Patterson-UTI swings to $28.4M Q3 2026 profit
The quarter included a $22.1 million gain from rig sales, while nine-month operating cash flow was $420.876 million.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Patterson-UTI Energy, Inc. (PTEN) reported third-quarter 2026 revenue of $1,342.234 million, compared with $1,175.954 million a year earlier, and net income attributable to common stockholders of $28.353 million, versus a $36.402 million loss. For the first nine months, common-stockholder net loss was $15.876 million, compared with a loss of $84.541 million in 2025; operating cash flow was $420.876 million, versus $563.693 million.
Third-quarter sales of 13 rigs produced a $22.1 million gain. Patterson-UTI plans to exit Colombian contract drilling operations, with the exit expected to be substantially completed over the next year; related costs were $24.0 million for the nine months ended September 30, 2026. It issued $500 million of 6.05% senior notes due 2036; net proceeds before offering expenses of approximately $496 million were used to redeem the 2028 notes and for general corporate purposes. On June 4, 2026, it redeemed approximately $483 million of 2028 notes.
The board declared a $0.10-per-share cash dividend, payable December 15, 2026, to holders of record December 1, 2026. U.S. contract-drilling backlog was approximately $424 million as of September 30, 2026; approximately 22% was reasonably expected to remain at September 30, 2027.
2 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue rose to $1,342.234 million from $1,175.954 million.
- Moderate pointThird-quarter common-stockholder earnings were $28.353 million, versus a $36.402 million loss.
Negative
- Moderate pointNine-month operating cash flow declined to $420.876 million from $563.693 million.
Filing Explained
Existing holders face potential ownership dilution if the expanded incentive-plan share pool is used; the filing does not report that capacity as issued shares.
Stockholders approved an increase of 28.9 million shares available for issuance under Patterson-UTI’s 2021 incentive plan; this expands capacity for future awards, rather than recording an issuance. If issued, additional shares would increase the share count and reduce existing holders’ percentage ownership, absent offsetting changes.
Separately,
Key Figures
Third-quarter revenue: $1,342.234 million
Net income attributable to common stockholders: $28.353 million
Operating cash flow: $420.876 million
+3 more
6 metrics
Third-quarter revenue
$1,342.234 million
Three months ended September 30, 2026; $1,175.954 million in 2025
Net income attributable to common stockholders
$28.353 million
Three months ended September 30, 2026; loss of $36.402 million in 2025
Operating cash flow
$420.876 million
Nine months ended September 30, 2026; $563.693 million in 2025
Senior notes issued
$500 million principal amount; 6.05% interest; due 2036
Issued May 19, 2026
Cash dividend per share
$0.10 per share
Payable December 15, 2026, to holders of record December 1, 2026
U.S. contract-drilling backlog
Approximately $424 million; approximately 22% reasonably expected to remain
As of September 30, 2026; remaining amount expected at September 30, 2027
Key Terms
Adjusted gross profit, Sales-type leases, Contract drilling backlog, Tier-1, super-spec, +1 more
5 terms
Adjusted gross profit financial
"Adjusted gross profit, which is considered a non-GAAP financial measure"
Adjusted gross profit is a company’s revenue from selling goods or services minus the direct costs of producing them, with one-time or unusual items added back or removed to show the core margin. Investors use it like a cleaned-up snapshot of how much a business actually earns on its products, similar to measuring body weight after removing heavy clothes, because it helps compare performance across periods and companies without noise from rare events.
Sales-type leases financial
"These arrangements were accounted for as sales-type leases"
A sales-type lease is when the owner of an asset treats a long-term lease more like a sale: the owner records the lease as if it sold the asset and recognizes any immediate profit, while the buyer records a financed purchase. Think of it as selling a car but letting the buyer pay over time with the seller recording a sale now. Investors care because it changes reported revenue, profit, and asset balances, which can affect valuation and cash-flow analysis.
Contract drilling backlog financial
"Our contract drilling backlog in the United States"
Tier-1, super-spec technical
"137 marketed Tier-1, super-spec rigs"
Performance Units financial
"The Performance Units generally vest over a three-year period"
Performance units are company awards that become valuable only if specified business targets are met; they typically convert into shares or cash when performance goals are achieved. Think of them like a conditional bonus that turns into stock only if the company hits agreed milestones, so they align managers’ incentives with shareholders’ interests and can affect future share count, executive pay expense, and investor returns.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue did PTEN report in the third quarter of 2026?
Patterson-UTI reported third-quarter revenue of $1,342.234 million, compared with $1,175.954 million in the third quarter of 2025. Net income attributable to common stockholders was $28.353 million, versus a $36.402 million loss.
How did PTEN refinance its 2028 notes?
Patterson-UTI issued $500 million of 6.05% senior notes due 2036 on May 19, 2026. Net proceeds before offering expenses were approximately $496 million and were used to redeem the 2028 notes and for general corporate purposes. On June 4, 2026, it redeemed approximately $483 million of 2028 notes at 100% of principal, plus accrued and unpaid interest.
What dividend did PTEN declare, and when is it payable?
The board approved a $0.10-per-share cash dividend on October 28, 2026, payable December 15, 2026, to holders of record December 1, 2026. The amount and timing of future dividends, if any, are at the board’s discretion and depend on business and financial factors.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 10-Q
______________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 1-39270
______________________
(Exact name of registrant as specified in its charter)
______________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(281 ) 765-7100
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| þ | Accelerated filer | o | Smaller reporting company | ||||||||||||||||||||
| Non-accelerated filer | o | Emerging growth company | |||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION | ||||||||
| Page | ||||||||
ITEM 1. | Financial Statements | |||||||
Unaudited condensed consolidated balance sheets | 3 | |||||||
Unaudited condensed consolidated statements of operations | 4 | |||||||
Unaudited condensed consolidated statements of comprehensive income (loss) | 5 | |||||||
Unaudited condensed consolidated statements of changes in stockholders’ equity | 6 | |||||||
Unaudited condensed consolidated statements of cash flows | 8 | |||||||
Notes to unaudited condensed consolidated financial statements | 9 | |||||||
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | ||||||
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 41 | ||||||
ITEM 4. | Controls and Procedures | 41 | ||||||
PART II — OTHER INFORMATION | ||||||||
ITEM 1. | Legal Proceedings | 42 | ||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 42 | ||||||
ITEM 5. | Other Information | 43 | ||||||
ITEM 6. | Exhibits | 43 | ||||||
Signature | ||||||||
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following unaudited condensed consolidated financial statements include all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ September 30, 2026 and December 31, 2025, respectively | |||||||||||
| Inventory | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right of use asset | |||||||||||
| Finance lease right of use asset | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Deposits on equipment purchases | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Operating lease liability | |||||||||||
| Finance lease liability | |||||||||||
| Total current liabilities | |||||||||||
| Long-term operating lease liability | |||||||||||
| Long-term finance lease liability | |||||||||||
Long-term debt, net of debt discount and issuance costs of $ September 30, 2026 and December 31, 2025, respectively | |||||||||||
| Deferred tax liabilities, net | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (see Note 9) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, par value $ and December 31, 2025, respectively | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings (deficit) | ( | ( | |||||||||
| Accumulated other comprehensive income (loss) | ( | ( | |||||||||
Treasury stock, at cost, December 31, 2025, respectively | ( | ( | |||||||||
| Total stockholders’ equity attributable to controlling interests | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||
| Drilling Services | $ | $ | $ | $ | |||||||||||||||||||
| Completion Services | |||||||||||||||||||||||
| Drilling Products | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total operating revenues | |||||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Drilling Services | |||||||||||||||||||||||
| Completion Services | |||||||||||||||||||||||
| Drilling Products | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Depreciation, depletion, amortization and impairment | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Other operating expense (income), net | ( | ( | |||||||||||||||||||||
| Total operating costs and expenses | |||||||||||||||||||||||
| Operating income (loss) | ( | ( | |||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense, net of amount capitalized | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expense) | ( | ||||||||||||||||||||||
| Total other income (expense) | ( | ( | ( | ( | |||||||||||||||||||
| Income (loss) before income taxes | ( | ( | ( | ||||||||||||||||||||
| Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
| Net income (loss) | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | ( | ||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Net income (loss) attributable to common stockholders per common share: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Diluted | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Cash dividends per common share | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
Foreign currency translation adjustment, net of taxes of $ | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
| Less: comprehensive income (loss) attributable to noncontrolling interest | ( | ||||||||||||||||||||||
| Comprehensive income (loss) attributable to common stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands)
| Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
6
| Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Noncontrolling Interest | Total | |||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Payment of cash dividends ( | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Dividend equivalents | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion, amortization and impairment | |||||||||||
| Deferred income tax expense (benefit) | ( | ||||||||||
| Stock-based compensation | |||||||||||
| Net (gain) loss on asset disposals | ( | ( | |||||||||
| Certain Colombia contract drilling exit costs | |||||||||||
| Other | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventory | ( | ||||||||||
| Other current assets | ( | ||||||||||
| Other assets | |||||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | ( | ( | |||||||||
| Other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Proceeds from disposal of assets, including insurance recoveries | |||||||||||
| Other | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Purchases of treasury stock | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Net proceeds from issuance of senior notes | |||||||||||
| Repayment of senior notes | ( | ||||||||||
| Payments of finance leases | ( | ( | |||||||||
| Other | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Net change in cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Net cash received (paid) during the period for: | |||||||||||
Interest, net of capitalized interest of $ | $ | ( | $ | ( | |||||||
| Income taxes | ( | ||||||||||
| Non-cash investing and financing activities: | |||||||||||
| Net increase (decrease) in payables for purchases of property and equipment | $ | $ | ( | ||||||||
| Purchases of property and equipment through exchange of lease right of use asset | |||||||||||
| Derecognition of right of use asset | ( | ( | |||||||||
| Net investment in sales-type leases recognized | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PATTERSON-UTI ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Basis of presentation — The unaudited interim condensed consolidated financial statements include the accounts of Patterson-UTI Energy, Inc. and its wholly-owned subsidiaries and the consolidating interest in a joint venture (collectively referred to herein as “we,” “us,” “our,” “ours” and like terms). All intercompany accounts and transactions have been eliminated. Patterson-UTI Energy, Inc. conducts its business operations through its wholly-owned subsidiaries and has no employees or independent operations. Certain immaterial prior year amounts have been reclassified to conform to current year presentation.
The U.S. dollar is the reporting currency and functional currency for most of our operations except certain of our foreign subsidiaries, which use their local currencies as their functional currency. Assets and liabilities of these foreign subsidiaries are translated into U.S. dollars using the exchange rates in effect as of the balance sheet date. The effects of these translation adjustments are reflected in accumulated other comprehensive income, which is a separate component of stockholders’ equity.
There have been no material changes to our critical accounting policies from those disclosed in our Annual Report.
Restricted cash — Restricted cash includes amounts restricted as cash collateral for the issuance of standby letters of credit.
The following table provides a reconciliation of cash and restricted cash reported within the unaudited condensed consolidated balance sheets that sum to the total of such amounts shown in the unaudited condensed statements of cash flows for the nine months ended September 30, 2026 and 2025 (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
Recently Adopted Accounting Standards — In December 2023, the FASB issued ASU 2023-09 to improve income tax disclosure. We adopted this accounting pronouncement effective January 1, 2025, on a prospective basis with the first disclosure enhancements reflected in our Annual Report on Form 10-K for the year ended December 31, 2025. The adoption did not have a material impact on our consolidated financial position, results of operations, or cash flows, but resulted in expanded disclosures within the Income Taxes footnote.
In July 2025, the FASB issued ASU 2025-05 to provide entities the option to use a practical expedient to assume balance sheet conditions remain unchanged when developing forecasts for estimating expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. We adopted this new guidance on January 1, 2026, and there was no material impact on our consolidated financial statements.
Recently Issued Accounting Standards — In November 2024, the FASB issued ASU 2024-03 to expand disclosure requirements related to certain income statement expenses, which requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. This guidance is effective for
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annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06 to improve the accounting for internal-use software cost by increasing the operability of the recognition guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. This guidance is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11 to clarify the applicability of the interim reporting guidance, the types of interim reporting and the form and content of interim financial statements in accordance with GAAP. Per the FASB, the amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. We are currently evaluating the impact this pronouncement will have on our consolidated financial statements.
2. Revenues
ASC Topic 606 Revenue from Contracts with Customers
Drilling Services and Completion Services — revenue is recognized based on our customers’ ability to benefit from our services in an amount that reflects the consideration we expect to receive in exchange for those services. This typically happens when the service is performed. The services we provide represent a series of distinct services, generally provided daily, that are substantially the same, with the same pattern of transfer to the customer. Because our customers benefit equally throughout the service period, generally measured in days, and our efforts in providing services are incurred relatively evenly over the period of performance, revenue is recognized as we provide services to the customer.
Drilling Services revenue primarily consists of daywork drilling contracts for which related revenues and expenses are recognized as services are performed. For certain contracts, we receive payments for the mobilization of rigs and other drilling equipment. We defer revenue and related direct operating expense related to mobilizations and recognize those revenues and expenses on a straight-line basis as drilling services are provided. Costs incurred to relocate rigs and other drilling equipment to areas in which a contract has not been secured are expensed as incurred and are recorded in Drilling Services operating expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). For certain contracts, we are also entitled to early termination payments if our customers choose to terminate a contract prior to the expiration of the contractual term. We recognize revenue associated with early termination payments when all contractual requirements related to early termination payments have been met.
Certain of our drilling contracts are performance-based. Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets. These types of contracts typically have a lower base dayrate but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers.
Completion Services revenue consists of services and products related to our suite of completion businesses, including hydraulic fracturing, completion support services, wireline and pumpdown services and cementing. These services are provided pursuant to contractual arrangements, including pricing agreements. Revenue from these services is earned as services are rendered, which is generally on a per stage or fixed monthly rate, except for our cementing services. All revenue is recognized when a contract with a customer exists, the performance obligations under the contract have been satisfied over time, the amount to which we have the right to invoice has been determined and collectability of amounts subject to invoice is probable. Contract fulfillment costs, such as mobilization costs and shipping and handling costs, are expensed as incurred and are recorded in Completion Services operating expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). To the extent fulfillment costs are considered separate performance obligations that are billable to the customer, the amounts billed are recorded as revenue in the Consolidated Statements of Operations and Comprehensive Income (Loss).
ASC Topic 842 Revenue from Equipment Rentals and Other
Drilling Products Revenue — revenues are primarily generated from the rental of drilling equipment, comprised of drill bits and downhole tools. These arrangements provide the customer with the right to control the use of the identified asset. Generally, the lease terms in such arrangements are for periods of two to three days and do not provide customers with options to purchase the underlying asset.
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Other — we are a non-operating working interest owner of oil and natural gas assets primarily located in Texas and New Mexico. The ownership terms are outlined in joint operating agreements for each well between the operator of the well and the various interest owners, including us, who are considered non-operators of the well. We receive revenue each period for our working interest in the well during the period.
Our revenue is disaggregated by service category, which aligns with our reportable segments. See Note 14 for details. Management believes this disaggregation depicts the nature, amount, timing and uncertainty of revenue and cash flows, as each service category is subject to different demand drivers and contract characteristics.
Accounts Receivable and Contract Liabilities
Accounts receivable is our right to consideration once it becomes unconditional. Payment terms typically range from 30 to 60 days.
The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on our consolidated balance sheet. We do not have any significant contract asset balances. Contract liabilities include prepayments received from customers prior to the requested services being completed. Once the services are complete and have been invoiced, the prepayment is applied against the customer’s account to offset the accounts receivable balance. Also included in contract liabilities are payments received from customers for reactivation or initial mobilization of rigs that were moved on location to the initial well site. These payments are allocated to the overall performance obligation and amortized over the initial term of the contract.
Contract liabilities consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):
Balance at December 31, 2025 | $ | ||||||||||
| Payment received/accrued and deferred | |||||||||||
| Revenue recognized during the period | ( | ||||||||||
Balance at September 30, 2026 (1) | $ | ||||||||||
(1)$2.4 million of our contract liability balance is current and is included in “Accrued liabilities,” and $1.0 million of our contract liability balance is noncurrent and is included in “Other liabilities” on our consolidated balance sheet.
During the nine months ended September 30, 2026, we recognized $77.1 million of revenue that was included in the contract liability balance at the beginning of the period. The substantial majority of our revenue related to our contract liabilities balance is expected to be recognized within one year.
Contract Costs
Costs incurred for rig upgrades based on a contract with a customer are considered capital improvements and are capitalized to drilling equipment and depreciated over the estimated useful life of the asset.
Remaining Performance Obligations
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. We generally calculate our backlog by multiplying the dayrate under our term drilling contracts by the number of days remaining under the contract. The calculation does not include any revenues related to fees for other services such as for mobilization, other than initial mobilization, demobilization and customer reimbursables, nor does it include potential reductions in rates for unscheduled standby or during periods in which the rig is moving or incurring maintenance and repair time in excess of what is permitted under the drilling contract. For contracts that contain variable dayrate pricing, our backlog calculation uses the dayrate in effect for periods where the dayrate is fixed, and, for periods that remain subject to variable pricing, uses commodity pricing or other related indices in effect at September 30, 2026. In addition, our term drilling contracts are generally subject to termination by the customer on short notice and provide for an early termination payment to us in the event that the contract is terminated by the customer. For contracts on which we have received notice for the rig to be placed on standby, our backlog calculation uses the standby rate for the period over which we expect to receive the standby rate. For contracts on which we have received an early termination notice, our backlog calculation includes the early termination rate, instead of the dayrate, for the period over which we expect to receive the lower rate. Please see “Our current backlog of contract drilling revenue may decline and
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may not ultimately be realized, as fixed-term contracts may in certain instances be terminated without an early termination payment” included in Item 1A of our Annual Report.
3. Inventory
Inventory consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Raw materials and supplies | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Inventory | $ | $ | |||||||||
4. Other Current Assets
| September 30, 2026 | December 31, 2025 | ||||||||||
| Federal and state income taxes receivable | $ | $ | |||||||||
| Workers’ compensation receivable | |||||||||||
| Prepaid expenses | |||||||||||
| Other | |||||||||||
| Other current assets | $ | $ | |||||||||
5. Property and Equipment
Property and equipment consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Equipment | $ | $ | |||||||||
| Oil and natural gas properties | |||||||||||
| Buildings and improvements | |||||||||||
| Rental equipment | |||||||||||
| Land and improvements | |||||||||||
| Total property and equipment | |||||||||||
| Less accumulated depreciation, depletion, amortization and impairment | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Depreciation, depletion, amortization and impairment — The following table summarizes depreciation, depletion, amortization and impairment expense related to property and equipment and intangible assets for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
| Amortization expense | |||||||||||||||||||||||
| Depletion expense | |||||||||||||||||||||||
| Impairment expense | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
We review our long-lived assets, including property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of certain assets may not be recovered over their
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6. Goodwill and Intangible Assets
Goodwill — During the nine months ended September 30, 2026, there were no As of September 30, 2026 and December 31, 2025, our goodwill balances by operating segment were as follows (in thousands):
| Completion Services | Drilling Products | Total | |||||||||||||||
Balance as of September 30, 2026 and December 31, 2025 | $ | $ | $ | ||||||||||||||
Goodwill is evaluated at least annually on July 31, or more frequently when events or circumstances occur indicating recorded goodwill may be impaired. During the third quarter of 2026, we completed our annual goodwill impairment test, concluding that there were no events or circumstances that existed that would lead to a determination that it is more likely than not that the fair value of any reporting unit is less than its carrying value.
Intangible Assets — The following table presents the gross carrying amount and accumulated amortization of our intangible assets as of September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Developed technology | ( | ( | |||||||||||||||||||||||||||||||||
| Trade name | ( | ( | |||||||||||||||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||||||||||||||
| Intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Amortization expense on intangible assets of approximately $30.3 million and $31.7 million was recorded for each of the three months ended September 30, 2026 and 2025. Amortization expense on intangible assets of approximately $94.0 million and $94.5 million was recorded for the nine months ended September 30, 2026 and 2025, respectively.
7. Accrued Liabilities
Accrued liabilities consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||
| Salaries, wages, payroll taxes and benefits | $ | $ | |||||||||
| Insurance | |||||||||||
| Property, sales, use and other taxes | |||||||||||
| Accrued interest payable | |||||||||||
| Deferred revenue | |||||||||||
| Other | |||||||||||
| Accrued liabilities | $ | $ | |||||||||
8. Long-Term Debt
Long-term debt consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):
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| September 30, 2026 | December 31, 2025 | ||||||||||
| $ | $ | ||||||||||
| Less deferred financing costs and discounts | ( | ( | |||||||||
| Total | $ | $ | |||||||||
Credit Agreement — 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”), which amended and restated our Amended and Restated Credit Agreement dated as of March 27, 2018.
On April 24, 2026, we entered into the Assignment and Amendment No. 1 to Second Amended and Restated Credit Agreement, which amended the Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), which, among other things, (i) extended the maturity date for $450 million of revolving credit commitments of certain lenders under the Credit Agreement from January 31, 2030 to January 31, 2031, with the option at our election for two one-year extensions, and (ii) assigned $25 million of the revolving credit commitments from HSBC Bank USA, N.A., to JPMorgan Chase Bank, N.A., in each case, on the terms and subject to the conditions set forth therein. As of September 30, 2026, the commitments under the Amended and Restated Credit Agreement were $500 million, and $450 million of the loans and commitments under the Credit Agreement would mature on January 31, 2031, with the remainder maturing January 31, 2030.
The Credit Agreement contains representations, warranties, affirmative and negative covenants and events of default and associated remedies that we believe are customary for agreements of this nature. We were in compliance with the covenants at September 30, 2026.
As of September 30, 2026, we had no borrowings outstanding under our Credit Agreement. We had $2.3 million in letters of credit outstanding under the Credit Agreement at September 30, 2026 and, as a result, had available borrowing capacity of approximately $498 million under the Credit Agreement at that date.
2015 Reimbursement Agreement — On March 16, 2015, we entered into a Reimbursement Agreement (as amended from time to time, the “2015 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, 2026, we had $27.0 million in letters of credit outstanding under the 2015 Reimbursement Agreement.
2028 Senior Notes, 2029 Senior Notes, 2033 Senior Notes and 2036 Senior Notes — On January 19, 2018, we completed an offering of $525 million in aggregate principal amount of 3.95 % senior notes due 2028 (the “2028 Notes”), of which the outstanding amount was fully redeemed on June 4, 2026. On November 15, 2019, we completed an offering of $350 million in aggregate principal amount of 5.15 % senior notes due 2029 (the “2029 Notes”). On September 13, 2023, we completed an offering of $400 million in aggregate principal amount of 7.15 % senior notes due 2033 (the “2033 Notes”). On May 19, 2026, we completed an offering of $500 million in aggregate principal amount of 6.05 % senior notes due 2036 (the “2036 Notes”). The net proceeds before offering expenses from the offering of the 2036 Notes were approximately $496 million, which we used to fully redeem our outstanding 2028 Notes and for general corporate purposes.
We pay interest on the 2036 Notes on May 15 and November 15 of each year. The 2036 Notes will mature on May 15, 2036. The 2036 Notes bear interest at a rate of 6.05 % per annum.
The 2029 Notes, 2033 Notes, and 2036 Notes (together, the “Senior Notes”) are our senior unsecured obligations, which rank equally with all other existing and future senior unsecured debt and will rank senior in right of payment to all other future subordinated debt. The Senior Notes will be effectively subordinated to any of our future secured debt to the extent of the value of the assets securing such debt. In addition, the Senior Notes will be structurally subordinated to the liabilities (including trade payables) of our subsidiaries that do not guarantee the Senior Notes. None of our subsidiaries are currently required to be a guarantor under the Senior Notes. If our subsidiaries guarantee the Senior Notes in the future, such guarantees (the “Guarantees”) will rank equally in right of payment with all of the guarantors’ future unsecured senior debt and senior in right of payment to all of the guarantors’ future subordinated debt. The Guarantees will be effectively subordinated to any of the guarantors’ future secured debt to the extent of the value of the assets securing such debt.
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At our option, we may redeem the 2036 Notes in whole or in part, at any time or from time to time prior to February 15, 2036 at a redemption price equal to the greater of (i) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2036 Notes matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points less (b) interest accrued to the date of redemption, and (ii) 100 % of the principal amount of the 2036 Notes to be redeemed, plus in either case, accrued and unpaid interest thereon to, but excluding, the redemption date. Additionally, commencing on February 15, 2036, we may redeem the 2036 Notes at our option, in whole or in part, at a redemption price equal to 100 % of the principal amount of the 2036 Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.
Upon the occurrence of a change of control triggering event, as defined in the indenture governing the 2036 Notes, each holder of the 2036 Notes may require us to purchase all or a portion of such holder’s 2036 Notes at a purchase price in cash equal to 101 % of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
On June 4, 2026, we completed our redemption of all the approximately $483 million aggregate principal amount of the outstanding 2028 Notes. The 2028 Notes were redeemed at a redemption price of 100 % of the principal amount of the 2028 Notes outstanding, plus accrued and unpaid interest to the redemption date. The total amount of the redemption was approximately $483 million, which was funded using a portion of the net proceeds from our 2036 Notes offering. We recognized a non-cash loss on extinguishment of debt of $0.9 million, primarily related to the write-off of unamortized debt issuance cost associated with the 2028 Notes, which is included in “Interest expense, net of amount capitalized” in the consolidated statement of operations.
The indentures pursuant to which the Senior Notes were issued include covenants that, among other things, limit our and our subsidiaries’ ability to incur certain liens, engage in sale and lease-back transactions or consolidate, merge, or transfer all or substantially all of their assets. These covenants are subject to important qualifications and limitations set forth in the indentures. We were in compliance with these covenants at September 30, 2026. The indentures governing the Senior Notes also contain customary events of default with respect to the Senior Notes. No events of default had occurred at September 30, 2026.
9. Commitments and Contingencies
Purchase Commitments — As of September 30, 2026, we maintained letters of credit in the aggregate amount of $31.4 million primarily for the benefit of various insurance companies as collateral for retrospective premiums and retained losses that could become payable under the 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.
As of September 30, 2026, we had commitments to purchase major equipment totaling approximately $179 million.
Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of September 30, 2026, the remaining minimum obligation under these agreements was approximately $7.0 million, of which approximately $1.1 million and $5.9 million relate to the remainder of 2026 and 2027, respectively.
Contingencies — Certain subsidiaries we acquired in the Ulterra acquisition are defendants in a claim brought by a subsidiary of NOV Inc. alleging breach of a license agreement related to certain patents. Such subsidiaries have asserted defenses to the claim and are defending vigorously against this claim.
On February 6, 2023, Grant Prideco, Inc., ReedHycalog UK, Ltd., ReedHycalog, LP and National Oilwell Varco, LP (“NOV”) sued Ulterra Drilling Technologies, LP (“Ulterra”) and several other companies in Texas state court. NOV seeks a declaration that United States Patent No. 8,721,752 (the “’752 Patent”) is a “Licensed RH Patent” per the terms of a license agreement between Ulterra and NOV. NOV also alleges a breach of contract based on the license agreement between NOV and Ulterra and seeks allegedly owed royalties since October 22, 2021. NOV also seeks attorney’s fees.
On February 27, 2023, Ulterra filed a plea to the jurisdiction, and subject thereto, an answer, affirmative defenses and counterclaims. Ulterra’s counterclaims include: (i) declaratory judgments of non-infringement of U.S. Pat. No. 7,568,534 and the ’752 patent; (ii) a declaratory judgment of no royalties after Oct. 22, 2021; (iii) a declaratory judgment that certain other identified patents are expired and therefore not infringed after Oct. 22, 2021; and (iv) a declaratory judgment of no breach of contract. On the same day, Ulterra filed a notice of removal in federal court for the Southern District of Texas, Houston Division (SDTX 4:23-cv-00730), as well as a corresponding notice in Texas state court. NOV moved to dismiss and remand the case back to state court. On
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February 17, 2024, the Court denied NOV’s motion. On March 19, 2024, Ulterra moved for judgment on the pleadings regarding its declaratory judgment that certain other identified patents are expired and therefore not infringed after October 22, 2021. On February 13, 2025, the motion was granted in part and denied in part.
In October and November 2025, the Court resolved certain dispositive motions in Ulterra’s favor, resulting in a Final Judgment in Ulterra’s favor on November 25, 2025. NOV has acknowledged that the Court’s rulings mean it cannot collect any of the royalties it had alleged were owed. On December 12, 2025, NOV filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit. The appeal is currently pending before the Federal Circuit as Docket Nos. 26-1256 and 26-1266. On April 20, 2026, NOV filed its opening appellate brief. Ulterra filed its response on July 31, 2026. NOV filed its reply on September 25, 2026. Oral argument is not yet scheduled.
Additionally, we are party to various other legal proceedings arising in the normal course of our business. We do not believe that the outcome of these proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition, cash flows or results of operations.
10. Stockholders’ Equity
Cash Dividend —On October 28, 2026, our Board of Directors approved a cash dividend on our common stock in the amount of $0.10 per share to be paid on December 15, 2026 to holders of record as of December 1, 2026. The amount and timing of all future dividend payments, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of our debt agreements and other factors. Our Board of Directors may, without advance notice, reduce or suspend our dividend for any reason, including to improve our financial flexibility and position our company for long-term success. There can be no assurance that we will pay a dividend in the future.
Share Repurchases and Acquisitions — 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, 2026, we had remaining authorization to purchase approximately $669 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.
Treasury stock acquisitions during the nine months ended September 30, 2026 were as follows (dollars in thousands):
| Shares | Cost | ||||||||||
Treasury shares at January 1, 2026 | $ | ||||||||||
| Purchases pursuant to stock buyback program | |||||||||||
| Acquisitions pursuant to long-term incentive plans | |||||||||||
Treasury shares at September 30, 2026 | $ | ||||||||||
11. Stock-based Compensation
We use share-based payments to compensate employees and non-employee directors. We grant incentive awards in the form of restricted stock units (a small portion of which are subject to the achievement of performance conditions) and performance unit awards (which are subject to the achievement of performance conditions). Certain of these incentive awards are share-settled, and certain of these incentive awards are cash-settled. See Note 12 in Notes to consolidated financial statements in Item 8 of our Annual Report for further description of the various types of stock-based compensation awards and the applicable award terms and accounting.
The Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan (as amended from time to time, the “2021 Plan”) was originally approved by our stockholders on June 3, 2021. Subject to stockholder approval, our Board of Directors approved an amendment to the 2021 Plan to increase the number of shares available for issuance under the 2021 Plan by 28.9 million shares (the “Amendment”). On June 4, 2026, our stockholders approved the Amendment.
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Stock Options — No stock options have been granted since 2016. Stock option activity from January 1, 2026 to September 30, 2026 follows:
| Underlying Shares | Weighted Average Exercise Price Per Share | ||||||||||
Outstanding at January 1, 2026 | $ | ||||||||||
| Exercised | $ | ||||||||||
| Expired | ( | $ | |||||||||
Outstanding at September 30, 2026 | $ | ||||||||||
Exercisable at September 30, 2026 | $ | ||||||||||
Restricted Stock Units (Equity Based) — Share-settled restricted stock unit activity from January 1, 2026 to September 30, 2026 follows:
| Time Based Shares | Performance Based Shares | Weighted Average Grant Date Fair Value Per Share | |||||||||||||||
Non-vested restricted stock units outstanding at January 1, 2026 | $ | ||||||||||||||||
| Granted | $ | ||||||||||||||||
Performance based restricted stock units settled (1) | ( | $ | |||||||||||||||
| Vested | ( | $ | |||||||||||||||
| Forfeited | ( | ( | $ | ||||||||||||||
Non-vested restricted stock units outstanding at September 30, 2026 | $ | ||||||||||||||||
(1)Performance based restricted stock units reached the end of their performance period during the nine months ended September 30, 2026, and no shares were issued to settle such performance based restricted stock units.
As of September 30, 2026, we had unrecognized compensation cost related to our unvested restricted stock units totaling $39.8 million. The weighted-average remaining vesting period for these unvested restricted stock units was 2.02 years as of September 30, 2026.
Restricted Stock Units (Liability Based) — A portion of the restricted stock unit awards granted in 2025 and 2026 are cash-settled. Cash-settled restricted stock unit activity from January 1, 2026 to September 30, 2026 follows:
| Time Based Shares | |||||||||||
Non-vested cash-settled restricted stock units outstanding at January 1, 2026 | |||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | |||||||||||
Non-vested cash-settled restricted stock units outstanding at September 30, 2026 | |||||||||||
As of September 30, 2026, we had unrecognized compensation cost related to our unvested cash-settled restricted stock units totaling $7.3 million. The weighted-average remaining vesting period for these unvested cash-settled restricted stock units was 2.05 years as of September 30, 2026.
Performance Unit Awards — We have granted performance unit awards to certain employees (the “Performance Units”). The Performance Units generally vest over a three-year period based on the achievement of performance goals. Historically, Performance Units have been tied to total shareholder return (“TSR”) achievement as compared to the TSR of a designated peer group, and allow for a payout ranging between 0 % and 200 % of the target payout. With respect to the Performance Units granted in each of April 2026 and May 2025, (i) one-half are cash-settled and are otherwise structured similarly to the Performance Units granted in 2024 with vesting tied to our relative TSR and (ii) one-half are share-settled and tied to our relative free cash flow return as compared to the free cash flow return of a designated peer group (“FCF”).
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Performance Units activity from January 1, 2026 to September 30, 2026 follows:
| Performance Units Share-Settled (at target) | Weighted Average Grant Date Fair Value Per Share | Performance Units Cash-Settled (at target) | |||||||||||||||||||||
Non-vested Performance Units outstanding at January 1, 2026 | $ | ||||||||||||||||||||||
| Granted | $ | ||||||||||||||||||||||
Performance Units settled (1) | ( | $ | |||||||||||||||||||||
| Forfeited | $ | ||||||||||||||||||||||
Non-vested Performance Units outstanding at September 30, 2026 | $ | ||||||||||||||||||||||
As of September 30, 2026, we had unrecognized compensation cost related to our unvested Performance Units totaling $19.3 million. The weighted-average remaining vesting period for these unvested Performance Units was 1.97 years as of September 30, 2026.
Stock-Based Compensation Expense — Expense (benefit) associated with restricted stock units and Performance Unit awards is included in “Direct operating costs” and “General and administrative” in our unaudited condensed consolidated statements of operations. The following table presents stock-based compensation expense (benefit) for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
| Share-settled awards | ||||||||||||||||||||||||||||||||||||||
| Restricted stock units | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Performance Units – TSR | ||||||||||||||||||||||||||||||||||||||
| Performance Units – FCF | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total share-settled awards | ||||||||||||||||||||||||||||||||||||||
| Cash-settled awards | ||||||||||||||||||||||||||||||||||||||
| Cash-settled restricted stock units | ||||||||||||||||||||||||||||||||||||||
| Cash-settled Performance Units | ||||||||||||||||||||||||||||||||||||||
| Total cash-settled awards | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
12. Income Taxes
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.
Our effective income tax rate for the three months ended September 30, 2026 was 39.3 %, compared with 15.3 % for the three 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.
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 periods was primarily attributable to the impact of permanent differences against income or loss before income taxes between periods.
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
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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.
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.
We continue to monitor income tax developments, including OECD Pillar 2 legislation, in the United States and other countries where we have legal entities or operations. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.
13. Earnings Per Share
We provide a dual presentation of our net income (loss) per common share in our unaudited condensed consolidated statements of operations: basic net income (loss) per common share (“Basic EPS”) and diluted net income (loss) per common share (“Diluted EPS”).
Basic EPS excludes dilution and is determined by dividing the earnings attributable to common stockholders by the weighted average number of common shares outstanding during the period.
Diluted EPS is based on the weighted average number of common shares outstanding plus the dilutive effect of potential common shares, including stock options and non-vested performance units and non-vested restricted stock units. The dilutive effect of stock options, non-vested performance units and non-vested restricted stock units is determined using the treasury stock method.
The following table presents information necessary to calculate net income (loss) per share for the three and nine months ended September 30, 2026 and 2025 as well as potentially dilutive securities excluded from the weighted average number of diluted common shares outstanding because their inclusion would have been anti-dilutive (in thousands, except per share amounts):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| BASIC EPS: | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Weighted average number of common shares outstanding, excluding non-vested restricted stock units | |||||||||||||||||||||||
| Basic net income (loss) per common share | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| DILUTED EPS: | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Weighted average number of common shares outstanding, including non-vested restricted stock units | |||||||||||||||||||||||
| Diluted net income (loss) per common share | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Potentially dilutive securities excluded as anti-dilutive | |||||||||||||||||||||||
14. Business Segments
Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer, who has ultimate responsibility for evaluating operating performance, allocating resources and making strategic and operational decisions for the company. Our business is organized based on the services and products we provide in three
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used to assess operating results and to make decisions regarding the allocation of resources among segments.
Drilling Services — represents our contract drilling, directional drilling, oilfield technology and electrical controls and automation businesses.
Completion Services — represents our hydraulic fracturing, completion support services, wireline and pumpdown services and cementing businesses.
Drilling Products — represents our manufacturing and distribution of drill bits business.
The following tables summarize selected financial information relating to our business segments (in thousands):
| Drilling Services | Completion Services | Drilling Products | Total | ||||||||||||||||||||
For the three months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Direct operating costs (1) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Depreciation, amortization and impairment (1) | |||||||||||||||||||||||
Other segment items (2) | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | $ | $ | $ | |||||||||||||||||||
| Reconciliation of revenue: | |||||||||||||||||||||||
| Total segment revenues from external customers | $ | ||||||||||||||||||||||
Other revenues (4) | |||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Reconciliation to consolidated income (loss) before income taxes: | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | ||||||||||||||||||||||
Other (4) | |||||||||||||||||||||||
Corporate (5) | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | ||||||||||||||||||||||
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| Drilling Services | Completion Services | Drilling Products | Total | ||||||||||||||||||||
For the three months ended September 30, 2025 | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Direct operating costs (1) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Depreciation, amortization and impairment (1) | |||||||||||||||||||||||
Other segment items (2) | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Reconciliation of revenue: | |||||||||||||||||||||||
| Total segment revenues from external customers | $ | ||||||||||||||||||||||
Other revenues (4) | |||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Reconciliation to consolidated income (loss) before income taxes: | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | ||||||||||||||||||||||
Other (4) | |||||||||||||||||||||||
| Corporate | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | |||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2)Other segment items for each reportable segment includes other operating expenses (income), such as certain legal accruals and settlements, and equity in earnings from an unconsolidated joint venture.
(3)Segment operating income (loss) is our measure of segment profitability. It is defined as revenue less operating expenses, general and administrative expenses, depreciation, amortization and impairment expense and other operating expenses (income).
(4)Other includes our oilfield rentals business, prior to its divestiture in April 2025, and oil and natural gas working interests.
(5)Corporate includes a $22.1 million gain on the sale of rigs during the third quarter of 2026.
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| Drilling Services | Completion Services | Drilling Products | Total | ||||||||||||||||||||
For the nine months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Direct operating costs (1) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Depreciation, amortization and impairment (1) | |||||||||||||||||||||||
Other segment items (2) | ( | ( | |||||||||||||||||||||
Segment operating income (loss) (3) | $ | $ | $ | $ | |||||||||||||||||||
| Reconciliation of revenue: | |||||||||||||||||||||||
| Total segment revenues from external customers | $ | ||||||||||||||||||||||
Other revenues (4) | |||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Reconciliation to consolidated income (loss) before income taxes: | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | ||||||||||||||||||||||
Other (4) | |||||||||||||||||||||||
Corporate (5) | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Other income (expense) | ( | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | |||||||||||||||||||||
| Drilling Services | Completion Services | Drilling Products | Total | ||||||||||||||||||||
For the nine months ended September 30, 2025 | |||||||||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | |||||||||||||||||||
Direct operating costs (1) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Depreciation, amortization and impairment (1) | |||||||||||||||||||||||
Other segment items (2) | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Reconciliation of revenue: | |||||||||||||||||||||||
| Total segment revenues from external customers | $ | ||||||||||||||||||||||
Other revenues (4) | |||||||||||||||||||||||
| Total consolidated revenues | $ | ||||||||||||||||||||||
| Reconciliation to consolidated income (loss) before income taxes: | |||||||||||||||||||||||
Segment operating income (loss) (3) | $ | ||||||||||||||||||||||
Other (4) | ( | ||||||||||||||||||||||
| Corporate | ( | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | ( | |||||||||||||||||||||
(1)The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.
(2)Other segment items for each reportable segment includes other operating expenses (income), such as certain legal accruals and settlements, and equity in earnings from an unconsolidated joint venture.
(3)Segment operating income (loss) is our measure of segment profitability. It is defined as revenue less operating expenses, general and administrative expenses, depreciation, amortization and impairment expense and other operating expenses (income).
(4)Other includes our oilfield rentals business, prior to its divestiture in April 2025, and oil and natural gas working interests.
(5)Corporate includes a $22.1 million gain on the sale of rigs during the third quarter of 2026.
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Other business segment information
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Capital expenditures: | |||||||||||||||||||||||
| Drilling Services | $ | $ | $ | $ | |||||||||||||||||||
| Completion Services | |||||||||||||||||||||||
| Drilling Products | |||||||||||||||||||||||
| Segment capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Other | |||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||
| Total capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||
| Identifiable assets: | |||||||||||
| Drilling Services | $ | $ | |||||||||
| Completion Services | |||||||||||
| Drilling Products | |||||||||||
| Segment assets | $ | $ | |||||||||
| Other | |||||||||||
Corporate (1) | |||||||||||
| Total assets | $ | $ | |||||||||
(1)Corporate assets primarily include cash on hand and certain property and equipment.
15. Fair Values of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Our valuation techniques require inputs that we categorize using the valuation hierarchy established in ASC 820-10, which categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:
Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.
Level 2 – Other inputs that are observable directly or indirectly, such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs for which there is little or no market data and for which we make our own assumptions about how market participants would price the assets and liabilities.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying values of cash, cash equivalents and restricted cash, trade receivables and accounts payable approximate fair value due to the short-term maturity of these items. These fair value estimates are considered Level 1 fair value estimates in the fair value hierarchy of fair value accounting.
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The estimated fair value of our outstanding debt balances as of September 30, 2026 and December 31, 2025 is set forth below (in thousands):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||||||
| Total debt | $ | $ | $ | $ | |||||||||||||||||||
(1)All of the outstanding 2028 Notes were fully redeemed on June 4, 2026. See Note 8 of Notes to unaudited condensed consolidated financial statements for additional information.
The fair values of the 2028 Notes, the 2029 Notes, the 2033 Notes and the 2036 Notes are based on quoted market prices, which are considered Level 1 fair value estimates in the fair value hierarchy of fair value accounting.
The implied market rates of interest used to determine the fair value of our outstanding debt balances as of September 30, 2026 and December 31, 2025 are set forth below:
| September 30, 2026 | December 31, 2025 | ||||||||||
| % | % | ||||||||||
| % | % | ||||||||||
| % | % | ||||||||||
| % | % | ||||||||||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We apply the provisions of the fair value measurement standard to our non-recurring, non-financial measurements including business combinations, as well as impairment related to goodwill and other long-lived assets.
16. Other Charges
Exit from Contract Drilling Operations in Colombia
During the second quarter of 2026, management approved a plan to exit our Colombian contract drilling operations 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.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) and other public filings, press releases and presentations by us contain “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995, as amended. As used in this Report, “we,” “us,” “our,” “ours” and like terms refer collectively to Patterson-UTI Energy, Inc. and its consolidated subsidiaries. Patterson-UTI Energy, Inc. conducts its operations through its wholly-owned subsidiaries and has no employees or independent business operations. These “forward-looking statements” involve risk and uncertainty. These “forward-looking statements” include, without limitation, statements relating to: outlook; liquidity; revenue; cost and margin expectations and backlog; financing of operations; oil and natural gas prices; rig counts and frac spreads; source and sufficiency of funds required for building new equipment, upgrading existing equipment and acquisitions (if opportunities arise); demand and pricing for our services; competition; equipment availability; government regulation; legal proceedings; debt service obligations; impact of inflation and economic downturns; capital expenditures; and other matters. Our forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often use words such as “anticipate,” “believe,” “budgeted,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “pursue,” “see,” “should,” “strategy,” “target,” or “will,” or the negative thereof and other words and expressions of similar meaning. The forward-looking statements are based on certain assumptions and analyses we make in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from actual future results expressed or implied by the forward-looking statements. These risks and uncertainties also include those set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Report and other sections of our filings with the United States Securities and Exchange Commission (the “SEC”) under the Exchange Act and the Securities Act, as well as, among others, risks and uncertainties relating to:
•adverse oil and natural gas industry conditions, including the impact of commodity price volatility on industry outlook;
•global economic conditions, including inflationary pressures and risks of economic downturns or recessions in the United States and elsewhere;
•volatility in customer spending and in oil and natural gas prices that could adversely affect demand for our services and their associated effect on rates;
•excess supply of drilling and completions equipment, including as a result of reactivation, improvement or construction;
•competition and demand for our services;
•the impact of the ongoing Ukraine/Russia and Middle East conflicts and instability in other international regions;
•strength and financial resources of competitors;
•utilization, margins and planned capital expenditures;
•ability to obtain insurance coverage on commercially reasonable terms and liabilities from operational risks for which we do not have and receive full indemnification or insurance;
•operating hazards attendant to the oil and natural gas business;
•failure by customers to pay or satisfy their contractual obligations (particularly with respect to fixed-term contracts);
•the ability to realize backlog;
•specialization of methods, equipment and services and new technologies, including the ability to develop and obtain satisfactory returns from new technology and the risk of obsolescence of existing technologies;
•the ability to attract and retain management and field personnel;
•loss of key customers;
•shortages, delays in delivery, and interruptions in supply, of equipment and materials;
•cybersecurity events;
•difficulty in building and deploying new equipment;
•complications with the design or implementation of our new enterprise resource planning system;
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•governmental regulation, including climate legislation, regulation and other related risks;
•environmental, social and governance practices, including the perception thereof;
•environmental risks and ability to satisfy future environmental costs;
•technology-related disputes;
•legal proceedings and actions by governmental or other regulatory agencies;
•changes to tax, tariff and import/export regulations and sanctions by the United States or other countries, including the impacts of any sustained escalation or changes in tariff levels or trade-related disputes;
•the ability to effectively identify and enter new markets or pursue strategic acquisitions;
•public health crises, pandemics and epidemics;
•weather;
•operating costs;
•expansion and development trends of the oil and natural gas industry;
•financial flexibility, including availability of capital and the ability to repay indebtedness when due;
•adverse credit and equity market conditions;
•our return of capital to stockholders, including timing and amounts (including any plans or commitments in respect thereof) of any dividends and share repurchases;
•stock price volatility;
•compliance with covenants under our debt agreements; and
•other financial, operational and legal risks and uncertainties detailed from time to time in our filings with the SEC.
We caution that the foregoing list of factors is not exhaustive. Additional information concerning these and other risk factors is contained elsewhere in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2025 (our “Annual Report”) and may be contained in our future filings with the SEC. You are cautioned not to place undue reliance on any of our forward-looking statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to update publicly or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise. In the event that we update any forward-looking statement, no inference should be made that we will make additional updates with respect to that statement, related matters or any other forward-looking statements. All subsequent written and oral forward-looking statements concerning us or other matters and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements above.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management Overview — We are a Houston, Texas-based leading provider of drilling and completion services to oil and natural gas exploration and production companies in the United States and other select countries, including contract drilling services, integrated well completion services and directional drilling services in the United States, and specialized drill bit solutions in North America, the Middle East and many other regions around the world. We operate under three reportable business segments: (i) drilling services, (ii) completion services and (iii) drilling products.
Drilling Services
Our contract drilling business operates primarily in the continental United States, and from time to time, we pursue contract drilling opportunities in other select markets. We also provide a comprehensive suite of directional drilling services in most major producing onshore oil and natural gas basins in the United States and we provide services that aim to improve the statistical accuracy of wellbore placement for directional and horizontal wells. We also provide electrical controls and automation to the energy, marine and mining industries in North America and other select markets.
As of September 30, 2026, we had 145 marketed land-based drilling rigs based in the following regions:
| Region | Number of Rigs | |||||||
| West Texas | 63 | |||||||
| Appalachia | 21 | |||||||
| Oklahoma | 16 | |||||||
| Rockies | 22 | |||||||
| South Texas | 12 | |||||||
| East Texas | 7 | |||||||
| Colombia | 1 | |||||||
Argentina(1) | 3 | |||||||
| Total | 145 | |||||||
(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.
We have addressed our customers’ needs for drilling horizontal wells in shale and other unconventional resource plays by improving the capabilities of our drilling fleet. The U.S. land rig industry has in recent years referred to certain high specification rigs as “super-spec” rigs, which we consider to be at least a 1,500 horsepower, AC-powered rig that has at least a 750,000-pound hookload, a 7,500-psi circulating system, and is pad-capable. Due to evolving customer preferences, we refer to certain premium rigs as “Tier-1, super spec” rigs, which we consider as being a super-spec rig that also has a third mud pump and raised drawworks that allows for more clearance underneath the rig floor. As of September 30, 2026, our rig fleet included 137 marketed Tier-1, super-spec rigs.
Completion Services
Our well completion services business consists of services for hydraulic fracturing, wireline and pumping, completion support and cementing. It also includes our power solutions natural gas fueling business and our proppant last mile logistics and storage business. Our completion services business operates in many of the most active basins in the continental United States including the Permian, the Marcellus Shale/Utica, the Eagle Ford, Mid-Continental, Haynesville and the Bakken/Rockies.
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.
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
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execution consistency. Together, these technologies support lower operating costs, improved service quality and future integration of automation and AI-enabled reservoir solutions.
Drilling Products
We serve the energy and mining markets by manufacturing and distributing drill bits and downhole tools throughout North America and internationally in over 30 countries. Our drilling equipment is used in oil and natural gas exploration and production and in geothermal and mining operations. We have manufacturing and repair facilities located in Fort Worth, Texas, Leduc, Alberta and Saudi Arabia and repair facilities located in Argentina, Colombia and Oman.
Recent Developments in Market Conditions and Outlook — Our revenues, profitability and cash flows are highly dependent upon capital expenditures of exploration and production companies (“E&Ps”), which are largely driven by capital budgets set to achieve respective production targets in relation to current and expected future prices for oil and natural gas, as well as broader macroeconomic conditions. Commodity prices have historically been volatile and are affected by global supply and demand dynamics, geopolitical conditions and other factors, but were relatively range-bound in recent years. The current demand for equipment and services remains impacted by macro conditions that are outside of our control, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, global economic conditions, as well as customer consolidation and focus by E&Ps and service companies on capital returns.
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.
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.
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.
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.
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.
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.
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.
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
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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.
On May 19, 2026, we completed an offering of $500 million in aggregate principal amount of 6.05% senior notes due 2036 (the “2036 Notes”). The net proceeds before offering expenses from the offering of the 2036 Notes were approximately $496 million, which we used to fully redeem our outstanding 2028 Notes and for general corporate purposes.
On June 4, 2026, we completed our redemption of all the approximately $483 million aggregate principal amount of the outstanding 2028 Notes. The 2028 Notes were redeemed at a redemption price of 100% of the principal amount of the 2028 Notes outstanding, plus accrued and unpaid interest to the redemption date. The total amount of the redemption was approximately $483 million, which was funded using a portion of the net proceeds from our 2036 Notes offering. We recognized a non-cash loss on extinguishment of debt of $0.9 million, primarily related to the write-off of unamortized debt issuance cost associated with the 2028 Notes, which is included in “Interest expense, net of amount capitalized” in the consolidated statement of operations.
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):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2026 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Drilling Services | $ | 417,367 | 31.1 | % | $ | 373,501 | 30.4 | % | $ | 1,142,585 | 31.0 | % | $ | 1,196,865 | 32.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Completion Services | 808,307 | 60.2 | % | 753,641 | 61.4 | % | 2,241,535 | 60.8 | % | 2,190,687 | 59.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Drilling Products | 110,167 | 8.2 | % | 91,333 | 7.4 | % | 281,297 | 7.6 | % | 259,933 | 7.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 6,393 | 0.5 | % | 9,492 | 0.8 | % | 22,115 | 0.6 | % | 28,326 | 0.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 1,342,234 | 100.0 | % | $ | 1,227,967 | 100.0 | % | $ | 3,687,532 | 100.0 | % | $ | 3,675,811 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations
The following tables summarize results of operations by business segment for the three months ended September 30, 2026 and June 30, 2026:
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||
| Drilling Services | 2026 | 2026 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 417,367 | $ | 373,501 | 11.7 | % | ||||||||||||||||||||||||||
| Direct operating costs | 268,453 | 259,619 | 3.4 | % | ||||||||||||||||||||||||||||
Adjusted gross profit (1) | 148,914 | 113,882 | 30.8 | % | ||||||||||||||||||||||||||||
| General and administrative | 5,472 | 6,617 | (17.3) | % | ||||||||||||||||||||||||||||
| Depreciation, amortization and impairment | 84,005 | 85,490 | (1.7) | % | ||||||||||||||||||||||||||||
| Other operating expense (income), net | 2,742 | (962) | NA | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 56,695 | $ | 22,737 | 149.4 | % | ||||||||||||||||||||||||||
| Capital expenditures | $ | 55,240 | $ | 60,148 | (8.2) | % | ||||||||||||||||||||||||||
Operating days – U.S. (2) | 9,249 | 8,361 | 10.6 | % | ||||||||||||||||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
(2)Operational data relates to our contract drilling business. A rig is considered to be operating if it is earning revenue pursuant to a contract on a given day.
Generally, the revenues in our drilling services segment are most impacted by two primary factors: our contract drilling day rates and our average number of rigs operating.
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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.
Other operating expense (income), net during the third quarter included a $3.0 million reserve associated with the Colombia contract drilling exit costs.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||
| Completion Services | 2026 | 2026 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 808,307 | $ | 753,641 | 7.3 | % | ||||||||||||||||||||||||||
| Direct operating costs | 675,463 | 630,716 | 7.1 | % | ||||||||||||||||||||||||||||
Adjusted gross profit (1) | 132,844 | 122,925 | 8.1 | % | ||||||||||||||||||||||||||||
| General and administrative | 7,842 | 7,230 | 8.5 | % | ||||||||||||||||||||||||||||
| Depreciation, amortization and impairment | 106,989 | 108,838 | (1.7) | % | ||||||||||||||||||||||||||||
| Other operating expense (income), net | — | (1,328) | (100.0) | % | ||||||||||||||||||||||||||||
| Operating income (loss) | $ | 18,013 | $ | 8,185 | 120.1 | % | ||||||||||||||||||||||||||
| Capital expenditures | $ | 62,712 | $ | 75,023 | (16.4) | % | ||||||||||||||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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%.
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.
Capital expenditures decreased primarily due to the timing of order placement.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||
| Drilling Products | 2026 | 2026 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 110,167 | $ | 91,333 | 20.6 | % | ||||||||||||||||||||||||||
| Direct operating costs | 58,971 | 54,194 | 8.8 | % | ||||||||||||||||||||||||||||
Adjusted gross profit (1) | 51,196 | 37,139 | 37.8 | % | ||||||||||||||||||||||||||||
| General and administrative | 8,500 | 8,344 | 1.9 | % | ||||||||||||||||||||||||||||
| Depreciation, amortization and impairment | 23,545 | 20,478 | 15.0 | % | ||||||||||||||||||||||||||||
| Operating income (loss) | $ | 19,151 | $ | 8,317 | 130.3 | % | ||||||||||||||||||||||||||
| Capital expenditures | $ | 19,904 | $ | 18,711 | 6.4 | % | ||||||||||||||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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%,
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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.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||
| Other | 2026 | 2026 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 6,393 | $ | 9,492 | (32.6) | % | ||||||||||||||||||||||||||
| Direct operating costs | 2,551 | 2,800 | (8.9) | % | ||||||||||||||||||||||||||||
Adjusted gross profit (1) | 3,842 | 6,692 | (42.6) | % | ||||||||||||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 1,763 | 1,639 | 7.6 | % | ||||||||||||||||||||||||||||
| Operating income (loss) | $ | 2,079 | $ | 5,053 | (58.9) | % | ||||||||||||||||||||||||||
| Capital expenditures | $ | 2,735 | $ | 1,910 | 43.2 | % | ||||||||||||||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | June 30, | |||||||||||||||||||||||||||||||
| Corporate | 2026 | 2026 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| General and administrative | $ | 48,146 | $ | 45,314 | 6.2 | % | ||||||||||||||||||||||||||
| Depreciation and impairment | $ | 5,281 | $ | 1,336 | 295.3 | % | ||||||||||||||||||||||||||
| Other operating expense (income), net | $ | (20,762) | $ | 4,604 | NA | |||||||||||||||||||||||||||
| Interest income | $ | 2,695 | $ | 2,902 | (7.1) | % | ||||||||||||||||||||||||||
| Interest expense, net of amount capitalized | $ | (19,974) | $ | (20,398) | (2.1) | % | ||||||||||||||||||||||||||
| Other income (expense) | $ | 1,150 | $ | (3,464) | NA | |||||||||||||||||||||||||||
| Capital expenditures | $ | 763 | $ | 132 | 478.0 | % | ||||||||||||||||||||||||||
General and administrative, interest income and interest expense, net of amount capitalized were relatively flat between sequential quarters.
Depreciation and impairment expense increased due to a $3.8 million impairment charge related to an operating lease right-of-use asset.
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.
The change in other income (expense) was due to a $4.5 million write-down of minority equity investments during the second quarter of 2026.
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Results of Operations
The following tables summarize results of operations by business segment for the nine months ended September 30, 2026 and September 30, 2025:
| Nine Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||
| Drilling Services | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 1,142,585 | $ | 1,196,865 | (4.5) | % | ||||||||||||||||||||||||||
| Direct operating costs | 745,933 | 748,808 | (0.4) | % | ||||||||||||||||||||||||||||
Adjusted gross profit (1) | 396,652 | 448,057 | (11.5) | % | ||||||||||||||||||||||||||||
| General and administrative | 19,186 | 12,066 | 59.0 | % | ||||||||||||||||||||||||||||
| Depreciation, amortization and impairment | 253,439 | 281,719 | (10.0) | % | ||||||||||||||||||||||||||||
| Other operating expense (income), net | 292 | 232 | 25.9 | % | ||||||||||||||||||||||||||||
| Operating income (loss) | $ | 123,735 | $ | 154,040 | (19.7) | % | ||||||||||||||||||||||||||
| Capital expenditures | $ | 169,809 | $ | 175,323 | (3.1) | % | ||||||||||||||||||||||||||
Operating days – U.S. (2) | 25,911 | 27,775 | (6.7) | % | ||||||||||||||||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
(2)Operational data relates to our contract drilling business. A rig is considered to be operating if it is earning revenue pursuant to a contract on a given day.
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.
General and administrative increased primarily due to certain internal reorganization initiatives and employee separation costs incurred during 2026.
Depreciation, amortization and impairment expense decreased due to a $27.8 million impairment charge to Latin American drilling equipment during the second quarter of 2025.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Completion Services | 2026 | 2025 | % Change | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Revenues | $ | 2,241,535 | $ | 2,190,687 | 2.3 | % | ||||||||||||||
| Direct operating costs | 1,887,665 | 1,870,882 | 0.9 | % | ||||||||||||||||
Adjusted gross profit (1) | 353,870 | 319,805 | 10.7 | % | ||||||||||||||||
| General and administrative | 22,402 | 29,953 | (25.2) | % | ||||||||||||||||
| Depreciation, amortization and impairment | 327,299 | 352,658 | (7.2) | % | ||||||||||||||||
| Other operating expense (income), net | (1,328) | 13,000 | NA | |||||||||||||||||
| Operating income (loss) | $ | 5,497 | $ | (75,806) | NA | |||||||||||||||
| Capital expenditures | $ | 182,836 | $ | 212,459 | (13.9) | % | ||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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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.
General and administrative decreased, benefiting from cost reduction activities enacted in 2025.
Depreciation, amortization and impairment expense decreased primarily due to less new equipment placed in service relative to asset retirements between the periods.
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.
Capital expenditures decreased primarily due to the timing of order placement.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Drilling Products | 2026 | 2025 | % Change | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Revenues | $ | 281,297 | $ | 259,933 | 8.2 | % | ||||||||||||||
| Direct operating costs | 160,089 | 146,540 | 9.2 | % | ||||||||||||||||
Adjusted gross profit (1) | 121,208 | 113,393 | 6.9 | % | ||||||||||||||||
| General and administrative | 24,767 | 26,256 | (5.7) | % | ||||||||||||||||
| Depreciation, amortization and impairment | 63,869 | 67,786 | (5.8) | % | ||||||||||||||||
| Operating income (loss) | $ | 32,572 | $ | 19,351 | 68.3 | % | ||||||||||||||
| Capital expenditures | $ | 54,457 | $ | 46,805 | 16.3 | % | ||||||||||||||
(1)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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.
Depreciation, amortization and impairment expense decreased year over year primarily due to the diminishing impact of the purchase‑accounting step‑up to fair value related to our drill bits.
Capital expenditures increased primarily due to the timing of order placement and higher raw material costs, particularly tungsten powder used in certain matrix bit applications.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
Other (1) | 2026 | 2025 | % Change | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Revenues | $ | 22,115 | $ | 28,326 | (21.9) | % | ||||||||||||||
| Direct operating costs | 8,235 | 18,380 | (55.2) | % | ||||||||||||||||
Adjusted gross profit (2) | 13,880 | 9,946 | 39.6 | % | ||||||||||||||||
| General and administrative | 2 | 109 | (98.2) | % | ||||||||||||||||
| Depreciation, depletion, amortization and impairment | 4,671 | 10,797 | (56.7) | % | ||||||||||||||||
| Operating income (loss) | $ | 9,207 | $ | (960) | NA | |||||||||||||||
| Capital expenditures | $ | 5,756 | $ | 7,543 | (23.7) | % | ||||||||||||||
(1)Other includes our oilfield rentals business, prior to its divestiture in April 2025, and oil and natural gas working interests.
(2)Adjusted gross profit, which is considered a non-GAAP financial measure, is defined as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense). See the section of this Report titled “Non-GAAP Financial Measures” for a reconciliation of GAAP gross profit to adjusted gross profit by segment.
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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.
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.
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.
Capital expenditures, excluding the effects of our oilfield rentals business divestiture, were consistent between the periods.
| Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| Corporate | 2026 | 2025 | % Change | |||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| General and administrative | $ | 139,871 | $ | 124,630 | 12.2 | % | ||||||||||||||
| Depreciation | $ | 8,480 | $ | 6,362 | 33.3 | % | ||||||||||||||
| Other operating expense (income), net | $ | (19,334) | $ | 6,228 | NA | |||||||||||||||
| Interest income | $ | 8,362 | $ | 4,216 | 98.3 | % | ||||||||||||||
| Interest expense, net of amount capitalized | $ | (57,857) | $ | (52,830) | 9.5 | % | ||||||||||||||
| Other income (expense) | $ | (1,349) | $ | 1,344 | NA | |||||||||||||||
| Capital expenditures | $ | 1,048 | $ | 8,386 | (87.5) | % | ||||||||||||||
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.
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.
Interest expense, net of amounts capitalized, increased due to a $0.9 million loss on extinguishment of debt and higher interest expense associated with senior notes issued in the second quarter of 2026.
Capital expenditures decreased primarily due to higher spending in 2025, which was related to our corporate office expansion.
Income Taxes
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.
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.
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.
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
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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.
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.
We continue to monitor income tax developments, including OECD Pillar 2 legislation, in the United States and other countries where we have legal entities or operations. We will incorporate into our future financial statements the impacts, if any, of future regulations and additional authoritative guidance when finalized.
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.
Liquidity and Capital Resources
Overview
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.
On May 19, 2026, we completed an offering of $500 million in aggregate principal amount of the 2036 Notes. The net proceeds before offering expenses from the offering of the 2036 Notes were approximately $496 million. We pay interest on the 2036 Notes on May 15 and November 15 of each year. The 2036 Notes will mature on May 15, 2036. The 2036 Notes bear interest at a rate of 6.05% per annum. See Note 8 of Notes to unaudited condensed consolidated financial statements for additional information.
Cash Flows
Our cash flows for the nine months ended September 30, 2026 and 2025 are summarized below:
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
| (in thousands) | |||||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 420,876 | $ | 563,693 | |||||||||||||
| Investing activities | (356,551) | (436,841) | |||||||||||||||
| Financing activities | (141,596) | (178,574) | |||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (4,061) | (2,658) | |||||||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (81,332) | $ | (54,380) | |||||||||||||
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.
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.
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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.
Credit Agreement
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.
On April 24, 2026, we entered into the Assignment and Amendment No. 1 to Second Amended and Restated Credit Agreement, which amended the Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), which, among other things, (i) extended the maturity date for $450 million of revolving credit commitments of certain lenders under the Credit Agreement from January 31, 2030 to January 31, 2031, but we may request two one-year extensions, subject to the satisfaction of certain conditions, and (ii) assigned $25 million of the revolving credit commitments from HSBC Bank USA, N.A., to JPMorgan Chase Bank, N.A., in each case, on the terms and subject to the conditions set forth therein.
The Credit Agreement contains representations, warranties, affirmative and negative covenants and events of default and associated remedies that we believe are customary for agreements of this nature. We were in compliance with the covenants at September 30, 2026. No events of default had occurred at September 30, 2026.
Reimbursement Agreement
2015 Reimbursement Agreement — On March 16, 2015, we entered into a Reimbursement Agreement (as amended from time to time, the “2015 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.
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.
Our outstanding long-term debt at September 30, 2026 was $1.2 billion and consisted of $345 million of our 2029 Notes, $400 million of our 2033 Notes, and $500 million of our 2036 Notes. We were in compliance with all covenants under the associated agreements and indentures at September 30, 2026.
For additional information regarding our long-term debt, see Note 9 of Notes to consolidated financial statements in Item 8 of our Annual Report.
Cash Requirements
We believe our current liquidity, together with cash expected to be generated from operations, should provide us with sufficient ability to fund our current plans to maintain and make improvements to our existing equipment, service our debt, pay cash dividends and repurchase our common stock and senior notes for at least the next 12 months.
If we pursue other opportunities that require capital, we believe we would be able to satisfy these needs through a combination of working capital, cash flows from operating activities, borrowing capacity under our revolving credit facility or additional debt or equity financing. However, there can be no assurance that such capital will be available on reasonable terms, if at all.
The majority of our capital expenditures are expected to be used for normal, recurring items necessary to support our business. A portion of our capital expenditures can be adjusted and managed by us to match market demand and activity levels.
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Sources and Uses of Cash
During the nine months ended September 30, 2026, our sources of cash flow included:
•$421 million from operating activities,
•$60.6 million in proceeds from the disposal of property and equipment, including insurance recoveries, and
•$496 million in net proceeds from the issuance of long-term debt.
During the nine months ended September 30, 2026, our uses of cash flow included:
•$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,
•$483 million for the repayment of the 2028 Notes,
•$114 million to pay dividends on our common stock,
•$33.7 million for repurchases of our common stock,
•$4.4 million for payments related to finance leases and
•$6.1 million for other investing and financing activities.
We paid cash dividends during the nine months ended September 30, 2026 as follows:
| Per Share | Total | ||||||||||
| (in thousands) | |||||||||||
| Paid on March 16, 2026 | $ | 0.10 | $ | 37,960 | |||||||
| Paid on June 15, 2026 | 0.10 | 38,056 | |||||||||
| Paid on September 15, 2026 | 0.10 | 38,089 | |||||||||
| $ | 0.30 | $ | 114,105 | ||||||||
On October 28, 2026, our Board of Directors approved a cash dividend on our common stock in the amount of $0.10 per share to be paid on December 15, 2026 to holders of record as of December 1, 2026. The amount and timing of all future dividend payments, if any, are subject to the discretion of the Board of Directors and will depend upon business conditions, results of operations, financial condition, terms of our debt agreements and other factors. Our Board of Directors may, without advance notice, reduce or suspend our dividend for any reason, including to improve our financial flexibility and position our company for long-term success. There can be no assurance that we will pay a dividend in the future.
We may, at any time and from time to time, seek to retire or purchase our outstanding debt for cash through open-market purchases, privately negotiated transactions, redemptions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
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, 2026, we had remaining authorization to purchase approximately $669 million of our outstanding common stock under the stock buyback program. Shares of stock purchased under the buyback program are held as treasury shares.
Treasury stock acquisitions during the nine months ended September 30, 2026 were as follows (dollars in thousands):
| Shares | Cost | ||||||||||
| Treasury shares at beginning of period | 144,435,252 | $ | 2,020,714 | ||||||||
| Purchases pursuant to stock buyback program | 2,000,000 | 24,174 | |||||||||
Acquisitions pursuant to long-term incentive plans (1) | 828,774 | 9,511 | |||||||||
| Treasury shares at end of period | 147,264,026 | $ | 2,054,399 | ||||||||
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(1)We withheld 828,774 shares during the nine months ended September 30, 2026 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.
Commitments — As of September 30, 2026, we had commitments to purchase major equipment totaling approximately $179 million. Our completion services segment has entered into agreements to purchase minimum quantities of proppants from certain vendors. As of September 30, 2026, the remaining minimum obligation under these agreements was approximately $7.0 million, of which approximately $1.1 million and $5.9 million relate to the remainder of 2026 and 2027, respectively.
See Note 9 of Notes to unaudited condensed consolidated financial statements for additional information on our current commitments and contingencies as of September 30, 2026.
Operating lease liabilities totaled $46.2 million and finance lease liabilities totaled $6.4 million as of September 30, 2026.
Trading and Investing — We have not engaged in trading activities that include high-risk securities, such as derivatives and non-exchange traded contracts. We invest cash primarily in highly liquid, short-term investments such as overnight deposits and money market accounts.
Non-GAAP Financial Measures
Adjusted EBITDA
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is not defined by GAAP. We define Adjusted EBITDA as net income (loss) plus income tax expense (benefit), net interest expense, depreciation, depletion, amortization and impairment expense, certain exit costs, noncontrolling investment write-down, certain significant legal accruals and settlements, impairment of goodwill, certain gains or losses on asset disposals and merger and integration expense. We present Adjusted EBITDA as a supplemental disclosure because we believe it provides, to both management and investors, additional information with respect to the performance of our fundamental business activities and a comparison of the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be construed as an alternative to the GAAP measure of net income (loss). Our computations of Adjusted EBITDA may not be the same as similarly titled measures of other companies. Set forth below is a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss).
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||||||||||||||
| 2026 | 2026 | 2026 | 2025 | ||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 28,636 | $ | (19,275) | $ | (15,115) | $ | (83,857) | |||||||||||||||||||||
| Income tax expense (benefit) | 18,508 | (8,647) | 6,265 | (4,008) | |||||||||||||||||||||||||
| Net interest expense | 17,279 | 17,496 | 49,495 | 48,614 | |||||||||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 221,583 | 217,781 | 657,758 | 719,322 | |||||||||||||||||||||||||
Certain Colombia contract drilling exit costs (1) | — | 20,011 | 20,011 | — | |||||||||||||||||||||||||
Noncontrolling investment write-down (2) | — | 4,520 | 4,520 | — | |||||||||||||||||||||||||
| (Gain) loss on rigs sold | (22,118) | — | (22,118) | — | |||||||||||||||||||||||||
Legal accruals and settlements (3) | — | — | — | 15,415 | |||||||||||||||||||||||||
| Merger and integration expense | — | — | — | 1,010 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 263,888 | $ | 231,886 | $ | 700,816 | $ | 696,496 | |||||||||||||||||||||
(1)Certain Colombia contract drilling exit costs represent inventory and other asset write-downs recorded in direct operating expenses within the consolidated statements of operations. These costs were excluded from Adjusted EBITDA as they relate to our decision to exit our Colombia contract drilling operations and are not considered representative of ongoing operating performance. See Note 16 of Notes to the unaudited condensed consolidated financial statements for additional information.
(2)Noncontrolling investment write-down represents an impairment charge of certain minority equity investments. The charge was excluded from Adjusted EBITDA as it represents a non-operating item.
(3)Legal accruals and settlements represent net expenses (income) arising from certain significant legal matters, including settlement activity and reserve adjustments related to prior-year claims. Unlike routine legal costs incurred in the ordinary course of business, these infrequent items are excluded from Adjusted EBITDA because management does not consider them representative of our current period operating performance.
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Adjusted Gross Profit
Adjusted gross profit is considered a non-GAAP financial measure. We define “Adjusted gross profit” as revenues less direct operating costs (excluding depreciation, depletion, amortization and impairment expense, which does not include impairment of goodwill). Adjusted gross profit is included as a supplemental disclosure because it is a useful indicator of our operating performance. Our computations of Adjusted gross profit may not be the same as similarly titled measures of other companies. Set forth below is a reconciliation of the non-GAAP financial measure of Adjusted gross profit to the GAAP financial measure of gross profit.
| Drilling Services | Completion Services | Drilling Products | Other | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
For the three months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues | $ | 417,367 | $ | 808,307 | $ | 110,167 | $ | 6,393 | |||||||||||||||
| Less direct operating costs | (268,453) | (675,463) | (58,971) | (2,551) | |||||||||||||||||||
| Less depreciation, depletion, amortization and impairment | (84,005) | (106,989) | (23,545) | (1,763) | |||||||||||||||||||
| GAAP gross profit (loss) | 64,909 | 25,855 | 27,651 | 2,079 | |||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 84,005 | 106,989 | 23,545 | 1,763 | |||||||||||||||||||
| Adjusted gross profit | $ | 148,914 | $ | 132,844 | $ | 51,196 | $ | 3,842 | |||||||||||||||
For the three months ended June 30, 2026 | |||||||||||||||||||||||
| Revenues | $ | 373,501 | $ | 753,641 | $ | 91,333 | $ | 9,492 | |||||||||||||||
| Less direct operating costs | (259,619) | (630,716) | (54,194) | (2,800) | |||||||||||||||||||
| Less depreciation, depletion, amortization and impairment | (85,490) | (108,838) | (20,478) | (1,639) | |||||||||||||||||||
| GAAP gross profit (loss) | 28,392 | 14,087 | 16,661 | 5,053 | |||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 85,490 | 108,838 | 20,478 | 1,639 | |||||||||||||||||||
| Adjusted gross profit | $ | 113,882 | $ | 122,925 | $ | 37,139 | $ | 6,692 | |||||||||||||||
For the nine months ended September 30, 2026 | |||||||||||||||||||||||
| Revenues | $ | 1,142,585 | $ | 2,241,535 | $ | 281,297 | $ | 22,115 | |||||||||||||||
| Less direct operating costs | (745,933) | (1,887,665) | (160,089) | (8,235) | |||||||||||||||||||
| Less depreciation, depletion, amortization and impairment | (253,439) | (327,299) | (63,869) | (4,671) | |||||||||||||||||||
| GAAP gross profit (loss) | 143,213 | 26,571 | 57,339 | 9,209 | |||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 253,439 | 327,299 | 63,869 | 4,671 | |||||||||||||||||||
| Adjusted gross profit | $ | 396,652 | $ | 353,870 | $ | 121,208 | $ | 13,880 | |||||||||||||||
For the nine months ended September 30, 2025 | |||||||||||||||||||||||
| Revenues | $ | 1,196,865 | $ | 2,190,687 | $ | 259,933 | $ | 28,326 | |||||||||||||||
| Less direct operating costs | (748,808) | (1,870,882) | (146,540) | (18,380) | |||||||||||||||||||
| Less depreciation, depletion, amortization and impairment | (281,719) | (352,658) | (67,786) | (10,797) | |||||||||||||||||||
| GAAP gross profit (loss) | 166,338 | (32,853) | 45,607 | (851) | |||||||||||||||||||
| Depreciation, depletion, amortization and impairment | 281,719 | 352,658 | 67,786 | 10,797 | |||||||||||||||||||
| Adjusted gross profit | $ | 448,057 | $ | 319,805 | $ | 113,393 | $ | 9,946 | |||||||||||||||
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates. There have been no material changes to our critical accounting estimates previously disclosed in Item 7 of our Annual Report.
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Recently Issued Accounting Standards
See Note 1 of Notes to unaudited condensed consolidated financial statements for a discussion of the impact of recently issued accounting standards.
Volatility of Oil and Natural Gas Prices and its Impact on Operations and Financial Condition
Our revenues, profitability and cash flows are highly dependent upon capital expenditures of exploration and production companies (“E&Ps”), which are largely driven by capital budgets set to achieve respective production targets in relation to current and expected future prices for oil and natural gas, as well as broader macroeconomic conditions. Commodity prices have historically been volatile and are affected by global supply and demand dynamics, geopolitical conditions and other factors, but were relatively range-bound in recent years. The current demand for equipment and services remains impacted by macro conditions that are outside of our control, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, global economic conditions, as well as customer consolidation and focus by E&Ps and service companies on capital returns.
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.
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.
In light of these and other factors, we expect oil and natural gas prices to continue to be unpredictable and to affect our financial condition, operations and ability to access sources of capital. Higher oil and natural gas prices do not necessarily result in increased activity because demand for our services is generally driven by our customers’ expectations of future oil and natural gas prices, as well as our customers’ ability to access, and willingness to deploy, capital to fund their operating and capital expenditures. A decline in demand for oil and natural gas, prolonged low oil or natural gas prices, expectations of decreases in oil and natural gas prices or a reduction in the ability of our customers to access capital would likely result in reduced capital expenditures by our customers and decreased demand for our services, which could have a material adverse effect on our operating results, financial condition and cash flows. Even during periods of historically moderate or high prices for oil and natural gas, companies exploring for oil and natural gas may cancel or curtail programs or reduce their levels of capital expenditures for exploration and production for a variety of reasons, including the depletion of capital expenditure budgets and/or meeting annual drilling and completion targets, which could reduce demand for our services.
Impact of Inflation and Trade Policies
Inflationary pressures and uncertainty regarding enacted and proposed changes to 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, have contributed, or may contribute, to increases in the cost of certain goods, services and labor. While the full effects are yet to be determined, prolonged trade tensions could, among other things, increase the costs of certain products and raw materials used in our businesses, such as drill pipe, parts and electronics. We continue to actively monitor market trends primarily related to sourcing of labor, supplies and equipment.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We may be exposed to certain market risks arising from the use of financial instruments in the ordinary course of business. For quantitative and qualitative disclosures about market risk, see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report. There have been no material changes in our exposure to market risk.
As of September 30, 2026, we would have had exposure to interest rate market risk associated with any outstanding borrowings and letters of credit that we had under the Credit Agreement and amounts owed under the 2015 Reimbursement Agreement. As of September 30, 2026, we had $2.3 million in letters of credit outstanding under the Credit Agreement and, as a result, had available borrowing capacity of approximately $498 million at that date.
Under the terms of the 2015 Reimbursement Agreement, we will reimburse Scotiabank on demand for any amounts that Scotiabank has disbursed under any of our letters of credit issued thereunder. We are obligated to pay Scotiabank interest on all amounts not paid by us on the date of demand or when otherwise due at the Prime rate plus 2.00% per annum.
Our functional currency is primarily the U.S. dollar. Approximately 98% of our revenue during the first nine months of 2026 was denominated in U.S. dollars. As such, we do not believe we are significantly exposed to foreign currency exchange rate risk. However, a portion of our revenues in foreign countries are denominated in U.S. dollars, and therefore, changes in foreign currency exchange rates impact our earnings to the extent that costs associated with those U.S. dollar revenues are denominated in the local currency. Similarly, a portion of our revenues are denominated in foreign currencies, but have associated U.S. dollar costs, which also give rise to foreign currency exchange rate exposure.
The carrying values of cash, cash equivalents and restricted cash, trade receivables and accounts payable approximate fair value due to the short-term maturity of these items.
ITEM 4. Controls and Procedures
Disclosure Controls and Procedures — We maintain disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), designed to ensure that the information required to be disclosed in the reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control Over Financial Reporting —There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
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PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings
Certain subsidiaries we acquired in the Ulterra acquisition are defendants in a claim brought by a subsidiary of NOV Inc. alleging breach of a license agreement related to certain patents. Such subsidiaries have asserted defenses to the claim and are defending vigorously against this claim.
On February 6, 2023, Grant Prideco, Inc., ReedHycalog UK, Ltd., ReedHycalog, LP and National Oilwell Varco, LP (“NOV”) sued Ulterra Drilling Technologies, LP (“Ulterra”) and several other companies in Texas state court. NOV seeks a declaration that United States Patent No. 8,721,752 (the “’752 Patent”) is a “Licensed RH Patent” per the terms of a license agreement between Ulterra and NOV. NOV also alleges a breach of contract based on the license agreement between NOV and Ulterra and seeks allegedly owed royalties since October 22, 2021. NOV also seeks attorney’s fees.
On February 27, 2023, Ulterra filed a plea to the jurisdiction, and subject thereto, an answer, affirmative defenses and counterclaims. Ulterra’s counterclaims include: (i) declaratory judgments of non-infringement of U.S. Pat. No. 7,568,534 and the ’752 patent; (ii) a declaratory judgment of no royalties after Oct. 22, 2021; (iii) a declaratory judgment that certain other identified patents are expired and therefore not infringed after Oct. 22, 2021; and (iv) a declaratory judgment of no breach of contract. On the same day, Ulterra filed a notice of removal in federal court for the Southern District of Texas, Houston Division (SDTX 4:23-cv-00730), as well as a corresponding notice in Texas state court. NOV moved to dismiss and remand the case back to state court. On February 17, 2024, the Court denied NOV’s motion. On March 19, 2024, Ulterra moved for judgment on the pleadings regarding its declaratory judgment that certain other identified patents are expired and therefore not infringed after October 22, 2021. On February 13, 2025, the motion was granted in part and denied in part.
In October and November 2025, the Court resolved certain dispositive motions in Ulterra’s favor, resulting in a Final Judgment in Ulterra’s favor on November 25, 2025. NOV has acknowledged that the Court’s rulings mean it cannot collect any of the royalties it had alleged were owed. On December 12, 2025, NOV filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit. The appeal is currently pending before the Federal Circuit as Docket Nos. 26-1256 and 26-1266. On April 20, 2026, NOV filed its opening appellate brief. Ulterra filed its response on July 31, 2026. NOV filed its reply on September 25, 2026. Oral argument is not yet scheduled.
Additionally, we are party to various other legal proceedings arising in the normal course of our business. We do not believe that the outcome of these proceedings, either individually or in the aggregate, will have a material adverse effect on our financial condition, cash flows or results of operations.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below sets forth the information with respect to purchases of our common stock made by us during the quarter ended September 30, 2026.
| Period Covered | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) (2) | ||||||||||||||||||||||
| July 2026 | 1,633 | $ | 9.74 | — | $ | 693,661 | ||||||||||||||||||||
| August 2026 | 1,484 | $ | 10.27 | — | $ | 693,661 | ||||||||||||||||||||
| September 2026 | 2,008,029 | $ | 12.04 | 2,000,000 | $ | 669,487 | ||||||||||||||||||||
| Total | 2,011,146 | 2,000,000 | ||||||||||||||||||||||||
(1)We withheld 11,146 shares during the third quarter of 2026 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.
(2)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
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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.
ITEM 5. Other Information
(c)During the three months ended September 30, 2026, no officer or director of the Company adopted terminated
ITEM 6. Exhibits
The following exhibits are filed herewith or incorporated by reference, as indicated:
| 3.1 | Restated Certificate of Incorporation of Patterson-UTI Energy, Inc., dated as of June 6, 2024 (filed June 6, 2024 as Exhibit 4.1 to our Registration Statement on Form S-8 and incorporated herein by reference). | ||||
| 3.2 | Amended and Restated Bylaws of Patterson-UTI Energy, Inc., effective June 14, 2023 (filed June 15, 2023 as Exhibit 3.1 to our Current Report on Form 8-K and incorporated herein by reference). | ||||
| 31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||||
| 31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended. | ||||
| 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
| 101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104 | The cover page from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, has been formatted in Inline XBRL. | ||||
| * | filed herewith. | ||||
| ** | furnished herewith. | ||||
| + | management contract or compensatory plan. | ||||
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SIGNATURE
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 thereunto duly authorized.
| PATTERSON-UTI ENERGY, INC. | ||||||||
| By: | /s/ C. Andrew Smith | |||||||
| C. Andrew Smith | ||||||||
| Executive Vice President and | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Duly Authorized Officer) | ||||||||
Date: November 2, 2026 | ||||||||