PATTERSON UTI ENERGY INC

Previous wording

To address evolving customer preferences for emissions-reducing equipment, we have invested in natural gas-powered equipment, including electric, direct drive, and dual fuel pumps, to replace legacy diesel completion services equipment.

Current wording

To address customer demand for lower-emission and more cost efficient operations, we continue to expand our portfolio of natural gas-powered solutions, including electric, direct drive, and dual fuel pumps, to replace legacy diesel completion services equipment.

Previous wording

Recent Developments in Market Conditions and Outlook — Commodity prices have historically been volatile but were relatively range-bound from the end of 2022 through the first quarter of 2025. The current demand for equipment and services remains impacted by macro conditions, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, economic conditions in the United States and elsewhere, as well as customer consolidation and focus by exploration and production companies and service companies on capital returns. During the second quarter of 2025, global economic conditions deteriorated, in part, because of recently enacted and proposed trade policies and tariffs by the United States and other governments, as well as uncertainty regarding potential future changes to global trade policies and tariffs. Additionally, during the second quarter of 2025, OPEC+ countries began phasing out voluntary crude oil production cuts, leading to an increase in global supply. These developments, combined with rising geopolitical tensions—particularly in the Middle East—have heightened uncertainty in global energy markets, which has contributed to a decline in our share price, lowered average crude oil futures prices and increased uncertainty regarding the future economic environment in which we operate. While the full effects are yet to be determined, and commodity prices have modesty recovered from the lows in the second quarter, prolonged trade tensions and sustained lower crude oil futures prices could adversely affect our future outlook on activity and profitability. Oil prices averaged $64.57 per barrel in the second quarter of 2025, as compared to $71.78 per barrel in the first quarter of 2025, and closed at $68.39 per barrel on July 21, 2025. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $3.19 per MMBtu in the second quarter of 2025 as compared to an average of $4.14 per MMBtu in the first quarter of 2025, and closed at $3.50 per MMBtu on July 21, 2025.

Current wording

Recent Developments in Market Conditions and Outlook — Commodity prices have historically been volatile but were relatively range-bound from the end of 2022 through the first quarter of 2025. The current demand for equipment and services remains impacted by macro conditions, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, economic conditions in the United States and elsewhere, as well as customer consolidation and focus by exploration and production companies and service companies on capital returns. During the second quarter of 2025, global economic conditions deteriorated, in part, because of enacted and proposed trade policies and tariffs by the United States and other governments, as well as uncertainty regarding potential future changes to global trade policies and tariffs. Additionally, during the second quarter of 2025, OPEC+ countries began phasing out voluntary crude oil production cuts, leading to an increase in global supply. These developments, combined with rising geopolitical tensions— particularly in the Middle East— heightened uncertainty in global energy markets, which contributed to a decline in our share price, lowered average crude oil futures prices and increased uncertainty regarding the future economic environment in which we operate. During the third quarter of 2025, global economic conditions and the global energy market remained uncertain, with ongoing effects from trade policy uncertainty, the phase-out of voluntary crude oil production cuts by OPEC+ countries, and downward pressure on crude oil futures prices. While the full effects are yet to be determined, prolonged trade tensions and sustained lower crude oil futures prices could adversely affect our future outlook on activity and profitability. Oil prices averaged $65.78 per barrel in the third quarter of 2025, as compared to $64.57 per barrel in the second quarter of 2025, and closed at $58.34 per barrel on October 20, 2025. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $3.03 per MMBtu in the third quarter of 2025 as compared to an average of $3.19 per MMBtu in the second quarter of 2025, and closed at $2.99 per MMBtu on October 20, 2025.

Previous wording

We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of June 30, 2025 was approximately $312 million. Approximately 9% of our total contract drilling backlog in the United States at June 30, 2025 is reasonably expected to remain at June 30, 2026. See Note 2 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.

Current wording

Our average active rig count in the United States for the third quarter of 2025 was 95 rigs. This was a decrease from our average active rig count for the second quarter of 2025 of 104. Term contracts help support our operating rig count. We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of September 30, 2025 was approximately $256 million. Approximately 9% of our total contract drilling backlog in the United States at September 30, 2025 is reasonably expected to remain at September 30, 2026. See Note 2 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.

Previous wording

In our Completion Services segment for the third quarter of 2025, we expect activity to be steady compared to the second quarter. We expect third quarter Completion Services adjusted gross profit to remain steady with the second quarter.

Current wording

In our Completion Services segment for the fourth quarter of 2025, we expect adjusted gross profit to decline, sequentially. From an activity perspective, we expect less seasonality compared to the fourth quarter of 2024.

Previous wording

For the three months ended June 30, 2025 and March 31, 2025 and for the six months ended June 30, 2025 and June 30, 2024 our operating revenues consisted of the following (dollars in thousands):

Current wording

For the three months ended September 30, 2025 and June 30, 2025 and for the nine months ended September 30, 2025 and September 30, 2024 our operating revenues consisted of the following (dollars in thousands):

Previous wording

Total revenues and average revenue per operating day decreased primarily due to a decrease in operating days in our contract drilling business within the United States and lower pricing. The increase in direct operating costs and average direct operating costs per operating day was primarily impacted by the fixed cost leverage for U.S. drilling rigs during the three months ended June 30, 2025.

Current wording

Total revenues and direct operating costs decreased primarily due to a decrease in operating days in our contract drilling business within the United States.

Previous wording

Depreciation, amortization and impairment expense increased primarily due to a $27.8 million impairment charge to Latin American drilling equipment during the second quarter of 2025. See Note 5 of Notes to unaudited condensed consolidated financial statements for additional information.

Current wording

Depreciation, amortization and impairment expense decreased primarily due to a $27.8 million impairment charge to Latin American drilling equipment during the second quarter of 2025. See Note 5 of Notes to unaudited condensed consolidated financial statements for additional information.

Previous wording

Direct operating costs and depreciation, amortization and impairment expense were approximately $0.5 million and $1.6 million higher than they would have otherwise been for the three months ended June 30, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. For the three months ended March 31, 2025, direct operating costs and depreciation, amortization and impairment expense were approximately $0.6 million and $2.3 million higher than they would have otherwise been, respectively, as a result of the step up to fair value of our drill bits.

Current wording

Direct operating costs and depreciation, amortization and impairment expense were approximately $0.8 million and $1.6 million higher than they would have otherwise been for the three months ended September 30, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. For the three months ended June 30, 2025, direct operating costs and depreciation, amortization and impairment expense were approximately $0.5 million and $1.6 million higher than they would have otherwise been, respectively, as a result of the step up to fair value of our drill bits.

Previous wording

Capital expenditures decreased primarily due to the timing of order placement and spending on committed deliveries that more heavily impacted the first quarter of 2025.

Current wording

Capital expenditures decreased primarily due to the timing of order placement and spending on committed deliveries.

Previous wording

The following tables summarize results of operations by business segment for the six months ended June 30, 2025 and June 30, 2024:

Current wording

The following tables summarize results of operations by business segment for the nine months ended September 30, 2025 and September 30, 2024:

Previous wording

The decrease in operating days for our U.S. contract drilling business reflects the industry-wide activity declines during the first six months of 2025.

Current wording

The decrease in operating days for our U.S. contract drilling business reflects the industry-wide activity declines during the first nine months of 2025.

Previous wording

Completion services revenues and direct operating costs decreased primarily due to lower activity in our fracturing operations. Revenues and direct operating costs from our fracturing operations decreased by approximately $250 million and $123 million, or 17% and 11%, respectively.

Current wording

Completion services revenues and direct operating costs decreased primarily due to lower activity in our fracturing operations. Revenues and direct operating costs from our fracturing operations decreased by approximately $360 million and $223 million, or 17% and 13%, respectively.

Previous wording

Other operating income, net in 2024 was due to gain on legal settlements.

Current wording

Other operating expense (income), net included a legal accrual taken during the third quarter of 2025, whereas in 2024 was due to gain on legal settlements. Legal accrual is included in “Accrued liabilities” in our consolidated balance sheets.

Previous wording

Direct operating costs and depreciation, amortization and impairment expense were approximately $1.1 million and $3.8 million higher than they would have otherwise been for the six months ended June 30, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. Direct operating costs and depreciation, amortization and impairment expense were approximately $3.8 million and $9.1 million higher than they would have otherwise been for the six months ended June 30, 2024, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting.

Current wording

Direct operating costs and depreciation, amortization and impairment expense were approximately $1.9 million and $5.4 million higher than they would have otherwise been for the nine months ended September 30, 2025, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting. Direct operating costs and depreciation, amortization and impairment expense were approximately $4.8 million and $11.6 million higher than they would have otherwise been for the nine months ended September 30, 2024, respectively, as a result of the step up to fair value of our drill bits in accordance with purchase accounting.

Previous wording

The changes for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 can be primarily attributed to the divestiture of our oilfield rentals business during the second quarter of 2025. In order to provide a more meaningful basis for comparison, the discussion below is focused on changes between comparable periods excluding the effects of the divestiture.

Current wording

The changes for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 can be primarily attributed to the divestiture of our oilfield rentals business during the second quarter of 2025. In order to provide a more meaningful basis for comparison, the discussion below is focused on changes between comparable periods excluding the effects of the divestiture.

Previous wording

Excluding the effects of our oilfield rentals business divestiture, the decrease in revenue and direct operating costs was driven by lower realized crude oil prices. Oil prices averaged $68.12 per barrel in the first half of 2025 as compared to $79.69 per barrel in the first half of 2024.

Current wording

Excluding the effects of our oilfield rentals business divestiture, the decrease in revenue and direct operating costs was driven by lower realized crude oil prices. Oil prices averaged $67.31 per barrel in the nine months ended September 30, 2025 as compared to $78.58 per barrel in the nine months ended September 30, 2024.

Previous wording

Our effective income tax rate for the three months ended June 30, 2025 was (2.5)%, compared with 51.9% for the three months ended March 31, 2025. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences and book impairments against earnings between periods.

Current wording

Our effective income tax rate for the three months ended September 30, 2025 was 15.3%, compared with (2.5)% for the three months ended June 30, 2025. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences and book impairments against earnings between periods.

Previous wording

Our effective income tax rate for the six months ended June 30, 2025 was (5.8)%, compared with 37.4% for the six months ended June 30, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of permanent differences against earnings between periods.

Current wording

Our effective income tax rate for the nine months ended September 30, 2025 was 4.6%, compared with (0.8)% for the nine months ended September 30, 2024. The difference in effective income tax rates between the periods was primarily attributable to the impact of valuation allowances on deferred tax assets between periods, as well as the impact of permanent differences against earnings between periods.

Previous wording

We continue to monitor income tax developments in the United States and other countries where we have legal entities. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law in the United States. This legislation includes several changes to existing income tax provisions with certain changes effective in 2025 and others implemented through 2027. We are currently evaluating the impact of the OBBBA on our consolidated financial statements.

Current wording

We continue to monitor income tax developments in the United States and other countries where we have legal entities. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law in the United States. This legislation includes several changes to existing income tax provisions with certain changes effective during 2025 and other changes effective after 2025. We continue to evaluate the impact of the OBBBA on our consolidated financial statements.

Previous wording

Our primary sources of liquidity are cash and cash equivalents, availability under our Credit Agreement and cash provided by operating activities. As of June 30, 2025, we had approximately $525 million in working capital, including $184 million of cash and cash equivalents, and approximately $498 million available under our Credit Agreement.

Current wording

Our primary sources of liquidity are cash and cash equivalents, availability under our Credit Agreement and cash provided by operating activities. As of September 30, 2025, we had approximately $500 million in working capital, including $185 million of cash and cash equivalents, and approximately $495 million available under our Credit Agreement.

Previous wording

On March 16, 2015, we entered into a Reimbursement Agreement (as amended from time to time, the “Reimbursement Agreement”) with The Bank of Nova Scotia (“Scotiabank”), pursuant to which we may from time to time request that Scotiabank issue an unspecified amount of letters of credit. As of June 30, 2025, we had $38.1 million in letters of credit outstanding under the Reimbursement Agreement.

Current wording

On March 16, 2015, we entered into a Reimbursement Agreement (as amended from time to time, the “Reimbursement Agreement”) with The Bank of Nova Scotia (“Scotiabank”), pursuant to which we may from time to time request that Scotiabank issue an unspecified amount of letters of credit. As of September 30, 2025, we had $36.3 million in letters of credit outstanding under the Reimbursement Agreement.

Previous wording

We have also agreed that if obligations under the Credit Agreement are secured by liens on any of our or our subsidiaries’ property, then our reimbursement obligations and (to the extent similar obligations would be secured under the Credit Agreement) other obligations under the Reimbursement Agreement and any letters of credit will be equally and ratably secured by all property subject to such liens securing the Credit Agreement.

Current wording

We have also agreed that if obligations under the Credit Agreement are secured by liens on any of our or our subsidiaries’ property, then our reimbursement obligations and (to the extent similar obligations would be secured under the Credit Agreement)

Previous wording

We had $42.1 million of outstanding letters of credit at June 30, 2025, which was comprised of $38.1 million outstanding under the Reimbursement Agreement, $2.0 million outstanding under the Credit Agreement, and $2.0 million outstanding with financial institutions providing for short-term borrowing capacity, overdraft protection and bonding requirements. We maintain these letters of credit primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses which could become payable under terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of June 30, 2025, no amounts had been drawn under the letters of credit. As of June 30, 2025, we had $37.0 million in surety bond exposure issued as financial assurance on an insurance agreement.

Current wording

We had $43.1 million of outstanding letters of credit at September 30, 2025, which was comprised of $36.3 million outstanding under the Reimbursement Agreement, $4.8 million outstanding under the Credit Agreement, and $2.0 million outstanding with financial institutions providing for short-term borrowing capacity, overdraft protection and bonding requirements. We maintain these letters of credit primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses which could become payable under terms of the underlying insurance contracts and compliance with contractual obligations. These letters of credit expire annually at various times during the year and are typically renewed. As of September 30, 2025, no amounts had been drawn under the letters of credit. As of September 30, 2025, we had $37.0 million in surety bond exposure issued as financial assurance on an insurance agreement.

Previous wording

We anticipate $29.9 million of expenditures for the remainder of 2025 related to various contractual obligations such as certain commitments to purchase proppants and lease liabilities.

Current wording

We anticipate $17.4 million of expenditures for the remainder of 2025 related to various contractual obligations such as certain commitments to purchase proppants and lease liabilities.

Previous wording

As of June 30, 2025, we had working capital of $525 million, including cash, cash equivalents and restricted cash of $186 million, compared to working capital of $453 million, including cash, cash equivalents and restricted cash of $241 million, at December 31, 2024.

Current wording

As of September 30, 2025, we had working capital of $500 million, including cash, cash equivalents and restricted cash of $187 million, compared to working capital of $453 million, including cash, cash equivalents and restricted cash of $241 million, at December 31, 2024.

Previous wording

During the six months ended June 30, 2025, our sources of cash flow included:

Current wording

During the nine months ended September 30, 2025, our sources of cash flow included:

Previous wording

•$348 million from operating activities, and

Current wording

•$564 million from operating activities, and

Previous wording

•$28.3 million in proceeds from the disposal of property and equipment, including insurance recoveries.

Current wording

•$33.2 million in proceeds from the disposal of property and equipment, including insurance recoveries.

Previous wording

During the six months ended June 30, 2025, our uses of cash flow included:

Current wording

During the nine months ended September 30, 2025, our uses of cash flow included:

Previous wording

•$306 million to make capital expenditures for the betterment and refurbishment of drilling services and completion services equipment and, to a much lesser extent, equipment for our other businesses, to acquire and procure equipment to support our drilling services, completion services, drilling products, and other operations,

Current wording

•$451 million to make capital expenditures for the betterment and refurbishment of drilling services and completion services equipment and, to a much lesser extent, equipment for our other businesses, to acquire and procure equipment to support our drilling services, completion services, drilling products, and other operations,

Previous wording

•$61.6 million to pay dividends on our common stock,

Current wording

•$92.1 million to pay dividends on our common stock,

Previous wording

•$35.8 million for repurchases of our common stock,

Current wording

•$69.4 million for repurchases of our common stock,

Previous wording

•$4.4 million for payments related to finance leases, and

Current wording

•$6.2 million for payments related to finance leases, and

Previous wording

•$15.9 million for other investing and financing activities.

Current wording

•$13.4 million for other investing and financing activities.

Previous wording

We paid cash dividends during the six months ended June 30, 2025 as follows:

Current wording

We paid cash dividends during the nine months ended September 30, 2025 as follows:

Previous wording

In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of June 30, 2025, we had remaining authorization to purchase approximately $728 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.

Current wording

In September 2013, our Board of Directors approved a stock buyback program. In February 2024, our Board of Directors approved an increase of the authorization under the stock buyback program to allow for an aggregate of $1.0 billion of future share repurchases. All purchases executed to date have been through open market transactions. Purchases under the buyback program are made at management’s discretion, at prevailing prices, subject to market conditions and other factors. Purchases may be made at any time without prior notice. There is no expiration date associated with the buyback program. As of September 30, 2025, we had remaining authorization to purchase approximately $694 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.

Previous wording

Treasury stock acquisitions during the six months ended June 30, 2025 were as follows (dollars in thousands):

Current wording

Treasury stock acquisitions during the nine months ended September 30, 2025 were as follows (dollars in thousands):

Previous wording

(1)We withheld 669,959 shares during the six months ended June 30, 2025 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended and the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, and not pursuant to the stock buyback program.

Current wording

(1)We withheld 680,817 shares during the nine months ended September 30, 2025 with respect to employees’ tax withholding obligations upon the vesting of restricted stock units. These shares were acquired at fair market value. These acquisitions were made pursuant to the terms of the Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan, as amended and the NexTier Oilfield Solutions Inc. Equity and Incentive Award Plan, and not pursuant to the stock buyback program.

Previous wording

Commitments— As of June 30, 2025, we had commitments to purchase major equipment totaling approximately $94.8 million. Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of June 30, 2025, the remaining minimum obligation under these agreements was approximately $27.1 million, of which approximately $9.2 million, $13.1 million, and $4.8 million relate to the remainder of 2025, 2026, and 2027, respectively.

Current wording

Commitments— As of September 30, 2025, we had commitments to purchase major equipment totaling approximately $72.5 million. Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of September 30, 2025, the remaining minimum obligation under these agreements was approximately $20.6 million, of which approximately $2.7 million, $13.1 million, and $4.8 million relate to the remainder of 2025, 2026, and 2027, respectively.

Previous wording

Operating lease liabilities totaled $44.7 million and finance lease liabilities totaled $21.8 million as of June 30, 2025.

Current wording

Operating lease liabilities totaled $46.4 million and finance lease liabilities totaled $21.3 million as of September 30, 2025.