to satisfy such
tax liability). Whenever under the Plan payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any Federal, state or
local withholding tax liability. An Award may also provide the holder with the
right to satisfy the Withholding Tax with previously owned shares of Common
Stock or shares of Common Stock otherwise issuable to the holder.
Whenever Common Stock is so retained or surrendered to satisfy
Withholding Tax, the value of shares of Common Stock so retained or surrendered
shall be determined by the Committee, and the value of shares of Common Stock
so sold
<PAGE> 10
shall be the net proceeds (after deduction of commissions) received by the
Company from such sale, as determined by the Committee.
SECTION 5.6 Non-assignability. Except as expressly provided in the
Plan or in any agreements, no Award under the Plan shall be assignable or
transferable by the holder thereof except by will or by the laws of descent and
distribution. During the life of the holder, Awards under the Plan shall be
exercisable only by such holder or by the guardian or legal representative of
such holder.
SECTION 5.7 Non-uniform Determinations. Determinations by the
Committee under the Plan (including, without limitation, determinations of the
persons to receive Awards; the form, amount and timing of such Awards; the
terms and provisions of such Awards and the agreements evidencing same; and
provisions with respect to termination of employment) need not be uniform and
may be made by it selectively among persons who receive, or are eligible to
receive, Awards under the Plan, whether or not such persons are similarly
situated.
SECTION 5.8 No Guarantee of Employment. The grant of an Award under
the Plan shall not constitute an assurance of continued employment for any
period or any obligation of the Board of Directors to nominate any director for
reelection by the Company's stockholders.
SECTION 5.9 Change of Control. A "Change of Control" shall be deemed
to have occurred if:
(1) any Person (as defined below), other than a
Designated Person, is or becomes the Beneficial Owner (as defined
below) of securities of the Company representing 35% or more of the
Voting Power (as defined below);
(2) there shall occur a change in the composition of a
majority of the Board of Directors within any period of four
consecutive years which change shall not have been approved by a
majority of the Board of Directors as constituted immediately prior to
the commencement of such period;
(3) at any meeting of the stockholders of the Company
called for the purpose of electing directors, more than one of the
persons nominated by the Board of Directors for election as directors
shall fail to be elected; or
(4) the stockholders of the Company approve a merger,
consolidation, sale of substantially all assets or other
reorganization of the Company, other than a reincorporation, in which
the Company does not survive.
For purposes of this Section 5.9, (i) "Person" shall have the meaning
set forth in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act"), as in effect on May 1, 1997, (ii) "Beneficial Owner"
shall have the meaning set forth in Rules 13d-3 and 13d-5 promulgated under the
Exchange Act on May 1, 1997; (iii) "Voting Power" shall mean the voting power
of the outstanding securities of the Company having the right under ordinary
circumstances to vote at
<PAGE> 11
an election of the Board of Directors; and (iv) "Designated Person" shall mean
any Person whose Beneficial Ownership of securities is solely the result of
such Person acquiring securities as an underwriter in an underwritten public
offering of such securities. Notwithstanding anything contained herein to the
contrary, a Change in Control shall not be deemed to have occurred due to the
Voting Power of Remy Capital Partners III, L.P. or any of its affiliates
(collectively "Remy") falling below 35% or subsequently increasing over 35%.
SECTION 5.10 Duration and Termination. (a) The Plan shall be of
unlimited duration. Notwithstanding the foregoing, no ISO (within the meaning
of Section 422 of the Code) shall be granted under the Plan ten (10) years
after the effective date of the Plan, but Awards granted prior to such date may
extend beyond such date, and the terms of this Plan shall continue to apply to
all Awards granted hereunder.
(b) The Board of Directors may suspend, discontinue or terminate
the Plan at any time. Such action shall not impair any of the rights of any
holder of any Award outstanding on the date of the Plan's suspension,
discontinuance or termination without the holder's written consent.
SECTION 5.11 Deferred Compensation and Trust Agreements. The
Committee may authorize and establish deferred compensation agreements and
arrangements in connection with Awards under the Plan and may establish trusts
and other arrangements including "rabbi trusts", with respect to such
agreements and appoint one or more trustees for such trusts. Shares of Common
Stock under the Plan may also be acquired by one or more trustees from the
Company, in the open market or otherwise.
SECTION 5.12 Effective Date. The Plan shall be effective as of July
23, 1997, subject to approval of the Corporation's stockholders.
<PAGE> 1
EXHIBIT 11.1 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
NINE MONTHS ENDED
September 30, 1997
------------------
<S> <C>
Primary:
Average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 11,910,355
Net effect of dilutive stock options and
warrants based on the treasury stock
method using average market price . . . . . . . . . . . . . . . . . . . . 2,091,610
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,001,965
============
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,515,000
============
Per share amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.54
============
Fully diluted:
Average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . 11,910,355
Net effect of dilutive stock options and
warrants based on the treasury stock
method using the quarter-end price
which is greater than the
average market price . . . . . . . . . . . . . . . . . . . . . . . . . . 2,445,804
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,356,159
============
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,515,000
============
Per share amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.52
============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,718
<SECURITIES> 0
<RECEIVABLES> 34,542
<ALLOWANCES> 533
<INVENTORY> 1,697
<CURRENT-ASSETS> 37,770
<PP&E> 120,025
<DEPRECIATION> 29,368
<TOTAL-ASSETS> 147,034
<CURRENT-LIABILITIES> 32,492
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 57,817
<TOTAL-LIABILITY-AND-EQUITY> 147,034
<SALES> 0
<TOTAL-REVENUES> 127,118
<CGS> 0
<TOTAL-COSTS> 92,270
<OTHER-EXPENSES> 15,482
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,393
<INCOME-PRETAX> 11,318
<INCOME-TAX> 3,803
<INCOME-CONTINUING> 7,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,515
<EPS-PRIMARY> .54
<EPS-DILUTED> .52
</TABLE>
