<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO CURRENT REPORT ON
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: APRIL 9, 1998
UTI ENERGY CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 001-12542 23-2037823
- ---------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
SUITE 225N
16800 GREENSPOINT PARK
HOUSTON, TEXAS 77060
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (281) 873-4111
----------------------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 9, 1998, UTI Energy Corp., a Delaware corporation (the
"Company"), effected the acquisition of Peterson Drilling Company, a Texas
corporation ("PDC"), through a merger (the "Merger") of a wholly owned
subsidiary of the Company with and into PDC. The Merger was effected pursuant to
an Agreement and Plan of Merger, dated April 9, 1998, between the Company, PDC
Acquisition Company, a Texas corporation, PDC and the shareholders of PDC
signatory thereto. The Company acquired PDC for a total purchase price of $20.4
million determined through arms-length negotiations between the parties. PDC's
assets include eight land drilling rigs, as well as related drilling equipment,
office facilities in Midland, Texas and approximately $4.0 million in net
working capital. The Company intends to continue to operate the business of PDC
and integrate PDC's operations with the Company's existing contract drilling
operations.
In connection with the Company's acquisition of PDC, the Company
retained Ray Peterson, President of PDC, and Leroy Peterson, Vice President of
PDC, as employees to the Company. The Company executed Employment Agreements
with both Ray Peterson and Leroy Peterson.
The acquisition was funded with the Company's existing cash.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The following financial statements of Peterson Drilling Company
are included in Appendix A and Appendix B hereto and filed
herewith:
Peterson Drilling Company Financial Statements.
Balance Sheet at December 31, 1997.
Statement of Income for the year ended December 31,
1997.
Statement of Cash Flows for the year ended December
31, 1997.
Peterson Drilling Company Financial Statements (Unaudited).
Condensed Balance Sheets as of March 31, 1998 and
December 31, 1997.
Condensed Statements of Income for the three months
ended March 31, 1998 and 1997.
Condensed Statements of Cash Flows for the three
months ended March 31, 1998 and 1997.
(b) Pro Forma Financial Information
The following pro forma financial information is included in
Appendix C hereto and filed herewith:
Pro Forma Condensed Consolidated Balance Sheet at March 31,
1998 (Unaudited).
Pro Forma Condensed Consolidated Statement of Income for
the three months ended March 31, 1998 (Unaudited).
Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1997 (Unaudited).
2
<PAGE> 3
(c) Exhibits
* 2.1 Agreement and Plan of Merger dated April 9, 1997 (the
"Merger Agreement"), between UTI Energy Corp., PDC
Acquisition Company, Peterson Drilling Company ("PDC") and
the shareholders of PDC signatory thereto. 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.
* 10.1 Employment Agreement dated April 9, 1998, by and between
UTI Energy Corp. and Ray Peterson.
* 10.2 Employment Agreement dated April 9, 1998, by and between
UTI Energy Corp. and Leroy Peterson.
23.1 Consent of Ernst & Young LLP
* Previously filed with the Company's Current Report on Form
8-K dated April 9, 1998.
3
<PAGE> 4
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: June 19, 1998 /s/ P. Blake Dupuis
-----------------------------------------
Chief Financial Officer and
Chief Accounting Officer
Signing on behalf of the registrant
and as principal financial officer
4
<PAGE> 5
APPENDIX A
AUDITED FINANCIAL STATEMENTS
OF
BUSINESS ACQUIRED
5
<PAGE> 6
PETERSON DRILLING COMPANY
FINANCIAL STATEMENTS
CONTENTS
REPORT OF INDEPENDENT AUDITORS............................................. A-1
AUDITED FINANCIAL STATEMENTS
Balance Sheet as of December 31, 1997............................. A-2
Statement of Income for the year ended December 31, 1997.......... A-3
Statement of Cash Flows for the year ended December 31, 1997...... A-4
Notes to Financial Statements..................................... A-5
6
<PAGE> 7
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Peterson Drilling Company
We have audited the accompanying balance sheet of Peterson Drilling Company (the
"Company") as of December 31, 1997, and the related statements of income and
cash flows for the year then ended. 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 audit.
We conducted our audit 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 estimated made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Peterson Drilling Company at
December 31, 1997, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Houston, Texas
May 29, 1998
A-1
<PAGE> 8
PETERSON DRILLING COMPANY
BALANCE SHEET
DECEMBER 31, 1997
(In thousands, except share data)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash .......................................................... $ 2
Accounts receivable ........................................... 5,602
Prepaid expenses .............................................. 14
--------
5,618
PROPERTY AND EQUIPMENT:
Machinery and equipment ....................................... 12,993
Accumulated depreciation ...................................... (9,195)
--------
3,798
--------
$ 9,416
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit ................................................ $ 120
Notes payable ................................................. 175
Accounts payable .............................................. 1,125
Accrued payroll costs ......................................... 172
Accrued income taxes .......................................... 180
Other accrued expenses ........................................ 470
--------
2,242
DEFERRED INCOME TAXES .............................................. 1,076
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 1,000,000 shares authorized,
623,815 shares issued and outstanding ...................... 624
Additional capital ............................................ 2,847
Retained earnings ............................................. 2,627
--------
6,098
--------
$ 9,416
========
</TABLE>
See accompanying notes.
A-2
<PAGE> 9
PETERSON DRILLING COMPANY
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(In thousands)
<TABLE>
<S> <C>
REVENUES ............................................................ $ 20,672
COSTS AND EXPENSES:
Cost of sales .................................................. 14,311
Selling, general and administrative ............................ 545
Depreciation ................................................... 462
--------
15,318
--------
OPERATING INCOME .................................................... 5,354
INTEREST EXPENSE .................................................... 44
--------
INCOME BEFORE INCOME TAXES .......................................... 5,310
INCOME TAXES ........................................................ 2,047
--------
NET INCOME .......................................................... $ 3,263
========
</TABLE>
See accompanying notes.
A-3
<PAGE> 10
PETERSON DRILLING COMPANY
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(In thousands)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 3,263
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation .............................................. 462
Deferred income taxes ..................................... 105
Change in operating assets and liabilities:
Accounts receivable and prepaids ........................ (3,146)
Accounts payable and other .............................. 191
--------
Net cash provided by operating activities ............ 875
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .......................................... (1,119)
--------
Net cash used by investing activities ................ (1,119)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit ........................... 120
Repayments of long-term debt .................................. (200)
--------
Net cash used by financing activities ................ (80)
--------
NET DECREASE IN CASH ............................................... (324)
CASH AT BEGINNING OF YEAR .......................................... 326
--------
CASH AT END OF YEAR ................................................ $ 2
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest .................................................... $ 44
Income taxes ................................................ $ 1,722
</TABLE>
See accompanying notes.
A-4
<PAGE> 11
PETERSON DRILLING COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Peterson Drilling Company (the "Company") provides onshore contract
drilling services to exploration and production companies. The Company's
drilling operations currently are concentrated in the oil and natural gas
producing basins of New Mexico. The Company's rig fleet currently
consists of eight land drilling rigs that are well suited to the
requirements of its markets.
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.
Property and Equipment
Property and equipment is stated at cost. Improvements are capitalized
and depreciated over the period of benefit. The Company periodically
reviews its assets for impairment. Provisions for permanent asset
impairment are charged to income when indicators of impairment are
present, and when it is considered probable that the carrying values of
producing asset groups may not be recovered over their remaining service
lives, based on estimates of future net cash flows on an undiscounted
basis. Upon retirement or other disposal of fixed assets, the cost and
related accumulated depreciation are removed from the respective
accounts, and any gains or losses are included in results of operations.
Depreciation is determined by the straight-line method over the estimated
useful lives of the related assets which range from 3-15 years.
Revenue Recognition
Revenues are recognized when services have been performed. Revenues from
footage 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.
Income Taxes
The Company utilizes the liability method in accounting for income taxes
that requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized
in the Company's financial statements or tax returns.
A-5
<PAGE> 12
PETERSON DRILLING COMPANY
NOTES TO FINANCIAL STATEMENTS
2. LINE OF CREDIT
The Company maintains a $1.0 million revolving credit agreement with a
bank which bears interest at the bank's prime rate (8.5% at December 31,
1997). The revolving credit agreement, which is to be used for working
capital and general corporate purposes, is secured by the pledge of the
Company's accounts receivable and drilling rigs. This facility was
terminated subsequent to year end. Maximum borrowings under this facility
in 1997 were $705,000.
3. NOTES PAYABLE
The Company's notes payable at December 31, 1997 consisted of the
following (in thousands):
<TABLE>
<S> <C>
Promissory note, bank, dated June 21,
1996, at the lower of the bank's prime
rate or the highest lawful rate (8.5% at
December 31, 1997), due in quarterly
installments of $25,000 through June
1999, paid in full in March 1998...................... $ 150
Promissory note, bank, dated April 10,
1995, at the lower of the bank's prime
rate or the highest lawful rate (8.5% at
December 31, 1997), due in quarterly
installments of $25,000 through March
1998.................................................. 25
--------
$ 175
========
</TABLE>
4. LEASES
Future minimum payments under noncancellable operating leases with
initial or remaining terms of one year or more totaled approximately
$14,000 at December 31, 1997. Rental expense for all operating leases in
1997 was approximately $14,200.
A-6
<PAGE> 13
PETERSON DRILLING COMPANY
NOTES TO FINANCIAL STATEMENTS
5. INCOME TAXES
The components of the provision for income taxes are as follows (in
thousands):
<TABLE>
<S> <C>
Current:
Federal.................................... $ 1,615
State...................................... 327
--------
1,942
Deferred:
Federal.................................... 88
State...................................... 17
--------
105
--------
$ 2,047
========
</TABLE>
Deferred income taxes are provided for temporary differences resulting
from certain income and expenses recognized in different periods for tax
and financial reporting purposes. Sources of temporary differences
primarily relate to depreciation.
The difference between tax expense computed at the federal income tax
rate of 34% and the effective tax rate of 39% reflected in the financial
statements is primarily due to state income taxes.
6. CONTINGENCIES
The Company is involved in various claims arising in the ordinary course
of business. In the opinion of management, these claims are not expected
to have a material adverse effect on the Company's financial position.
7. RELATED PARTY TRANSACTIONS
The Company had notes receivable from officers of $27,735 at December 31,
1997 which are included in accounts receivable and bear interest at 10%.
These notes were collected in May 1998.
A-7
<PAGE> 14
PETERSON DRILLING COMPANY
NOTES TO FINANCIAL STATEMENTS
8. FINANCIAL INSTRUMENTS
Concentrations of credit risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and trade
accounts receivable.
The Company maintains cash balances with various financial institutions.
The Company policy is designed to limit exposure to any one institution.
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.
In 1997, the Company had three major customers which accounted for
approximately 30%, 14% and 11% of revenues, respectively. 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.
Cash, accounts receivable and accounts payable: The carrying amounts
reported in the balance sheets approximate fair value.
Line of credit and long-term debt: The carrying amounts included in the
balance sheet of the Company's borrowings under its revolving bank credit
arrangement and promissory notes approximate their fair value.
9. SUBSEQUENT EVENT
On April 9, 1998, the Company was acquired by UTI Energy Corp. ("UTI"),
for a total purchase price of $20.4 million. UTI intends to continue to
operate the business of the Company and integrate the Company's
operations with UTI's existing contract drilling operations.
10. YEAR 2000 (UNAUDITED)
In connection with the acquisition of the Company by UTI, the Company
will migrate its information systems with those systems utilized by UTI
in 1998. UTI's management does not anticipate that they will incur
material operating expenses or be required to invest heavily in
information system improvements to be year 2000 compliant.
A-8
<PAGE> 15
APPENDIX B
UNAUDITED FINANCIAL STATEMENTS
OF
BUSINESS ACQUIRED
7
<PAGE> 16
PETERSON DRILLING COMPANY
CONDENSED FINANCIAL STATEMENTS
CONTENTS
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Condensed Balance Sheets as of March 31, 1998 and
December 31, 1997............................................... B-1
Condensed Statements of Income for the three months ended
March 31, 1998 and 1997......................................... B-2
Condensed Statements of Cash Flows for the three months
ended March 31, 1998 and 1997................................... B-3
Notes to Condensed Financial Statements........................... B-4
8
<PAGE> 17
PETERSON DRILLING COMPANY
CONDENSED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(in thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash ....................................................... $ 3,949 $ 2
Accounts receivable ........................................ 3,139 5,602
Prepaid expenses ........................................... 6 14
------------ ------------
7,094 5,618
PROPERTY AND EQUIPMENT:
Machinery and equipment .................................... 13,049 12,993
Accumulated depreciation ................................... (9,320) (9,195)
------------ ------------
3,729 3,798
------------ ------------
$ 10,823 $ 9,416
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit ............................................. $ -- $ 120
Notes payable .............................................. -- 175
Accounts payable ........................................... 1,149 1,125
Accrued payroll costs ...................................... 226 172
Accrued income taxes ....................................... 754 180
Other accrued expenses ..................................... 410 470
------------ ------------
2,539 2,242
DEFERRED INCOME TAXES ........................................... 1,018 1,076
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common Stock, $1 par value, 1,000,000 shares authorized,
623,815 shares issued and outstanding ................... 624 624
Additional capital ......................................... 2,847 2,847
Retained earnings .......................................... 3,795 2,627
------------ ------------
7,266 6,098
------------ ------------
$ 10,823 $ 9,416
============ ============
</TABLE>
B-1
<PAGE> 18
PETERSON DRILLING COMPANY
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1998 1997
------------ ------------
(in thousands)
<S> <C> <C>
REVENUES ........................................ $ 5,592 $ 4,349
COSTS AND EXPENSES:
Cost of sales .............................. 3,525 3,410
Selling, general and administrative ........ 116 139
Depreciation ............................... 124 108
------------ ------------
3,765 3,657
------------ ------------
OPERATING INCOME ................................ 1,827 692
OTHER INCOME (EXPENSE):
Interest income ............................ 36 --
Interest expense ........................... -- (21)
------------ ------------
INCOME BEFORE INCOME TAXES ...................... 1,863 671
INCOME TAXES .................................... 695 255
------------ ------------
NET INCOME ...................................... $ 1,168 $ 416
============ ============
</TABLE>
B-2
<PAGE> 19
PETERSON DRILLING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------------ ------------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................ $ 1,168 $ 416
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ...................................... 124 108
Deferred income taxes ............................. (58) (54)
Change in operating assets and liabilities:
Accounts receivable and prepaids .............. 2,471 (585)
Accounts payable and accruals .................. 592 432
------------ ------------
Net cash provided by operating activities .... 4,297 317
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................. (55) (395)
------------ ------------
Net cash used by investing activities ........ (55) (395)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayment under line of credit .................... (120) --
Repayments of long-term debt .......................... (175) (50)
------------ ------------
Net cash used by financing activities ........ (295) (50)
------------ ------------
NET INCREASE (DECREASE) IN CASH ............................ 3,947 (128)
CASH AT BEGINNING OF PERIOD ................................ 2 326
------------ ------------
CASH AT END OF PERIOD ...................................... $ 3,949 $ 198
============ ============
</TABLE>
B-3
<PAGE> 20
PETERSON DRILLING COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements at March 31,
1998 have been prepared in accordance with generally accepted
accounting principles for interim financial information. 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
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 months ended March 31, 1998 are not necessarily indicative of the
results for the entire year ended December 31, 1998. For further
information, refer to the Company's 1997 audited financial statements.
2. CONTINGENCIES
The Company is involved in various claims arising in the ordinary
course of business. In the opinion of management, these claims are not
expected to have a material adverse effect on the Company's financial
position.
3. SUBSEQUENT EVENT
On April 9, 1998, the Company was acquired by UTI Energy Corp. ("UTI"),
for a total purchase price of $20.4 million. UTI intends to continue to
operate the business of the Company and integrate the Company's
operations with UTI's existing contract drilling operations.
B-4
<PAGE> 21
APPENDIX C
PRO FORMA FINANCIAL INFORMATION
9
<PAGE> 22
UTI ENERGY CORP.
Pro Forma Financial Information
Acquisition of Peterson Drilling Company
Acquisition of Contract Drilling Operations of Southland Drilling Company, Ltd.
Acquisition of Contract Drilling Assets of Quarles Drilling Corporation
Peterson
On April 9, 1998, UTI Energy Corp., (the "Company"), effected the
acquisition of Peterson Drilling Company, ("Peterson"). The Merger was effected
pursuant to an Agreement and Plan of Merger, dated April 9, 1998. The Company
acquired Peterson for a total purchase price of $20.4 million determined through
arms-length negotiations between the parties. Peterson's assets include eight
land drilling rigs, as well as related drilling equipment, office facilities in
Midland, Texas, and approximately $4.0 million in net working capital. The
Company intends to continue to operate the business of Peterson and integrate
Peterson's operations with the Company's existing contract drilling operations.
In connection with the Company's acquisition of Peterson, the Company
retained Ray Peterson, President of Peterson, and Leroy Peterson, Vice President
of Peterson, as employees to the Company. The Company executed employment
agreements with both Ray Peterson and Leroy Peterson.
The acquisition was funded with the Company's existing cash.
Southland
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 the Company's Common
Stock, at an exercise price of $16.00 per share (the "Southland Acquisition").
The acquired assets included eight land drilling rigs and other equipment used
in Southland's contract drilling business. The Company also assumed certain
drilling contracts of Southland. The Southland Acquisition further expanded the
Company's operations in the active oil and gas producing areas in South Texas
and the Gulf Coast.
Quarles
On January 27, 1997, pursuant to the terms and conditions of an Asset
Purchase Agreement dated as of December 31, 1996 (the "Asset Purchase
Agreement"), by and between the Company, and Quarles Drilling Corporation,
("Quarles"), the Company purchased the contract drilling assets (the "Quarles
Assets") of Quarles for a total purchase price of $16.2 million consisting of
$8.1 million in cash and 733,779 shares of Common Stock. The Quarles Assets,
which were utilized in Quarles' contract drilling business, consisted of nine
land drilling rigs and various other equipment.
In connection with the Company's acquisition of the Quarles Assets, the
Company retained Don Quarles, President of Quarles, as a consultant to the
Company.
C-1
<PAGE> 23
UTI ENERGY CORP.
Pro Forma Financial Information
Acquisition of Peterson Drilling Company
Acquisition of Contract Drilling Operations of Southland Drilling Company, Ltd
Acquisition of Contract Drilling Assets of Quarles Drilling Corporation
JSM
On September 11, 1997, the Company acquired all of the capital stock of
J.S.M. & Associates, Inc. ("JSM") for 618,748 shares of Common Stock and $2.6
million in cash. 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, and JSM's operating results since September 11,
1997, have been consolidated with the operating results of the Company. Pro
forma results for JSM have not been provided as the acquisition was not a
significant acquisition as defined in Rule 3-05 of Regulation S-X of the
Securities Act.
The unaudited pro forma condensed consolidated balance sheet as of
March 31, 1998 assumes that the acquisition of Peterson occurred on March 31,
1998. The unaudited pro forma condensed consolidated statements of income assume
that the acquisitions of Peterson, Southland and Quarles occurred on January 1,
1997.
The unaudited pro forma condensed consolidated financial information
should be read in conjunction with the historical financial statements of UTI
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1997 and the historical financial statements of Peterson included elsewhere
herein.
The acquisitions were accounted for by the Company under the purchase
method of accounting, and the assets and liabilities have been recorded at their
estimated fair market values at the dates of the acquisitions. The pro forma
adjustments to give effect to the Peterson, Southland and Quarles acquisitions
reflect the Company's preliminary determination of these adjustments based upon
available information. There can be no assurance that the actual adjustments
will not vary significantly from the estimated adjustments reflected in the
unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated financial information
does not purport to be indicative of the financial position or results of
operations that would actually have occurred if the Peterson, Southland and
Quarles acquisitions had occurred as presented in such statements or that may be
obtained in the future. In addition, future results may vary significantly from
the results reflected in such statements due to general economic conditions, oil
and gas commodity prices, the demand and prices for contract drilling services,
the Company's ability to successfully integrate the operations of Peterson,
Southland and Quarles with its current business and several other factors, many
of which are beyond the Company's control.
C-2
<PAGE> 24
UTI ENERGY CORP.
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
March 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Acquisition
Historical Historical Adjustments
UTI Peterson Amount Notes Pro Forma
---------- ---------- ---------- ----- ---------
ASSETS
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 43,913 $ 3,949 $ (21,900) (A) $ 25,962
Accounts receivable, net 30,813 3,139 -- 33,952
Materials and supplies 1,517 -- -- 1,517
Prepaid expenses 1,282 6 -- 1,288
---------- ---------- ---------- ---------
77,525 7,094 (21,900) 62,719
PROPERTY AND EQUIPMENT:
Property and equipment 137,522 13,049 7,070 (B) 157,641
Accumulated depreciation and amortization (34,779) (9,320) 9,320 (B) (34,779)
---------- ---------- ---------- ---------
102,743 3,729 16,390 122,862
GOODWILL, net 17,450 -- 3,219 (B) 20,669
OTHER ASSETS 166 -- 1,500 (C) 1,666
---------- ---------- ---------- ---------
$ 197,884 $ 10,823 $ (791) $ 207,916
========== ========== ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 33 $ -- $ -- $ 33
Accounts payable 11,895 1,149 -- 13,044
Accrued payroll costs 3,615 226 -- 3,841
Accrued income taxes 1,552 754 -- 2,306
Other accrued expenses 2,558 410 75 (D) 3,043
---------- ---------- ---------- ---------
19,653 2,539 75 22,267
LONG-TERM DEBT, less current portion 23,575 -- -- 23,575
DEFERRED INCOME TAXES 14,846 1,018 6,400 (E) 22,264
OTHER LIABILITIES 348 -- -- 348
SHAREHOLDERS' EQUITY:
Common stock 16 624 (624) (F) 16
Additional capital 126,909 2,847 (2,847) (F) 126,909
Retained earnings 20,988 3,795 (3,795) (F) 20,988
Restricted stock plan unearned compensation (34) -- -- (34)
Treasury stock (8,417) -- -- (8,417)
---------- ---------- ---------- ---------
139,462 7,266 (7,266) 139,462
---------- ---------- ---------- ---------
$ 197,884 $ 10,823 $ (791) $ 207,916
========== ========== ========== =========
</TABLE>
See accompanying notes.
C-3
<PAGE> 25
UTI ENERGY CORP.
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
Three Months Ended March 31, 1998
(in thousands, except share data)
<TABLE>
<CAPTION>
Acquisition
Historical Historical Adjustments
UTI Peterson Amount Notes Pro Forma
---------- ---------- ---------- ----- ---------
<S> <C> <C> <C> <C> <C>
REVENUES $ 48,317 $ 5,592 $ -- $ 53,909
COSTS AND EXPENSES:
Cost of sales 34,953 3,525 -- 38,478
Selling, general and administrative 3,594 116 -- 3,710
Depreciation and amortization 3,801 124 477 (A) 4,402
---------- ---------- ---------- ---------
42,348 3,765 477 46,590
---------- ---------- ---------- ---------
OPERATING INCOME 5,969 1,827 (477) 7,319
OTHER INCOME (EXPENSE):
Interest expense (879) -- -- (879)
Interest income 647 36 (275) (B) 408
Other 103 -- -- 103
---------- ---------- ---------- ---------
(129) 36 (275) (368)
---------- ---------- ---------- ---------
INCOME BEFORE INCOME TAXES 5,840 1,863 (752) 6,951
INCOME TAXES 2,293 695 (248) (C) 2,740
---------- ---------- ---------- ---------
NET INCOME $ 3,547 $ 1,168 $ (504) $ 4,211
========== ========== ========== =========
EARNINGS PER SHARE:
Basic $ 0.22 $ 0.26
========== =========
Diluted $ 0.21 $ 0.24
========== =========
AVERAGE SHARES OUTSTANDING:
Basic 16,150,546 16,150,546
Diluted 17,256,436 17,256,436
</TABLE>
See accompanying notes.
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<PAGE> 26
UTI ENERGY CORP.
Pro Forma Condensed Consolidated Statement of Income (Unaudited)
Year Ended December 31, 1997
(in thousands, except share data)
<TABLE>
<CAPTION>
Acquisition
Historical (1) (2) Historical Adjustments
UTI Quarles Southland Peterson Amount Notes Pro Forma
---------- ------- --------- ---------- ---------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES $ 182,437 $ 3,407 $ 7,347 $ 20,672 $ -- $ 213,863
COSTS AND EXPENSES:
Cost of sales 136,356 4,081 5,611 14,311 (90) (A) 160,269
Selling, general and administrative 11,777 -- 294 545 90 (A) 12,706
Depreciation and amortization 11,075 66 -- 462 2,634 (B) 14,237
---------- ------- --------- ---------- ---------- -----------
159,208 4,147 5,905 15,318 2,634 187,212
---------- ------- --------- ---------- ---------- -----------
OPERATING INCOME (LOSS) 23,229 (740) 1,442 5,354 (2,634) 26,651
OTHER INCOME (EXPENSE):
Interest expense (4,330) -- -- (44) (2,425) (C) (6,799)
Interest income 689 -- -- -- (283) (D) 406
Other 546 -- -- -- 546
---------- ------- --------- ---------- ---------- -----------
(3,095) -- -- (44) (2,708) (5,847)
---------- ------- --------- ---------- ---------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 20,134 (740) 1,442 5,310 (5,342) 20,804
INCOME TAXES 7,609 -- -- 2,047 (1,655) (E) 8,001
---------- ------- --------- ---------- ---------- -----------
NET INCOME (LOSS) $ 12,525 $ (740) $ 1,442 $ 3,263 $ (3,687) $ 12,803
========== ======= ========= ========== ========== ===========
EARNINGS PER SHARE:
Basic $ 0.96 $ 0.97
========== ===========
Diluted $ 0.83 $ 0.85
========== ===========
AVERAGE SHARES OUTSTANDING:
Basic 13,082,663 61,148 (F) 13,143,811
Diluted 15,069,419 36,668 (F) 15,106,087
</TABLE>
See accompanying notes.
(1) This Statement reflects the historical gross drilling contract revenues,
direct operating expenses, and depreciation directly related to the assets
acquired for the period from January 1, 1997 to January 27, 1997.
(2) This Statement reflects the historical revenues and direct and indirect
operating expenses directly related to the assets acquired (excluding
depreciation) for the period from January 1, 1997 to April 11, 1997.
C-5
<PAGE> 27
UTI ENERGY CORP.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Adjustments to March 31, 1998 Pro Forma Condensed Consolidated Balance Sheet
(Unaudited).
(A) Cash paid in connection with the Peterson acquisition including $1.5
million pursuant to non-compete agreements with the former officers.
(B) Adjustment to revalue Peterson assets based upon allocation of the
purchase price.
(C) Non-compete agreements with the former officers of Peterson to be
amortized over the three year term of the agreement.
(D) Accrued estimated transaction costs.
(E) Deferred taxes provided for the difference between the book basis and
the tax basis of acquired property and equipment.
(F) Purchase accounting elimination of Peterson equity.
Adjustments to Pro Forma Condensed Consolidated Statement of Income (Unaudited)
for the three months ended March 31, 1998.
(A) Adjust depreciation and amortization expense based upon the restated
value of equipment, goodwill and the non-compete agreements.
(B) Adjust interest income based on lower available cash balances due to
Peterson acquisition.
(C) Adjust income tax expense (benefit) at marginal rate, less tax effect
of non-deductible goodwill amortization.
Adjustments to Pro Forma Condensed Consolidated Statement of Income (Unaudited)
for the year ended December 31, 1997.
(A) Reclassify certain costs and expenses related to Quarles selling
activities to conform to the Company's presentation.
(B) Adjust depreciation and amortization expense based upon the restated
value of property and equipment, goodwill and non-compete agreements.
The adjustment amount related to Quarles, Southland and Peterson was
$61,000, $630,000 and $2,003,000, respectively.
(C) Increase interest expense resulting from the Quarles, Southland and
Peterson acquisition debt by $56,000, $1,021,000 and $1,348,000,
respectively.
(D) Adjust interest income based on lower available cash balances due to
Peterson acquisition.
(E) Adjust income tax expense (benefit) at marginal rate, less tax effect
of non-deductible goodwill amortization.
(F) 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 December 31, 1997. The shares issued reflected in the
Pro Forma Condensed Consolidated Statement of Income assume the shares
were issued effective January 1, 1997.
C-6
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-13261) pertaining to the UTI Energy Corp. 1993 Non-qualified Stock
Option Plan, the First Amendment to Termination Agreement and Release, the UTI
Energy Corp. Non-Employee Director Stock Option Plan of our reported dated May
29, 1998, with respect to the financial statements of Peterson Drilling Company
for the year ended December 31, 1997 included in this Form 8-K/A.
Ernst & Young LLP
Houston, Texas
June 19, 1998
