PATTERSON UTI ENERGY INC
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 2, 2026
PTEN$9.92-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0000889900-26-000056
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0000889900-26-000072
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 146 previous paragraphs and 142 current paragraphs.
72 unchanged; 55 reworded; 15 added; 15 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
We operate a low-emissions fleet portfolio, with approximately 90% of our active hydraulic horsepower powered by natural gas through electric, direct-drive and dual-fuel pumping technologies, supported by our integrated Power Solutions business. The composition of our fleet helps our customers reduce emissions, improve fuel efficiency and lower operating costs compared to traditional diesel-powered completion operations. We continue to invest selectively in next-generation equipment and technologies that further enhance fleet performance, reliability and environmental efficiency.
Current report
During 2026, global energy markets were impacted by geopolitical developments, including conflict in the Middle East, disruptions to regional energy supply and transportation infrastructure, OPEC+ production decisions and changing global supply and demand fundamentals. These factors contributed to increased volatility in commodity prices and uncertainty regarding customer spending levels and future industry activity. While the full effects of these developments remain uncertain, we believe these dynamics contributed to increased activity levels in certain North American markets as customers responded to higher commodity prices and evolving global energy market conditions. However, the sustainability of this activity remains dependent on numerous factors, including commodity prices, customer cash flows, access to capital, global economic conditions, geopolitical developments and OPEC+ production decisions.
Current report
Recent Developments in Business and Financial Matters — During the third quarter of 2026, we sold three Colombia rigs as part of our plan to exit Colombia. In addition, we sold 10 U.S. rigs that were not included in our marketed rig count as part of our ongoing fleet management activities. These transactions resulted in a gain on sale of assets of approximately $22.1 million.
Current report
Other operating expense (income), net during the third quarter included a $3.0 million reserve associated with the Colombia contract drilling exit costs.
Current report
Completion Services revenues increased primarily due to pricing improvements in our fracturing operations. Total activity from our fracturing operations declined modestly as several fleets experienced elevated non-productive time late in the third quarter, primarily due to temporary sand availability constraints and trucking delays in certain regions. Revenues from our fracturing operations increased approximately $37.6 million or 6%. Revenues from our other completion services businesses increased approximately $17.0 million or 13%.
Current report
Direct operating costs increased primarily due to higher labor costs and sand trucking expenses. Direct operating costs from our fracturing operations increased approximately $21.1 million or 4%. Additionally, direct operating costs for our power solutions business increased $9.6 million, or 54%, primarily due to higher commodity costs based on regional market pricing in West Texas.
Current report
Revenues and direct operating costs increased primarily due to higher activity and more favorable pricing in the United States. Revenues and direct operating costs in the United States increased by approximately $15.0 million and $1.6 million, or 24% and 4%, respectively. Direct operating costs increased at a lower rate than revenues, reflecting the benefit of a $3.8 million reversal of a previously recorded sales and use tax reserve, which partially offset costs associated with increased activity levels.
Current report
Depreciation and impairment expense increased due to a $3.8 million impairment charge related to an operating lease right-of-use asset.
Current report
Completion services revenues and direct operating costs increased primarily due to higher logistics activity for sand delivery in our fracturing operations. Revenues and direct operating expenses from our fracturing operations increased by approximately $80.2 million and $36.1 million, or 5% and 2%, respectively. The increase was partially offset by lower activity in our other completions services businesses, primarily our wireline and pumpdown business, which declined $18.9 million and $14.8 million, or 9% and 8% lower, respectively.
Current report
Other operating expense (income), net included a gain on legal settlements in 2026, compared to a legal accrual recorded during the third quarter of 2025. Legal accruals are included in “Accrued liabilities” in our consolidated balance sheets.
Current report
Revenue and direct operating costs increased primarily due to higher activity in the United States and international markets. U.S. revenues and direct operating costs increased by approximately $15.2 million, or 8%, and $8.1 million, or 8%, respectively.
Current report
Capital expenditures, excluding the effects of our oilfield rentals business divestiture, were consistent between the periods.
Current report
For the nine months ended September 30, 2026, our effective income tax rate was (70.8)%, compared with the U.S. federal statutory rate of 21%. The effective income tax rate differed from the U.S. federal statutory rate primarily because we recorded income tax expense on a loss before income taxes. This result was primarily attributable to permanently nondeductible expenses, which reduced the income tax benefit that otherwise would have been expected on the loss before income taxes. The magnitude of the effective income tax rate was further affected by the loss before income taxes being modest relative to income tax expense, as effective income tax rates can become disproportionately large in absolute value when income or loss before income taxes approaches zero. As a result, the relationship between our income tax expense and our loss before income taxes produced a substantial negative effective income tax rate that is not meaningful when compared with the U.S. federal statutory rate.
Current report
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and when necessary, valuation allowances are provided. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We assess the realizability of our deferred tax assets quarterly and consider carryback availability, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Current report
During 2026, global energy markets were impacted by geopolitical developments, including conflict in the Middle East, disruptions to regional energy supply and transportation infrastructure, OPEC+ production decisions and changing global supply and demand fundamentals. These factors contributed to increased volatility in commodity prices and uncertainty regarding customer spending levels and future industry activity. While the full effects of these developments remain uncertain, we believe these dynamics contributed to increased activity levels in certain North American markets as customers responded to higher commodity prices and evolving global energy market conditions. However, the sustainability of this activity remains dependent on numerous factors, including commodity prices, customer cash flows, access to capital, global economic conditions, geopolitical developments and OPEC+ production decisions.
Removed paragraphs (15)
Previous report
In an effort 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 report
During 2025, global economic conditions weakened in part due to uncertainty related to trade policies and tariffs implemented or proposed by the United States and other governments. At the same time, oil markets were affected by evolving supply dynamics, including changes in production policies by OPEC+ countries and increasing non-OPEC supply. These factors contributed to periods of downward pressure on crude oil prices and increased uncertainty in global energy markets.
Previous report
During the first half of 2026, energy markets experienced increased volatility driven by geopolitical developments in the Middle East, including the conflict with Iran and ongoing disruptions to global oil supply and key transportation routes. These events contributed to fluctuations in commodity prices, customer spending expectations and overall market sentiment. In addition, global energy markets continue to be influenced by OPEC+ production decisions, changes in worldwide supply and demand balances and broader macroeconomic conditions. While the full effects are yet to be determined, we believe these dynamics contributed to increased activity in the second quarter of 2026, particularly North America, and could support continued increases in activity in the second half of 2026, as operators reassess capital allocation and activity levels commensurate with commodity prices and long-term supply chain dependability.
Previous report
Total revenues increased primarily due to higher activity in our directional drilling business, where operating days increased 16% and contributed approximately $12.6 million of the total segment revenue increase. Additionally, revenues from our contract drilling business benefitted from our new multi-year, sales-type lease agreements for two rigs to DLS Archer Ltd. S.A. in support of Archer's operations in Argentina, contributing approximately $7.8 million of revenue during the period.
Previous report
Capital expenditures increased primarily due to the timing of order placement and incremental growth capital investments, including additional drilling rig structural upgrades.
Previous report
Completion services revenues and direct operating costs increased primarily due to our fracturing operations. First quarter results were lower, which were largely the result of disruptions caused by winter storm conditions. Revenues and direct operating costs from our fracturing operations increased by approximately $55.1 million and $42.8 million, or 10% and 9%, respectively, which was primarily due to a 6% increase in total pumping hours. Other completion services revenue and direct operating costs increased $19.0 million and $6.4 million, or 17% and 7%, respectively, mainly due to higher activity for our power solutions and cementing operations.
Previous report
Capital expenditures increased primarily due to the timing of order placement and incremental growth capital investments including expansion of Emerald 100% natural gas completions equipment.
Previous report
Revenue and direct operating costs increased primarily due to higher activity in the United States. Revenues and direct operating costs in the United States increased by approximately $9.1 million and $5.1 million, or 17% and 15%, respectively.
Previous report
Other operating expense (income), net, reflected insurance proceeds received during the second quarter of 2025.
Previous report
Completion services revenues decreased primarily due to lower activity in our wireline and power solutions operations. Revenues from our wireline operations were $24.8 million lower, or 18%, resulting from fewer stages perforated. Revenues from our power solutions operations were $13.0 million lower, or 20%, due primarily to fewer working days. Revenue from our fracturing operations was resilient, only declining $6.9 million, or 1%, due to slightly lower pumping hours.
Previous report
Direct operating costs declined across our fracturing, power solutions, and wireline operations by $26.6 million, $13.5 million, and $20.2 million, or 3%, 30%, and 17%, respectively. The declines in direct operating costs for our fracturing and wireline operations primarily resulted from lower activity, but we also saw incremental cost savings from reduced maintenance expense. The decrease in power solutions direct operating costs was primarily due to fewer working days.
Previous report
Direct operating cost increased due to higher raw material and labor costs.
Previous report
Capital expenditures decreased due to our oilfield rentals business divestiture in the second quarter of 2025.
Previous report
During 2025, global economic conditions weakened in part due to uncertainty related to trade policies and tariffs implemented or proposed by the United States and other governments. At the same time, oil markets were affected by evolving supply dynamics, including changes in production policies by OPEC+ countries and increasing non-OPEC supply. These factors contributed to periods of downward pressure on crude oil prices and increased uncertainty in global energy markets.
Previous report
During the first half of 2026, energy markets experienced increased volatility driven by geopolitical developments in the Middle East, including the conflict with Iran and concerns regarding potential disruptions to global oil supply and key transportation routes. These events contributed to fluctuations in commodity prices, customer spending expectations and overall market sentiment. In addition, global energy markets continue to be influenced by OPEC+ production decisions, changes in worldwide supply and demand balances and broader macroeconomic conditions. While the full effects are yet to be determined, we believe these dynamics could support increased activity in the second half of 2026, particularly in North America, as operators reassess capital allocation and activity levels commensurate with commodity prices and supply chain dependability.
Reworded paragraphs (55)
Previous wording
As of June 30, 2026, we had 148 marketed land-based drilling rigs based in the following regions:
Current wording
As of September 30, 2026, we had 145 marketed land-based drilling rigs based in the following regions:
Previous wording
(1)In January 2026, we signed a multi-year agreement to lease two rigs to DLS Archer Ltd. S.A. to support Archer’s operations in Argentina’s Vaca Muerta formation.
Current wording
(1)We signed multi-year agreements to lease three rigs to DLS Archer Ltd. S.A. to support Archer’s operations in Argentina’s Vaca Muerta formation. These arrangements were accounted for as sales-type leases because ownership of the rigs is expected to transfer to Archer by the end of the lease term, either through the exercise of a purchase option that is reasonably certain to be exercised or upon satisfaction of the contractual conditions required for transfer of title.
Previous wording
We are also advancing our Vertex™ fully automated, closed-loop completions process, a component of our proprietary digital completions management platform, eos™, which offers our customers the opportunity for greater operational efficiency, lower costs and improved performance, while laying the foundation for integrating AI-driven reservoir technologies.
Current wording
We are also advancing our Vertex™ automated, closed-loop completions process, a component of our proprietary digital completions management platform, eos™, which help optimize fleet performance, improve operational efficiency and enhance execution consistency. Together, these technologies support lower operating costs, improved service quality and future integration of automation and AI-enabled reservoir solutions.
Previous wording
Oil prices averaged $95.65 per barrel in the second quarter of 2026, as compared to $72.74 per barrel in the first quarter of 2026, and closed at $84.25 per barrel on July 27, 2026. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $2.95 per MMBtu in the second quarter of 2026 as compared to an average of $4.71 per MMBtu in the first quarter of 2026, and closed at $2.63 per MMBtu on July 27, 2026.
Current wording
Oil prices averaged $87.12 per barrel in the third quarter of 2026, as compared to $95.65 per barrel in the second quarter of 2026, and closed at $105.25 per barrel on October 26, 2026. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $2.87 per MMBtu in the third quarter of 2026 as compared to an average of $2.95 per MMBtu in the second quarter of 2026, and closed at $2.52 per MMBtu on October 26, 2026.
Previous wording
Our drilling activity in the United States remained relatively stable in the second quarter of 2026, with an average active rig count in the United States of 92 rigs, consistent with the first quarter of 2026 and supported in part by term contracts. Activity strengthened as the quarter progressed, and we exited the quarter with 96 rigs operating, reflecting a higher level of activity than the quarterly average. 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 June 30, 2026 was approximately $365 million. Approximately 15% of our total contract drilling backlog in the United States at June 30, 2026 is reasonably expected to remain at June 30, 2027. See Note 2 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.
Current wording
Our drilling activity in the United States increased moderately in the third quarter of 2026, with an average active rig count in the United States of 101 rigs, compared to our average active rig count of 92 in the second quarter of 2026. Activity strengthened as the quarter progressed, and we exited the quarter with 104 rigs operating, reflecting a higher level of activity than the quarterly average. 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, 2026 was approximately $424 million. Approximately 22% of our total contract drilling backlog in the United States at September 30, 2026 is reasonably expected to remain at September 30, 2027. See Note 2 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.
Previous wording
In our drilling services segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter. We expect our average U.S. rig count to beapproximately 100 in the third quarter, and we expect to exit the quarter higher than the quarterly average.
Current wording
In our drilling services segment for the fourth quarter of 2026, we expect adjusted gross profit to be higher than the third quarter. We expect our average U.S. rig count to be approximately 104 in the fourth quarter, and we expect to exit 2026 above that level, with additional rig reactivations anticipated in the first quarter of 2027.
Previous wording
In our completion services segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter, supported by near-full utilization across our active frac equipment and additional pricing improvement compared to the second quarter.
Current wording
In our completion services segment for the fourth quarter of 2026, we expect adjusted gross profit to be higher than the third quarter, supported by activity levels broadly consistent with the third quarter and additional pricing improvements.
Previous wording
In our drilling products segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter, driven by higher drilling activity in the United States and the seasonal recovery from spring breakup in Canada.
Current wording
In our drilling products segment for the fourth quarter of 2026, we expect adjusted gross profit to be lower than the third quarter, primarily reflecting the expectation for lower drilling activity in Saudi Arabia due to ongoing geopolitical unrest in the region.
Previous wording
Recent Developments in Business and Financial Matters—During the second quarter of 2026, management approved a plan to exit our Colombian contract drilling operations, which resulted in incremental operating expenses totaling $21.0 million within the Drilling Services segment. Changes in Colombia’s political environment, coupled with continued reductions in activity forecasts and challenging market conditions in the region, have reduced the attractiveness of additional investment. The exit activity is expected to be substantially completed over the next year.
Current wording
During the second quarter of 2026, management approved a plan to exit our Colombian contract drilling operations, which resulted in incremental operating expenses totaling $3.0 million and $24.0 million within the Drilling Services segment for the three and nine months ended September 30, 2026, respectively. Changes in Colombia’s political environment, coupled with continued reductions in activity forecasts and challenging market conditions in the region, have reduced the attractiveness of additional investment. The exit activity is expected to be substantially completed over the next year.
Previous wording
For the three months ended June 30, 2026 and March 31, 2026 and for the six months ended June 30, 2026 and June 30, 2025, our operating revenues consisted of the following (dollars in thousands):
Current wording
For the three months ended September 30, 2026 and June 30, 2026 and for the nine months ended September 30, 2026 and September 30, 2025, our operating revenues consisted of the following (dollars in thousands):
Previous wording
Direct operating costs increased primarily due to costs incurred to reactive rigs in our contract drilling business and the higher activity in our directional drilling business. In addition, direct operating costs were approximately $20.0 million higher due to our decision to exit our contract drilling operations in Colombia. See Note 16 of Notes to unaudited condensed consolidated financial statements for additional information.
Current wording
Total revenues and direct operating costs increased compared to the prior quarter primarily due to higher operating days in our U.S. contract drilling business. Higher activity was concentrated in oil producing basins, particularly the Rockies and Permian, while demand for our contract drilling services in natural gas basins remained relatively steady compared to the prior quarter. Direct operating costs during the second quarter included approximately $20.0 million associated with our decision to exit our contract drilling operations in Colombia. See Note 16 to the unaudited condensed consolidated financial statements for additional information.
Previous wording
Revenues increased primarily due to higher realized pricing on crude oil. Market prices for crude oil averaged $95.65 per barrel in the second quarter of 2026, as compared to $72.74 per barrel in the first quarter of 2026.
Current wording
Revenues decreased due to lower realized pricing on crude oil and lower production volumes. Market prices for crude oil averaged $87.12 per barrel in the third quarter of 2026 as compared to $95.65 per barrel in the second quarter of 2026.
Previous wording
General and administrative was relatively flat between sequential quarters.
Current wording
General and administrative, interest income and interest expense, net of amount capitalized were relatively flat between sequential quarters.
Previous wording
Other operating (income) expenses, net includes net losses associated with the disposal of assets. Accordingly, the related gains or losses have been excluded from the results of specific segments. The change in other operating (income) expenses, net was primarily due to a $4.5 million reversal of cumulative compensation costs associated with certain performance-based restricted stock units during the first quarter of 2026 and a $2.2 million increase in credit loss expense during the second quarter of 2026.
Current wording
Other operating (income) expenses, net includes net losses associated with the disposal of assets. Accordingly, the related gains or losses have been excluded from the results of specific segments. The change in other operating (income) expenses, net was due to a $22.1 million gain on the sale of 13 rigs during the third quarter of 2026, including three rigs sold as part of our plan to exit Colombia, compared to a $2.2 million credit loss expense recognized during the second quarter of 2026.
Previous wording
The following tables summarize results of operations by business segment for the six months ended June 30, 2026 and June 30, 2025:
Current wording
The following tables summarize results of operations by business segment for the nine months ended September 30, 2026 and September 30, 2025:
Previous 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. The decrease in operating days for our U.S. contract drilling business reflects the industry-wide activity declines at the beginning of 2026. Direct operating costs during the six months ended June 30, 2026, were approximately $20.0 million higher due to our decision to exit our contract drilling operations in Colombia. See Note 16 of Notes to unaudited condensed consolidated financial statements for additional information.
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. The decrease in operating days for our U.S. contract drilling business reflects the industry-wide activity declines at the beginning of 2026, partially offset by improving activity levels during the second half of 2026. Direct operating costs during the nine months ended September 30, 2026, were approximately $20.0 million higher due to our decision to exit our contract drilling operations in Colombia. See Note 16 of Notes to unaudited condensed consolidated financial statements for additional information.
Previous wording
General and administrative increased primarily due to certain internal reorganization initiatives and employee separation costs incurred during the first half of 2026.
Current wording
General and administrative increased primarily due to certain internal reorganization initiatives and employee separation costs incurred during 2026.
Previous wording
General and administrative decreased, benefiting from cost reduction activities.
Current wording
General and administrative decreased, benefiting from cost reduction activities enacted in 2025.
Previous wording
Capital expenditures decreased primarily due to the timing of order placement as well as lower maintenance capital expenditures due to fewer operating days.
Current wording
Capital expenditures decreased primarily due to the timing of order placement.
Previous wording
The changes for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 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, 2026 as compared to the nine months ended September 30, 2025 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, revenue increased $5.5 million, or 54%, related to our non-operating working interests in oil and natural gas properties. The increase was primarily driven by higher realized crude oil prices. Oil prices averaged $84.29 per barrel during the six months ended June 30, 2026 as compared to $68.12 per barrel during the six months ended June 30, 2025. Direct operating costs were consistent across both periods.
Current wording
Excluding the effects of our oilfield rentals business divestiture, revenue increased $7.2 million, or 48%, related to our non-operating working interests in oil and natural gas properties. The increase was primarily driven by higher realized crude oil prices. Oil prices averaged $85.25 per barrel during the nine months ended September 30, 2026 as compared to $67.31 per barrel during the nine months ended September 30, 2025. Direct operating costs were consistent across both periods.
Previous wording
Depreciation, depletion, amortization and impairment expense, excluding the effects of our oilfield rentals business divestiture, decreased $4.2 million, or 59% due to a $3.6 million impairment recorded during the six months ended June 30, 2025.
Current wording
Depreciation, depletion, amortization and impairment expense, excluding the effects of our oilfield rentals business divestiture, decreased $3.3 million, or 42% due to a $3.6 million impairment recorded during the nine months ended September 30, 2025.
Previous wording
General and administrative increased primarily due to certain internal reorganization initiatives, higher share‑based compensation expense related to cash-settled liability awards and employee compensation costs, and software subscription fees incurred during the first half of 2026 compared to the same period of 2025.
Current wording
General and administrative increased primarily due to certain internal reorganization initiatives and software subscription fees incurred during 2026 compared to the same period of 2025.
Previous wording
Other operating (income) expenses, net includes net losses associated with the disposal of assets. Accordingly, the related gains or losses have been excluded from the results of specific segments. The change in other operating (income) expenses, net was primarily due to a $4.5 million reversal of cumulative compensation costs associated with certain performance-based restricted stock units during the first quarter of 2026.
Current wording
Other operating (income) expenses, net includes net losses associated with the disposal of assets. Accordingly, the related gains or losses have been excluded from the results of specific segments. The change in other operating (income) expenses, net was primarily due to a $22.1 million gain on the sale of 13 rigs during the third quarter of 2026, including three rigs sold as part of our plan to exit Colombia.
Previous wording
Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in pretax income in jurisdictions with varying statutory tax rates, the impact of U.S. state and local taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.
Current wording
Our effective income tax rate fluctuates from the U.S. statutory tax rate based on, among other factors, changes in income or loss before income taxes in jurisdictions with varying statutory tax rates, changes in the absolute amount of income or loss before income taxes, the impact of U.S. state and local income taxes, the realizability of deferred tax assets and other differences related to the recognition of income and expense between GAAP and tax accounting.
Previous wording
Our effective income tax rate for the three months ended June 30, 2026 was 31.0%, compared with 12.8% for the three months ended March 31, 2026. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against earnings between periods.
Current wording
Our effective income tax rate for the three months ended September 30, 2026 was 39.3%, compared with 31.0% for the three months ended June 30, 2026. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against income or loss before income taxes between periods.
Previous wording
Our effective income tax rate for the six months ended June 30, 2026 was 21.9%, compared with (5.8)% for the six months ended June 30, 2025. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against earnings between periods.
Current wording
Our effective income tax rate for the nine months ended September 30, 2026 was (70.8)%, compared with 4.6% for the nine months ended September 30, 2025. The difference in effective income tax rates between the periods was primarily attributable to the impact of permanent differences against income or loss before income taxes between periods.
Previous wording
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.
Current wording
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. The applicable provisions of the OBBBA have been reflected in our income tax provision.
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, 2026, we had approximately $588 million in working capital, including $201 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, 2026, we had approximately $641 million in working capital, including $337 million of cash and cash equivalents, and approximately $498 million available under our Credit Agreement.
Previous wording
Our cash flows for the six months ended June 30, 2026 and 2025 are summarized below:
Current wording
Our cash flows for the nine months ended September 30, 2026 and 2025 are summarized below:
Previous wording
Operating Activities —The decrease in cash provided by operating activities between the six months ended June 30, 2026 and 2025 was primarily attributable to changes related to timing of working capital payments and receipts.
Current wording
Operating Activities —The decrease in cash provided by operating activities between the nine months ended September 30, 2026 and 2025 was primarily attributable to changes related to timing of working capital payments and receipts.
Previous wording
Investing Activities — The decrease in cash used in investing activities between the six months ended June 30, 2026 and 2025 was primarily attributable to lower capital expenditures driven by the timing of order placement and reduced maintenance capital spending resulting from fewer operating days. These decreases were partially offset by lower proceeds from sales of assets.
Current wording
Investing Activities — The decrease in cash used in investing activities between the nine months ended September 30, 2026 and 2025 was primarily attributable to lower capital expenditures driven by the timing of order placement, reduced maintenance capital spending resulting from fewer operating days, and higher proceeds from disposal of property and equipment.
Previous wording
Financing Activities —The decrease in cash used in financing activities between the six months ended June 30, 2026 and 2025 was primarily due to fewer share repurchases and proceeds from the issuance of our 2036 Notes. These factors were partially offset by the redemption of our 2028 Notes and increased dividend payments.
Current wording
Financing Activities —The decrease in cash used in financing activities between the nine months ended September 30, 2026 and 2025 was primarily due to fewer share repurchases and proceeds from the issuance of our 2036 Notes. These factors were partially offset by the redemption of our 2028 Notes and increased dividend payments.
Previous wording
On January 31, 2025, we entered into the Second Amended and Restated Credit Agreement with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, and the other parties thereto (the “Amended and Restated Credit Agreement”). The Credit Agreement amended and restated our Amended and Restated Credit Agreement dated as of March 27, 2018. As of June 30, 2026, the commitments under the Credit Agreement were $500 million, and the loans and commitments under the Credit Agreement would mature on January 31, 2030.
Current wording
On January 31, 2025, we entered into the Second Amended and Restated Credit Agreement with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, and the other parties thereto (the “Amended and Restated Credit Agreement”). The Credit Agreement amended and restated our Amended and Restated Credit Agreement dated as of March 27, 2018.
Previous wording
We had $31.3 million of outstanding letters of credit at June 30, 2026, which was comprised of $27.0 million outstanding under the 2015 Reimbursement Agreement, $2.3 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, 2026, no amounts had been drawn under the letters of credit. As of June 30, 2026, we had $39.0 million in surety bond exposure issued as financial assurance on an insurance agreement.
Current wording
We had $31.4 million of outstanding letters of credit at September 30, 2026, which was comprised of $27.0 million outstanding under the 2015 Reimbursement Agreement, $2.3 million outstanding under the Credit Agreement and $2.1 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, 2026, no amounts had been drawn under the letters of credit. As of September 30, 2026, we had $39.0 million in surety bond exposure issued as financial assurance on an insurance agreement.
Previous wording
During the six months ended June 30, 2026, our sources of cash flow included:
Current wording
During the nine months ended September 30, 2026, our sources of cash flow included:
Previous wording
•$120 million from operating activities and
Current wording
•$421 million from operating activities,
Previous wording
•$14.9 million in proceeds from the disposal of property and equipment, including insurance recoveries, and
Current wording
•$60.6 million in proceeds from the disposal of property and equipment, including insurance recoveries, and
Previous wording
During the six months ended June 30, 2026, our uses of cash flow included:
Current wording
During the nine months ended September 30, 2026, our uses of cash flow included:
Previous wording
•$273 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
•$414 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,
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Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Capital expenditures increased primarily due to higher raw material costs, particularly tungsten powder used in certain matrix bit applications.
Previous report — wording carried elsewhere
Interest expense, net of amounts capitalized, increased due to a $0.9 million loss on extinguishment of debt and higher interest expense associated with the 2036 Notes issued during the second quarter of 2026.
Previous report — wording carried elsewhere
Revenues were relatively flat between the periods.
Previous report — wording carried elsewhere
The change in other income (expense) was due to a $4.5 million write-down of minority equity investments in the second quarter of 2026.