##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION



Form 10-K

(Mark One)



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|[X] | Annual report pursuant to section 13 or 15(d) of the
	Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 1999



|      |                                                                                  
|----- | ---------------------------------------------------------------------------------
|[   ] | Transition report pursuant to section 13 or 15(d) of the
	Securities Exchange Act

| |                                                                       
| | ----------------------------------------------------------------------
| | of 1934 for the transition period from
	            to

	            .

Commission File Number 1-12542

UTI ENERGY CORP.



|                                                                                           |  |                                                
|------------------------------------------------------------------------------------------ |  | -----------------------------------------------
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Delaware(State or other jurisdiction of incorporation)                                     |  | 23-2037823(I.R.S. Employer
	Identification No.)
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Suite 225N
	16800 Greenspoint Park
	Houston, Texas(Address of principal executive offices) |  | 77060(Zip Code)                                

(281) 873-4111



Securities Registered Pursuant to Section 12(b) of the Act:

|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Common Stock, Par Value $.001 |  | American Stock Exchange                  
|                              |  |                                          
|Title of each class           |  | Name of each exchange on which registered

Securities Registered Pursuant to Section 12(g) of the
Act:  None

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by
 section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that registrant was required to file such reports) and
(2) has been subject to such filing requirements for the
past
90 days.  Yes [X]  No [   ]

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [   ]

Aggregate market value of the voting stock held by non-affiliates
 of the registrant.

$478,859,388 at March 20, 2000


Number of shares outstanding of each class of registrants
Common Stock, as of the latest practicable date.

18,482,397 shares of Common Stock at March 20, 2000


Documents incorporated by reference.

Proxy Statement for the 2000 Annual Meeting of Shareholders.
(Part III)




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---

TABLE OF CONTENTS



|                                                           |  |  |  |  |  |  |  | 
|---------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                    
|PART II                                                   
|PART III                                                  
|PART IV                                                   
|REPORT OF INDEPENDENT AUDITORS                            
|CONSOLIDATED BALANCE SHEETS                               
|CONSOLIDATED STATEMENTS OF OPERATIONS                     
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                
|SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS          
|SIGNATURES                                                



---






PART I

Item 1.  BUSINESS

Introduction

UTI Energy Corp. is a leading provider of onshore contract
drilling services to exploration and production companies. UTI
operates one of the largest land drilling rig fleets in the
United States. UTIs drilling operations currently are
concentrated in the prolific oil and natural gas producing basins
 of:



| |   |           
| | - | ----------
| |  | Texas     
|
| |  | Oklahoma  
|
| |  | New Mexico
|
| |  | Wyoming   

UTI has a fleet of 125 land drilling rigs that are well
suited to the requirements of its markets. UTI also provides
pressure pumping services in the Appalachian Basin.

Business Segments

UTI operates principally in two business segments:



| |   |                 
| | - | ----------------
| |  | land drilling   
|
| |  | pressure pumping

Financial information and other disclosures relating to these
business segments are provided in the Notes to Consolidated
Financial Statements.

Land Drilling

UTIs rigs can drill to depths ranging from 8,000 to
30,000 feet. In 1999, UTI continued to increase its number
of rigs available for contract. The following table shows the
increase:

|                                      |  |                |     |                   |  |  |    | 
|------------------------------------- |  | -------------- | --- | ----------------- |  |  | -- | 
|                                      |  | As of          |     | As of            
|                                      |  | March 20, 2000 |     | December 31, 1998
|                                      |  |                |     |                  
|Number of rigs available for contract |  |                | 108 |                   |  |  | 90 | 

UTI also has 17 stacked rigs. A stacked rig is a rig that is not
currently being marketed and cannot be made available without
incurring refurbishing expenditures. UTI could return the stacked
 rigs to operation at an average estimated cost of approximately
$650,000 per rig. UTI intends to either use the stacked rigs
 for parts or to place them into service in an orderly manner as
regional market conditions merit and trained crews are retained.
UTIs rig utilization rate was 43% for the year ended
December 31, 1999. Rig utilization during the fourth quarter
 of 1999 was 57%.

2



---



##### Table of Contents



UTIs land drilling services are performed through regional
drilling units:



| |   |                                                                                      
| | - | -------------------------------------------------------------------------------------
| |  | East Texas (FWA Drilling Company)                                                    
|
| |  | Mid-Continent (Triad Drilling Company)                                               
|
| |  | New Mexico/ West Texas (FWA/ Peterson Drilling Company and Norton
	 Drilling Company)
|
| |  | Rockies (Norton Drilling Company)                                                    
|
| |  | South Texas (Southland Drilling Company)                                             

UTIs regional offices for contract drilling are located in:



| |   |                        
| | - | -----------------------
| |  | Oklahoma City, Oklahoma
|
| |  | Lubbock, Texas         
|
| |  | Midland, Texas         
|
| |  | Tyler, Texas           
|
| |  | Victoria, Texas        

UTI deploys rigs and equipment among the various drilling units
based on regional need and profitability. UTIs land
drilling customers include major oil companies and various sized
independent producers.



| |              
| | -------------
| | Drilling Rigs

A land drilling rig consists of various components, including:



| |   |                   
| | - | ------------------
| |  | engines           
|
| |  | drawworks or hoist
|
| |  | derrick or mast   
|
| |  | substructure      
|
| |  | pumps             
|
| |  | blowout preventers
|
| |  | drill pipe        

Over the life of a typical drilling rig, many of these components
 are replaced or rebuilt on a periodic basis. Other components,
including the derrick/mast and substructure, can be utilized for
extended periods of time with proper maintenance. UTI follows a
policy of keeping its drilling rigs technologically competitive
and well maintained.

3



---



##### Table of Contents



The following table shows the current distribution of rigs among
UTIs regional units as of March 20, 2000:

|                       |  |         |    |         |  |         |    |       |  |               |    |  |  |  |     |  |  |  |            | 
|---------------------- |  | ------- | -- | ------- |  | ------- | -- | ----- |  | ------------- | -- |  |  |  | --- |  |  |  | ---------- | 
|                       |  |         |    |         |  |         |    |       |  | Average Rated
|                       |  | Active  |    | Idle    |  | Stacked |    | Total |  | Drilling     
|Region                 |  | Rigs(1) |    | Rigs(1) |  | Rigs(1) |    | Rigs  |  | Depths       
|                       |  |         |    |         |  |         |    |       |  |              
|East Texas             |  |         | 13 |         |  |         | 1  |       |  |               | 2  |  |  |  | 16  |  |  |  | 15,500 ft. | 
|                      
|                      
|                      
|                      
|Mid Continent          |  |         | 12 |         |  |         | 12 |       |  |               | 9  |  |  |  | 33  |  |  |  | 13,500 ft. | 
|                      
|                      
|                      
|                      
|New Mexico/ West Texas |  |         | 35 |         |  |         | 15 |       |  |               | 6  |  |  |  | 56  |  |  |  | 13,500 ft. | 
|                      
|                      
|                      
|                      
|Rockies                |  |         | 1  |         |  |         | 3  |       |  |               |   |  |  |  | 4   |  |  |  | 18,000 ft. | 
|                      
|                      
|                      
|                      
|South Texas            |  |         | 11 |         |  |         | 5  |       |  |               |   |  |  |  | 16  |  |  |  | 16,000 ft. | 
|                       |  |         |    |         |  |         |    |       |  |               |    |  |  |  |     |  |  |  |            | 
|Total                  |  |         | 72 |         |  |         | 36 |       |  |               | 17 |  |  |  | 125 |  |  |  |            | 
|                       |  |         |    |         |  |         |    |       |  |               |    |  |  |  |     |  |  |  |            | 



---



|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | A rig is considered active when under contract. An idle rig is
	one that is not under contract but is available and being
	marketed. A stacked rig is not currently being marketed and
	cannot be made available without incurring refurbishing
	expenditures.

The following table sets forth certain data concerning UTIs
 utilization of drilling rigs. This utilization data is based on
UTIs total fleet, including stacked and idle rigs:

|                                           |  |                                          |         |      |  |      |         |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                           |  |                                         
|                                           |  | Years Ended December 31,                
|                                           |  |                                         
|                                           |  | 1999                                     |         | 1998 |  | 1997
|                                           |  |                                          |         |      |  |     
|                                           |  |                                         
|                                           |  | (in thousands, except operating days and
|                                           |  | rig data)                               
|                                          
|                                          
|                                          
|                                          
|Revenues                                   |  | $                                        | 134,870 |      |  | $    | 162,600 |   |  | $ | 161,265 |  
|                                          
|                                          
|                                          
|                                          
|Cost of revenues                           |  | $                                        | 110,958 |      |  | $    | 124,779 |   |  | $ | 124,780 |  
|                                          
|                                          
|                                          
|                                          
|Selling, general and administrative        |  | $                                        | 2,818   |      |  | $    | 3,767   |   |  | $ | 4,206   |  
|                                          
|                                          
|                                          
|                                          
|Operating days(1)                          |  |                                          | 17,823  |      |  |      | 20,308  |   |  |   | 21,576  |  
|                                          
|                                          
|                                          
|                                          
|Average revenue per day                    |  | $                                        | 7.57    |      |  | $    | 8.01    |   |  | $ | 7.47    |  
|                                          
|                                          
|                                          
|                                          
|Average costs per day                      |  | $                                        | 6.23    |      |  | $    | 6.14    |   |  | $ | 5.78    |  
|                                          
|                                          
|                                          
|                                          
|Average margin per day                     |  | $                                        | 1.34    |      |  | $    | 1.87    |   |  | $ | 1.69    |  
|                                          
|                                          
|                                          
|                                          
|Number of owned rigs at end of period      |  |                                          | 125     |      |  |      | 109     |   |  |   | 89      |  
|                                          
|                                          
|                                          
|                                          
|Average number of rigs owned during period |  |                                          | 112     |      |  |      | 100     |   |  |   | 82      |  
|                                          
|                                          
|                                          
|                                          
|Average rigs operating                     |  |                                          | 49      |      |  |      | 56      |   |  |   | 59      |  
|                                          
|                                          
|                                          
|                                          
|Rig utilization percentage(2)              |  |                                          | 43      | %    |  |      | 55      | % |  |   | 72      | %
|                                          
|                                          
|                                          
|                                          
|Capital expenditures                       |  | $                                        | 7,116   |      |  | $    | 32,912  |   |  | $ | 16,282  |  
|                                          
|                                          
|                                          
|                                          
|Capital expenditures per operating day     |  | $                                        | .40     |      |  | $    | 1.62    |   |  | $ | 0.75    |  



---



|    |                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | An operating day is defined as a day during which a rig is being
	operated, mobilized, assembled or dismantled while under
	contract.                                                                                                                                                                                                
|   
|(2) | Utilization rates are calculated by dividing the operating days
	by the total available days, including stacked rigs. Available
	days are calculated by multiplying rigs owned by the days in the
	period under review. For the year ended December  31, 1999,
	the utilization rate of UTIs rigs, excluding stacked rigs,
	was 50%.

4



---



##### Table of Contents





| |                   
| | ------------------
| | Drilling Contracts

UTIs land drilling rigs are employed under individual
contracts. The drilling contract may be for a single well or a
number of wells. Drilling contracts are generally obtained
through competitive bidding. UTI bids contracts on the basis of
profitability and not to maximize rig utilization. Contracts
generally are subject to termination by the customer on short
notice. Drilling contracts may provide for compensation on a
dayrate, footage or turnkey basis.



| |                     
| | --------------------
| | 1)  Dayrate Contract

A dayrate contract provides for a basic rate per day when
drilling. A dayrate contract provides for lower rates when the
rig is moving or when drilling operations are interrupted or
restricted by:



| |   |                                           
| | - | ------------------------------------------
| |  | equipment breakdowns                      
|
| |  | adverse weather conditions                
|
| |  | other conditions beyond the control of UTI

In addition, dayrate contracts typically provide for a lump sum
fee for the mobilization and demobilization of the drilling rig.
The dayrate depends on:



| |   |                                         
| | - | ----------------------------------------
| |  | market and competitive conditions       
|
| |  | nature of the operations to be performed
|
| |  | duration of the work                    
|
| |  | equipment and services to be provided   
|
| |  | geographic area involved                
|
| |  | other variables                         



| |                                  
| | ---------------------------------
| | 2)  Footage and Turnkey Contracts

In a footage contract, UTI undertakes to drill a well to a
specified depth at a fixed price per foot of hole. In a turnkey
contract, UTI undertakes to drill a well to a specified depth for
 a fixed price. Turnkey contracts are pursued on a limited basis
because of the degree of risks of the contracts. UTI enters into
footage and turnkey contracts in situations where UTI possesses
experience and expertise in the geological and operational aspect
 of the project.

Footage and turnkey contracts have the following characteristics
that are not normally found under dayrate contracts:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | UTI must bear the cost of performing the drilling services until
	the target depth is reached          
|
| |  | UTI must make significant cash commitments                                                             
|
| |  | UTI generally furnishes more services including testing, coring
	and casing the hole and other services
|
| |  | UTI earns compensation upon completion of the well to the
	specified depth                             
|
| |  | UTI incurs a higher degree of risk than under dayrate contracts                                        
|
| |  | UTI bears the cost of unanticipated downhole problems and other
	cost overruns                         

5



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##### Table of Contents



For the year ended December 31, 1999, UTI completed wells
under all three types of contracts as the following table shows:

|        |  |                 |     | 
|------- |  | --------------- | --- | 
|        |  | Percentage of  
|        |  | Completed Wells
|        |  |                
|Dayrate |  |                 | 50% | 
|       
|       
|       
|       
|Footage |  |                 | 31% | 
|       
|       
|       
|       
|Turnkey |  |                 | 19% | 

UTI also provides horizontal boring services which uses vertical
drilling technology to bore horizontal holes. These services are
used for the placement of pipelines and cables, including fiber
optic cables, under obstacles such as highways and railroads.
These services are currently marketed in the eastern half of the
United States.

Pressure Pumping

UTI, through its subsidiary Universal Well Services, Inc.,
is a leading provider of pressure pumping services in the
northern Appalachian Basin. Pressure pumping services consist
primarily of:



| |   |                                                               
| | - | --------------------------------------------------------------
| |  | well stimulation and cementing for the completion of new wells
|
| |  | remedial work on existing wells                               

Generally, all completed Appalachian Basin wells require
cementing services before production commences. Cementing is the
process of inserting material between the hole wall and the pipe
to center and stabilize the pipe in the hole. In addition, most
completed wells drilled in the Appalachian Basin require some
form of fracturing or other stimulation to enhance the flow of
gas and oil to the well bore.

UTI continuously maintains its pressure pumping equipment.
Virtually all of the pressure pumping equipment is in use on a
regular basis. As of March 20, 2000, UTI operated the
following pressure pumping equipment:

|                         |       |          |    |     | 
|------------------------ | ----- | -------- | -- | --- | 
|                         |       | Number  
|Equipment Type           |       | of Units
|                         |       |         
|Cement pumper trucks     |       |          | 13 |    
|                        
|                        
|                        
|                        
|Fracturing pumper trucks |       |          | 22 |    
|                        
|                        
|                        
|                        
|Nitrogen pumper trucks   |       |          | 6  |    
|                        
|                        
|                        
|                        
|Blender trucks           |       |          | 10 |    
|                        
|                        
|                        
|                        
|Bulk acid trucks         |       |          | 8  |    
|                        
|                        
|                        
|                        
|Bulk cement trucks       |       |          | 17 |    
|                        
|                        
|                        
|                        
|Bulk nitrogen trucks     |       |          | 4  |    
|                        
|                        
|                        
|                        
|Bulk sand trucks         |       |          | 18 |    
|                        
|                        
|                        
|                        
|Connection trucks        |       |          | 7  |    
|                        
|                        
|                        
|                        
|Other trucks             |       |          | 3  |    
|                         |       |          |    |    
|                         | Total |          |    | 108 | 
|                         |       |          |    |    

6



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##### Table of Contents



The following table shows certain data concerning UTIs
pressure pumping operations:

|                                    |  |                                   |        |      |  |      |        |  |  |   |        | 
|----------------------------------- |  | --------------------------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                    |  |                                  
|                                    |  | Years Ended December 31,         
|                                    |  |                                  
|                                    |  | 1999                              |        | 1998 |  | 1997
|                                    |  |                                   |        |      |  |     
|                                    |  |                                  
|                                    |  | (in thousands, except total jobs)
|                                   
|                                   
|                                   
|                                   
|Revenues                            |  | $                                 | 20,721 |      |  | $    | 23,365 |  |  | $ | 20,923 | 
|                                   
|                                   
|                                   
|                                   
|Cost of revenues                    |  | $                                 | 12,219 |      |  | $    | 14,041 |  |  | $ | 12,615 | 
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |  | $                                 | 3,457  |      |  | $    | 3,216  |  |  | $ | 2,945  | 
|                                   
|                                   
|                                   
|                                   
|Total jobs                          |  |                                   | 2,892  |      |  |      | 3,292  |  |  |   | 3,196  | 
|                                   
|                                   
|                                   
|                                   
|Average revenue per job             |  | $                                 | 7.17   |      |  | $    | 7.10   |  |  | $ | 6.55   | 
|                                   
|                                   
|                                   
|                                   
|Average costs per job               |  | $                                 | 4.23   |      |  | $    | 4.27   |  |  | $ | 3.95   | 
|                                   
|                                   
|                                   
|                                   
|Average margin per job              |  | $                                 | 2.94   |      |  | $    | 2.83   |  |  | $ | 2.60   | 
|                                   
|                                   
|                                   
|                                   
|Capital expenditures                |  | $                                 | 2,307  |      |  | $    | 3,895  |  |  | $ | 1,676  | 

Other Operations

In addition to its operating activities, UTI has invested in
working interests in gas and oil wells. These investments are
principally in the Appalachian and Permian Basins. The net book
value of such investments at December 31, 1999 was $318,000.
 The net book value at December 31, 1998 was $404,000.

Industry Conditions

The level of activity in the United States onshore oil and
natural gas exploration and production industry influences the
demand and prices for UTIs services. The level of activity
depends upon numerous factors over which UTI has no control.
These factors include:



| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | the level of oil and natural gas prices                                      
|
| |  | the expectations about future oil and natural gas prices                     
|
| |  | the ability of OPEC to set and maintain production levels and
	prices        
|
| |  | the cost of exploring for, producing and delivering oil and
	natural gas     
|
| |  | the level and price of foreign imports of oil and natural gas                
|
| |  | the discovery rate of new oil and natural gas reserves                       
|
| |  | the available pipeline and other oil and natural gas
	transportation capacity
|
| |  | the worldwide weather conditions                                             
|
| |  | the international, political, military, regulatory and economic
	conditions  
|
| |  | the ability of oil and natural gas companies to raise capital                

The level of drilling activity in the onshore oil and natural gas
 exploration and production industry in the United States has
been volatile. UTI cannot give assurance that recent levels of
oil and natural gas exploration activities in UTIs markets
will continue. UTI cannot give assurance that demand for
UTIs services will correspond to the level of activity in
the industry. Further, any changes in the demand for or supply of
 oil and natural gas materially impacts the demand for and
pricing of UTIs services.

7



---



##### Table of Contents



As prices for oil and natural gas have increased, exploration and
 production companies have increased spending budgets. These
increased spending budgets have increased the demand for drilling
 services. Increased demand for drilling services is expected to
increase the contract rates for UTIs contract drilling
services.

All of UTIs operating regions have been affected by the
above-mentioned factors. However, some of UTIs operating
regions, like the Permian Basin, have been more significantly
affected than other regions due to greater sensitivity to changes
 in oil prices.

Competition

The land drilling and well servicing industry is:



| |   |                      
| | - | ---------------------
| |  | highly-fragmented    
|
| |  | intensely competitive
|
| |  | cyclical             

Since 1982, the decline and continued instability in oil and
natural gas prices has severely impacted the land drilling
business. These depressed economic conditions have reduced the
number of competitors and reduced the number of rigs available.
However, the supply of available rigs, particularly in the United
 States land markets, still exceeds the demand for those rigs.
This excess capacity has resulted in substantial competition.
Competition for services in a particular market is based on:



| |   |                                 
| | - | --------------------------------
| |  | price of service                
|
| |  | location of available equipment 
|
| |  | type of available equipment     
|
| |  | condition of available equipment
|
| |  | quality of service              

In addition, drilling rigs are mobile and can be moved from one
market to another in response to market conditions.

Seasonality

Seasonality does not significantly affect the overall operations
of UTI. However, UTIs pressure pumping services in
Appalachia are subject to slow periods of activity during the
spring thaw. In addition, UTIs drilling operations in the
Rockies are affected by governmental land restrictions during the
 first quarter.

Raw Materials and Subcontractors

UTI uses many suppliers of raw materials and services. These
materials and services have been and continue to be available.
Where appropriate, UTI maximizes price discounts through volume
purchases. UTI also utilizes numerous independent subcontractors
from various trades.

8



---



##### Table of Contents



Operating Risks and Insurance

UTIs drilling operations and fleet are subject to the many
hazards of the onshore drilling industry. Among other things,
these hazards include:



| |   |           
| | - | ----------
| |  | blowouts  
|
| |  | explosions
|
| |  | cratering 
|
| |  | sour gas  
|
| |  | well fires
|
| |  | spills    

These hazards can result in:



| |   |                                                          
| | - | ---------------------------------------------------------
| |  | personal injury                                          
|
| |  | loss of life                                             
|
| |  | severe damage to or destruction of property and equipment
|
| |  | environmental damage                                     
|
| |  | suspension of operations                                 

UTI maintains insurance protection as management deems
appropriate. Such insurance coverage, however, may not provide
sufficient funds in all situations to protect UTI from all
liabilities that could result from its operations. Also, claims
will be subject to various retentions and deductibles.

UTI generally seeks to obtain indemnity agreements from its
customers. These indemnity agreements require the customers to
hold UTI harmless in the event of loss of production or reservoir
 damage. This contractual indemnification may not be supported by
 adequate insurance maintained by the customer.

UTIs operations and financial condition could be damaged by
 the occurrence of a significant event not fully insured or
indemnified against or the failure of a customer to meet its
indemnification. Moreover, UTI may not always be able to secure
insurance in the future at reasonable rates.

Environmental Regulation

UTIs activities are subject to existing environmental laws
and regulations at the federal, state and local level. UTI does
not anticipate that compliance with existing environmental laws
and regulations will have a material adverse effect upon its
operations, capital expenditures or earnings in the foreseeable
future. UTI cannot predict what effect the following could have
on its activities:



| |   |                                                   
| | - | --------------------------------------------------
| |  | additional regulation or legislation              
|
| |  | changes in enforcement policies or practices      
|
| |  | claims for damages to property and the environment

9



---



##### Table of Contents



UTIs operations routinely involve the handling of various
materials, including hazardous materials. UTIs operations
and facilities are subject to numerous state and federal
environmental laws, rules and regulations, including but not
limited to, laws concerning:



| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | containment and disposal of hazardous materials, oilfield waste,
	other waste materials and acids
|
| |  | use of underground storage tanks                                                                 

Environmental laws have generally become more restrictive in
recent years. In addition, environmental laws and regulations may
 impose strict liability. If UTI is determined to be strictly
liable, UTI could be liable for clean up costs, even if the
situation resulted from:



| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | previous conduct of UTI that was lawful at the time conducted                                                 
|
| |  | improper conduct of or conditions caused by previous property
	owners or other persons not associated with UTI

From time to time, parties may make claims and bring litigation
against UTI under these laws. These claims and related costs
could be substantial and could have a material adverse effect on
UTIs financial condition. However, this has not happened in
 the past.

UTI is unable to predict the effect of new regulations and
amendments to existing regulations governing its operations.
Therefore, UTI is unable to determine the ultimate costs of
complying with environmental laws and regulations.

UTI is subject to The Oil Pollution Act of 1990, which amends
provisions of the federal Water Pollution Control Act of 1972,
commonly known as the Clean Water Act, and other statutes that
address the prevention of and response to oil spills into
navigable waters. The Oil Pollution Act subjects owners of
facilities to:



| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | strict, joint and several liability for all containment and
	cleanup costs                                                       
|
| |  | other damages arising from a spill, including but not limited to,
	 the costs of responding to a release of oil to surface waters

The Clean Water Act provides penalties for any discharge of
petroleum products in reportable quantities and imposes
substantial liability for the costs of removing a spill. State
laws for the control of water pollution also provide varying
civil and criminal penalties and liabilities in the case of
releases of petroleum or its derivatives into surface waters or
into the ground. The Environmental Protection Agency is also
authorized to seek preliminary and permanent injunctive relief
and in certain cases, criminal penalties and fines. UTI may be
exposed to claims that it is liable under the Clean Water Act if
a discharge occurs at a well site where UTI is conducting
drilling or pressure pumping operations.

10



---



##### Table of Contents



UTI is also subject to The Comprehensive Environmental Response
Compensation and Liability Act, which is commonly known as CERCLA
 or the Superfund Law. CERCLA imposes liability,
without regard to fault or the legality of the original conduct,
on certain classes of persons which release a hazardous
substance into the environment. These persons include the
owner and operator of a site and persons that disposed of or
arranged for the disposal of the hazardous substances found at
the site. The definition of hazardous substance does not
currently include crude oil and certain drilling materials, such
as drilling fluids and produced waters, although they may be
included in the future. In addition, UTIs operations may
involve the use or handling of acids currently classified as
hazardous substances and other materials that may in the future
be classified as environmentally hazardous substances.

As mentioned above, UTIs operations are subject to local,
state and federal regulations for the control of emissions and
air pollution. Legal and regulatory requirements in this area are
 increasing. UTI cannot assure that significant costs and
liabilities will not be incurred in the future as a result of new
 regulatory developments. In particular, regulations promulgated
under the Clean Air Act Amendments of 1990 may impose additional
compliance requirements that could affect UTIs operations.
UTI may in the future be subject to civil or administrative
enforcement actions for failure to comply strictly with air
regulations and permits. These enforcement actions are generally
resolved by paying monetary fines or correcting any identified
deficiencies. Alternatively, regulatory agencies could prevent
UTI from constructing or operating certain air emission sources.

Management believes that UTI is in substantial compliance with
environmental laws and regulations.

Employees

As of March 20, 2000, UTI employed approximately
1,929 full-time employees. 1,828 of these employees
were field personnel and 101 of them were employed in
selling and administrative capacities.

In addition to the services of its employees, UTI uses
consultants periodically. None of UTIs employees are
represented by labor unions. There have been no work stoppages or
 strikes during the last three years that have resulted in the
loss of production or production delays. Management believes that
 employee relations are good.

UTI maintains an incentive compensation plan for its managerial
and key employees. The incentive compensation plan is based on
operating results and return on invested capital. UTI believes
that this plan allows it to attract and retain qualified managers
 and key operating employees. UTI also provides incentive
compensation to its rig workers based on operating results and
safety records.

11



---



##### Table of Contents



Item 2.  PROPERTIES

Contract drilling operations are conducted from facilities UTI
currently owns in:



| |   |                        
| | - | -----------------------
| |  | Levelland, Texas       
|
| |  | Midland, Texas         
|
| |  | Oklahoma City, Oklahoma
|
| |  | Rock Springs, Wyoming  
|
| |  | Tyler, Texas           
|
| |  | Victoria, Texas        
|
| |  | Woodward, Oklahoma     

Pressure pumping operations are conducted from five base camps in
 the Appalachian Basin:



| |   |                           
| | - | --------------------------
| |  | Allen, Kentucky           
|
| |  | Bradford, Pennsylvania    
|
| |  | Meadville, Pennsylvania   
|
| |  | Punxsutawney, Pennsylvania
|
| |  | Wooster, Ohio             

The Punxsutawney and Meadville camps are owned by UTI. The other
camps are leased under leases not exceeding five years.

UTI does not believe that its executive offices or its other
leased facilities are material to its operations. Management
believes that UTIs properties are suitable and adequate for
 its operations.

Item 3.  LEGAL PROCEEDINGS

UTI is involved in several claims arising in the ordinary course
of business. In the opinion of management, all of these claims
are covered by insurance or will not have a material adverse
effect on UTIs financial position.

Sometimes individuals bring personal injury claims against UTI
and its operating subsidiaries. UTI management believes that it
maintains a reasonable amount of insurance coverage against such
claims.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
 HOLDERS

UTI did not submit any matters to a vote of security holders
during the quarter that ended December 31, 1999.

12



---



##### Table of Contents






PART II



|        |                                                                
|------- | ---------------------------------------------------------------
|Item 5. | MARKET FOR UTIS COMMON EQUITY AND RELATED STOCKHOLDER
	MATTERS

UTIs common stock is the only class of equity of UTI
currently outstanding. UTIs common stock is traded on the
American Stock Exchange under the symbol UTI. The
following table provides price information for UTIs common
stock for 1999 and 1998.

|              |  |      |       |      |  |      |       |     |  |   |       |  |  |   |       | 
|------------- |  | ---- | ----- | ---- |  | ---- | ----- | --- |  | - | ----- |  |  | - | ----- | 
|              |  |      |       |     
|              |  | 1999 |       | 1998
|              |  |      |       |     
|Quarter Ended |  | High |       | Low  |  | High |       | Low
|              |  |      |       |      |  |      |       |    
|March 31      |  | $    | 10.88 |      |  | $    | 5.13  |     |  | $ | 26.44 |  |  | $ | 12.00 | 
|             
|             
|             
|             
|June 30       |  |      | 17.13 |      |  |      | 8.63  |     |  |   | 20.50 |  |  |   | 12.50 | 
|             
|             
|             
|             
|September 30  |  |      | 22.88 |      |  |      | 14.69 |     |  |   | 13.38 |  |  |   | 6.50  | 
|             
|             
|             
|             
|December 31   |  |      | 23.63 |      |  |      | 14.75 |     |  |   | 12.00 |  |  |   | 5.75  | 

As of March 20, 2000, the closing price for UTIs
common stock was $32.50. As of March 20, 2000, UTIs
common stock was held by approximately 180 stockholders of
record. Management estimates that more than 8,000 persons
beneficially owned the stock.

UTI has not paid a cash dividend on its common stock during the
two most recent fiscal years and management does not anticipate
that any cash dividend will be paid on the common stock for the
foreseeable future.

UTI has recently sold unregistered common stock to Canpartners
Investments IV, LLC and parties related to Southland
Drilling Company, Ltd. These two transactions are described
in the following paragraphs.

On March 2, 2000, UTI sold 298,138 shares of common
stock to Canpartners Investments IV, LLC. Canpartners
Investments IV, LLC exchanged warrants covering
480,000 shares of common stock of UTI that it acquired on
September 26, 1997 for the 298,138 shares of common
stock of UTI, and no other consideration was given. This sale was
 exempt from registration under Section 3(a)(9) of the
Securities Act of 1933. Under Section 3(a)(9), if an
existing security holder exchanges securities of the issuer for
other securities of the issuer and no other consideration is
paid, then the transaction is exempt from registration.

13



---



##### Table of Contents



On March 3, 2000, UTI sold 91,500 shares of common
stock to parties related to Southland Drilling Company, Ltd.
 Like Canpartners Investments IV, LLC, the Southland parties
 exchanged warrants covering 183,000 shares of common stock
of UTI that it acquired on April 11, 1997 for the
91,500 shares of common stock of UTI, and no other
consideration was given. This sale was also exempt from
registration under Section 3(a)(9) of the Securities Act of
1933. The following table shows the Southland parties and the
number of shares of common stock covered by warrants that were
exchanged for shares of common stock.

|                           |  |                    |        |                  |  |  |        | 
|-------------------------- |  | ------------------ | ------ | ---------------- |  |  | ------ | 
|                           |  | Number of Shares   |        | Number of Shares
|                           |  | of Common Stock    |        | of Common Stock 
|Party                      |  | Covered by Warrant |        | Sold by UTI     
|                           |  |                    |        |                 
|Neil E. Hanson             |  |                    | 63,240 |                  |  |  | 31,620 | 
|                          
|                          
|                          
|                          
|Christopher N. Hanson      |  |                    | 42,000 |                  |  |  | 21,000 | 
|                          
|                          
|                          
|                          
|John J. Surko              |  |                    | 2,880  |                  |  |  | 1,440  | 
|                          
|                          
|                          
|                          
|Ben A. McCarthy            |  |                    | 72,000 |                  |  |  | 36,000 | 
|                          
|                          
|                          
|                          
|Southland Minerals Company |  |                    | 2,880  |                  |  |  | 1,440  | 

14



---



##### Table of Contents



Item 6.  SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial
data of UTI for each of the periods indicated. The selected
financial data is derived from UTIs audited consolidated
financial statements. The information presented below should be
read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations
and the Consolidated Financial Statements and notes
to the consolidated financial statements.

|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |       | 
|------------------------------------------------------------ | ------- | ------------------------------------- | ------- | ------ | - | ---- | ------- | ------ |  | ---- | ------- | ------ |  | - | ------ | ------ |  | - | ------ | ----- | 
|                                                             |         |                                      
|                                                             |         | Years Ended December 31,             
|                                                             |         |                                      
|                                                             |         | 1999                                  |         | 1998   |   | 1997 |         | 1996   |  | 1995
|                                                             |         |                                       |         |        |   |      |         |        |  |     
|                                                             |         |                                      
|                                                             |         | (in thousands, except per share data)
|                                                            
|                                                            
|                                                            
|                                                            
|Statement of Operations Data(1)                              |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|                                                            
|                                                            
|                                                            
|                                                            
|Revenues                                                     |         | $                                     | 155,775 |        |   | $    | 186,157 |        |  | $    | 182,437 |        |  | $ | 97,301 |        |  | $ | 40,124 |      
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Gross profit                                                 |         | $                                     | 32,535  |        |   | $    | 47,222  |        |  | $    | 44,938  |        |  | $ | 18,583 |        |  | $ | 7,404  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Selling, general and administrative expenses                 |         |                                       | 10,170  |        |   |      | 10,781  |        |  |      | 10,011  |        |  |   | 7,166  |        |  |   | 5,057  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Provisions for bad debts                                     |         |                                       | 548     |        |   |      | 1,143   |        |  |      | 623     |        |  |   | 141    |        |  |   | (10    | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Other charges                                                |         |                                       | 260     |        |   |      | 785     |        |  |      |        |        |  |   |       |        |  |   |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation and amortization                                |         |                                       | 24,122  |        |   |      | 19,529  |        |  |      | 11,075  |        |  |   | 4,292  |        |  |   | 2,552  |      
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Operating income (loss)                                      |         |                                       | (2,565  | )      |   |      | 14,984  |        |  |      | 23,229  |        |  |   | 6,984  |        |  |   | (195   | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Other income(2)                                              |         |                                       | 3,706   |        |   |      | 1,934   |        |  |      | 1,235   |        |  |   | 1,341  |        |  |   | 293    |      
|                                                            
|                                                            
|                                                            
|                                                            
|Interest expense                                             |         |                                       | (4,168  | )      |   |      | (3,815  | )      |  |      | (4,330  | )      |  |   | (1,148 | )      |  |   | (265   | )    
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Income (loss) from continuing operations before income taxes |         |                                       | (3,027  | )      |   |      | 13,103  |        |  |      | 20,134  |        |  |   | 7,177  |        |  |   | (167   | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Income taxes                                                 |         |                                       | (425    | )      |   |      | 5,235   |        |  |      | 7,609   |        |  |   | 2,324  |        |  |   | (592   | )    
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Income (loss) from continuing operations                     |         | $                                     | (2,602  | )      |   | $    | 7,868   |        |  | $    | 12,525  |        |  | $ | 4,853  |        |  | $ | 425    |      
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Income (loss) from continuing operations per common share    |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Basic   |                                       | $       | (0.15  | ) |      | $       | 0.49   |  |      | $       | 0.96   |  |   | $      | 0.46   |  |   | $      | 0.04  | 
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|                                                             | Diluted |                                       | $       | (0.15  | ) |      | $       | 0.47   |  |      | $       | 0.83   |  |   | $      | 0.42   |  |   | $      | 0.04  | 
|                                                             |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|Average common shares outstanding                            |         |                                       |         |        |   |      |         |        |  |      |         |        |  |   |        |        |  |   |        |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Basic   |                                       |         | 16,992 |   |      |         | 16,070 |  |      |         | 13,083 |  |   |        | 10,448 |  |   |        | 9,899 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Diluted |                                       |         | 16,992 |   |      |         | 16,795 |  |      |         | 15,069 |  |   |        | 11,439 |  |   |        | 9,899 | 

|                                           |  |                    |         |      |  |      |         |      |  |      |         |  |  |   |        |  |  |   |        | 
|------------------------------------------ |  | ------------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------ |  |  | - | ------ | 
|                                           |  |                   
|                                           |  | As of December 31,
|                                           |  |                   
|                                           |  | 1999               |         | 1998 |  | 1997 |         | 1996 |  | 1995
|                                           |  |                    |         |      |  |      |         |      |  |     
|Balance Sheet Data                         |  |                    |         |      |  |      |         |      |  |      |         |  |  |   |        |  |  |   |        | 
|                                          
|                                          
|                                          
|                                          
|Working capital(3)                         |  | $                  | 20,895  |      |  | $    | 22,592  |      |  | $    | 70,452  |  |  | $ | 5,761  |  |  | $ | 5,427  | 
|                                          
|                                          
|                                          
|                                          
|Total assets(1)                            |  |                    | 260,582 |      |  |      | 234,021 |      |  |      | 208,987 |  |  |   | 61,870 |  |  |   | 33,990 | 
|                                          
|                                          
|                                          
|                                          
|Long-term debt, including Redeemable Stock |  |                    | 32,196  |      |  |      | 31,721  |      |  |      | 30,159  |  |  |   | 14,658 |  |  |   | 8,701  | 
|                                          
|                                          
|                                          
|                                          
|Shareholders equity(3)                    |  |                    | 157,032 |      |  |      | 144,146 |      |  |      | 137,620 |  |  |   | 22,696 |  |  |   | 14,990 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Over the five years presented, UTIs rig fleet has increased
	 by 98 land drilling rigs. This increase in land drilling rigs is
	 the primary cause for the increase in revenue, gross profit,
	selling, general and administrative expenses, depreciation and
	amortization and total assets. The net change in land drilling
	rigs owned was 16 during 1999, 20 during 1998, 24 during 1997, 10
	 during 1996 and 28 during 1995.
|   
|(2) | UTI recognized a $2.8 million gain from the sale of land
	drilling assets in the first quarter of 1999.                                                                                                                                                                                                                                                                                                                            
|   
|(3) | In October of 1997, UTI sold approximately 1.8 million
	shares of its common stock in a public offering. Approximately
	another 1.7  million shares of UTI common stock were sold by
	 various shareholders of UTI through the exercise of options and
	warrants. Both of these events resulted in net proceeds to UTI of
	 approximately $80.0 million.                                                                           

15



---



##### Table of Contents





|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS

Beginning in 1995, UTI decided to expand its land drilling
operations. Management of UTI made this decision to take
advantage of:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | improving market conditions                                         
|
| |  | benefits arising from a consolidation in the land drilling
	industry

To effect this strategy, UTI disposed of its oilfield
distribution business in September 1995 and embarked on an
acquisition program aimed at expanding UTIs presence in the
 oil and natural gas producing regions in the United States.
Under this strategy, UTI has acquired 107 rigs since 1995. During
 this same time period, UTI disposed of nine rigs primarily in
the Appalachian Basin. Five of the nine rigs disposed of were
sold in 1999.

UTIs revenues grew substantially during 1997 and 1998 as a
result of:



| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | acquisitions                                                                  
|
| |  | increased rig utilization and dayrates caused by favorable market
	 conditions

Beginning in 1998 and continuing into 1999, UTI and the United
States land drilling industry experienced significant declines in
 demand and pricing for their services. The depressed market
conditions caused UTIs rig fleet utilization to decrease
from 72% in 1997 to 55% in 1998 and to 43% in 1999.

In response to these depressed industry conditions, UTI undertook
 a series of actions during the third quarter of 1998 and the
first quarter of 1999 designed to:



| |   |                                             
| | - | --------------------------------------------
| |  | improve efficiency                          
|
| |  | increase productivity                       
|
| |  | make UTI more competitive in the marketplace

These actions included:



| |   |                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | streamlining of certain contract drilling operations                                                                                                                             
|
| |  | personnel changes                                                                                                                                                                
|
| |  | changes to the accounting and administrative functions, including
	 the relocation of certain accounting functions from Oklahoma
	City to UTIs corporate headquarters in Houston

This consolidation of operations reduced UTIs regional
drilling units from seven to four. It also reduced UTIs
administrative staff by forty-six persons. As a result of the
above actions, UTI recorded other charges of $.3 million
during 1999 and $.8 million during 1998. The charges
consisted primarily of employee-related expenses.

In addition, UTI sold certain non-strategic assets of its
Appalachian Basin contract drilling division for
$5.6 million. As a result, UTI recorded a gain of
approximately $2.8 million during the first quarter of 1999.

16



---



##### Table of Contents



UTI currently expects market conditions in the land drilling
industry to improve in response to the recent improvement in
commodity prices for oil and natural gas. In this regard, UTI
expects its average utilization during the first quarter of 2000
to be more than the 43% average utilization experienced during
1999. The dayrate component of drilling contracts also have
increased during the first quarter of 2000. As conditions in the
land drilling industry improve, UTI believes that its strong
liquidity position and balance sheet provide it with the
financial ability to react quickly to opportunities in the land
drilling industry.

Results of Operations

UTI believes the number of land rigs actively drilling in the
United States indicates the overall strength of the United States
 oilfield service industry. Without giving effect to
acquisitions, variations in UTIs revenues and gross margins
 generally follow trends in the United States rig count.

The following table presents certain results of operations data
for UTI and the average United States rig count as reported by
Baker Hughes Inc.(1) for the periods indicated:

|                               |                                            |                          |   |         |   |      |   |         |   |  |   |         |  
|------------------------------ | ------------------------------------------ | ------------------------ | - | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                               |                                            |                         
|                               |                                            | Years Ended December 31,
|                               |                                            |                         
|                               |                                            | 1999                     |   | 1998    |   | 1997
|                               |                                            |                          |   |         |   |     
|Operating Data:                |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                              
|                              
|                              
|                              
|                               | Average U.S. active land rig count         |                          |   | 504     |   |      |   | 671     |   |  |   | 801     |  
|                              
|                              
|                              
|                              
|                               | Number of rigs owned by UTI at end of year |                          |   | 125     |   |      |   | 109     |   |  |   | 89      |  
|                              
|                              
|                              
|                              
|                               | Average number of rigs owned during year   |                          |   | 112     |   |      |   | 100     |   |  |   | 82      |  
|                              
|                              
|                              
|                              
|                               | Average rigs operating                     |                          |   | 49      |   |      |   | 56      |   |  |   | 59      |  
|                              
|                              
|                              
|                              
|Land Drilling:                 |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                              
|                              
|                              
|                              
|                               | Operating days(2)                          |                          |   | 17,823  |   |      |   | 20,308  |   |  |   | 21,576  |  
|                              
|                              
|                              
|                              
|                               | Utilization rate(3)                        |                          |   | 43      | % |      |   | 55      | % |  |   | 72      | %
|                              
|                              
|                              
|                              
|Pressure Pumping:              |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                              
|                              
|                              
|                              
|                               | Cementing jobs                             |                          |   | 2,108   |   |      |   | 2,296   |   |  |   | 2,245   |  
|                              
|                              
|                              
|                              
|                               | Stimulation jobs                           |                          |   | 784     |   |      |   | 996     |   |  |   | 951     |  
|                              
|                              
|                              
|                              
|Financial Data (in thousands): |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                              
|                              
|                              
|                              
|                               | Revenues                                   |                          | $ | 155,775 |   |      | $ | 186,157 |   |  | $ | 182,437 |  
|                               |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                               | Gross profit                               |                          | $ | 32,535  |   |      | $ | 47,222  |   |  | $ | 44,938  |  
|                               |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                               | As a percentage of revenue                 |                          |   | 20.9    | % |      |   | 25.4    | % |  |   | 24.6    | %
|                               |                                            |                          |   |         |   |      |   |         |   |  |   |        
|                               | Operating income (loss)                    |                          | $ | (2,565  | ) |      | $ | 14,984  |   |  | $ | 23,229  |  
|                               |                                            |                          |   |         |   |      |   |         |   |  |   |        



---



|    |                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Baker Hughes, Inc. is an international oilfield service and
	equipment company. For more than twenty years, it has conducted
	and published a weekly census of active drilling rigs. Its active
	 rig count is generally regarded as an industry standard for
	measuring industry activity levels.                                   
|   
|(2) | An operating day is defined as a day during which a rig is being
	operated, mobilized, assembled or dismantled while under
	contract.                                                                                                                                                                                                
|   
|(3) | Utilization rates are calculated by dividing the operating days
	by the total available days, including stacked rigs. Available
	days are calculated by multiplying rigs owned by the days in the
	period under review. For the year ended December  31, 1999,
	the utilization rate of UTIs rigs, excluding stacked rigs,
	was 50%.

17



---



##### Table of Contents



Comparison of Years Ended 1999 and 1998

Revenues by business segment for the years ended
December 31, 1999 and 1998 are as follows:

|          |                  |                |         |          |  |            |         |         |  |  |       |       |  
|--------- | ---------------- | -------------- | ------- | -------- |  | ---------- | ------- | ------- |  |  | ----- | ----- | -
|          |                  |                |         |         
|          |                  | Years Ended    |         |         
|          |                  | December 31,   |         | %       
|          |                  |                |         | Increase
|          |                  | 1999           |         | 1998     |  | (Decrease)
|          |                  |                |         |          |  |           
|          |                  |                |         |         
|          |                  | (in thousands) |         |         
|         
|         
|         
|         
|Revenues: |                  |                |         |          |  |            |         |         |  |  |       |      
|         
|         
|         
|         
|          | Land Drilling    |                | $       | 134,870  |  |            | $       | 162,600 |  |  |       | (17.1 | )
|         
|         
|         
|         
|          | Pressure Pumping |                |         | 20,721   |  |            |         | 23,365  |  |  |       | (11.3 | )
|         
|         
|         
|         
|          | Other            |                |         | 184      |  |            |         | 192     |  |  |       | (4.2  | )
|          |                  |                |         |          |  |            |         |         |  |  |       |      
|          |                  | $              | 155,775 |          |  | $          | 186,157 |         |  |  | (16.3 | )    
|          |                  |                |         |          |  |            |         |         |  |  |       |      

Despite the net acquisition of sixteen rigs during the year ended
 December 31, 1999, land drilling revenue decreased. The
decrease was attributable to depressed market conditions.
Pressure pumping revenue also decreased as a result of depressed
market conditions. These depressed market conditions resulted in:



| |   |                         
| | - | ------------------------
| |  | lower utilization rates 
|
| |  | lower rates for services

Gross profit and gross profit percentage by business segment for
the years ended December 31, 1999 and 1998 are as follows:

|              |                  |                |        |        |  |      |      |      |  |   |        |        |  |  |      |      | 
|------------- | ---------------- | -------------- | ------ | ------ |  | ---- | ---- | ---- |  | - | ------ | ------ |  |  | ---- | ---- | 
|              |                  |                |        |       
|              |                  | Years Ended    |        |       
|              |                  | December 31,   |        |       
|              |                  |                |        |       
|              |                  | 1999           |        | %      |  | 1998 |      | %   
|              |                  |                |        |        |  |      |      |     
|              |                  |                |        |       
|              |                  | (in thousands) |        |       
|             
|             
|             
|             
|Gross Profit: |                  |                |        |        |  |      |      |      |  |   |        |        |  |  |      |     
|             
|             
|             
|             
|              | Land Drilling    |                | $      | 23,912 |  |      |      | 17.7 |  |   | $      | 37,821 |  |  |      | 23.3 | 
|             
|             
|             
|             
|              | Pressure Pumping |                |        | 8,502  |  |      |      | 41.0 |  |   |        | 9,324  |  |  |      | 39.9 | 
|             
|             
|             
|             
|              | Other            |                |        | 121    |  |      |      | 65.8 |  |   |        | 77     |  |  |      | 40.1 | 
|              |                  |                |        |        |  |      |      |      |  |   |        |        |  |  |      |     
|              |                  | $              | 32,535 |        |  |      | 20.9 |      |  | $ | 47,222 |        |  |  | 25.4 |     
|              |                  |                |        |        |  |      |      |      |  |   |        |        |  |  |      |     

The gross profit of the land drilling segment declined due to
depressed market conditions. The gross profit percentage of the
pressure pumping segment increased due to an increase in gross
profit per job on stimulation jobs for the year ended
December 31, 1999 compared to the same period of 1998.

Selling, general and administrative expenses decreased
$.6 million during the year ended December 31, 1999
compared to the year ended December 31, 1998. This was
primarily due to actions taken to streamline operations during
the third quarter of 1998 and the first quarter of 1999.

Provisions for bad debts decreased $.6 million for the year
ended December 31, 1999 compared to the year ended
December 31, 1998. This was primarily due to improved
collection efforts.

The other charges for the years ended December 31, 1999 and
1998 were the result of the streamlining of certain contract
drilling operations and changes to the accounting and
administrative functions.

18



---



##### Table of Contents



Depreciation and amortization expense increased $4.6 million
 during the year ended December 31, 1999 compared to the
year ended December 31, 1998. This was primarily due to
depreciation and amortization on assets acquired during 1998 and
1999.

Other net income increased $2.3 million during the year
ended December 31, 1999 compared to the year ended
December 31, 1998. This increase was primarily due to a
$2.8 million gain realized as a result of the sale of land
drilling assets in 1999. The assets sold consisted of UTIs
drilling presence in the Appalachian Basin.

Interest expense increased $.4 million during the year ended
 December 31, 1999 compared to the year ended
December 31, 1998. This increase was primarily due to an
increase in average outstanding debt for the year ended
December 31, 1999 compared to the same period of 1998. The
following table shows other significant data regarding UTIs
 debt:

|                         |  |                   |              |                   |  |   |              | 
|------------------------ |  | ----------------- | ------------ | ----------------- |  | - | ------------ | 
|                         |  | Year Ended        |              | Year Ended       
|                         |  | December 31, 1999 |              | December 31, 1998
|                         |  |                   |              |                  
|Average Debt Outstanding |  | $                 | 32.0 million |                   |  | $ | 26.7 million | 
|                        
|                        
|                        
|                        
|Effective Interest Rate  |  |                   | 13.0%        |                   |  |   | 14.3%        | 

Income taxes decreased $5.7 million during the year ended
December 31, 1999 compared to the year ended
December 31, 1998. This was primarily due to a taxable loss
in 1999. UTIs effective tax rate for the year ended
December 31, 1999 was 14.0%. UTIs effective tax rate
for the year ended December 31, 1998 was 40.0%. This
decrease in the effective tax rate from 40.0% to 14.0% was
primarily for two reasons:



| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | goodwill amortization associated with acquisitions that is
	nondeductible for tax purposes
|
| |  | state income taxes payable in states where a taxable loss was not
	 incurred              

Comparison of Years Ended 1998 and 1997

Revenues by business segment for the years ended
December 31, 1998 and 1997 are as follows:

|          |                  |                |         |          |  |            |         |         |  |  |     |       |   
|--------- | ---------------- | -------------- | ------- | -------- |  | ---------- | ------- | ------- |  |  | --- | ----- | --
|          |                  |                |         |         
|          |                  | Year Ended     |         |         
|          |                  | December 31,   |         | %       
|          |                  |                |         | Increase
|          |                  | 1998           |         | 1997     |  | (Decrease)
|          |                  |                |         |          |  |           
|          |                  |                |         |         
|          |                  | (in thousands) |         |         
|         
|         
|         
|         
|Revenues: |                  |                |         |          |  |            |         |         |  |  |     |      
|         
|         
|         
|         
|          | Land Drilling    |                | $       | 162,600  |  |            | $       | 161,265 |  |  |     | 0.8   | % 
|         
|         
|         
|         
|          | Pressure Pumping |                |         | 23,365   |  |            |         | 20,923  |  |  |     | 11.7  | % 
|         
|         
|         
|         
|          | Other            |                |         | 192      |  |            |         | 249     |  |  |     | (22.9 | )%
|          |                  |                |         |          |  |            |         |         |  |  |     |      
|          |                  | $              | 186,157 |          |  | $          | 182,437 |         |  |  | 2.0 | %    
|          |                  |                |         |          |  |            |         |         |  |  |     |      

19



---



##### Table of Contents



Land drilling revenues remained flat as a result of depressed
market conditions. These depressed market conditions resulted in:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | lower utilization rates                                             
|
| |  | lower dayrates and prices received on footage and turnkey
	contracts

However, these factors were offset by additional revenues from
rigs acquired during 1997 and 1998. The increase in pressure
pumping revenue resulted from an increase in pressure pumping
jobs and related rates. UTIs pressure pumping operations
were not as adversely affected by declining oil and natural gas
prices as UTIs land drilling operations.

Gross profit and gross profit percentage by business segment for
the years ended December 31, 1998 and 1997 are as follows:

|              |                  |                          |        |        |  |      |      |      |  |   |        |        |  |  |      |      | 
|------------- | ---------------- | ------------------------ | ------ | ------ |  | ---- | ---- | ---- |  | - | ------ | ------ |  |  | ---- | ---- | 
|              |                  |                         
|              |                  | Years Ended December 31,
|              |                  |                         
|              |                  | 1998                     |        | %      |  | 1997 |      | %   
|              |                  |                          |        |        |  |      |      |     
|              |                  |                         
|              |                  | (in thousands)          
|             
|             
|             
|             
|Gross Profit: |                  |                          |        |        |  |      |      |      |  |   |        |        |  |  |      |     
|             
|             
|             
|             
|              | Land Drilling    |                          | $      | 37,821 |  |      |      | 23.3 |  |   | $      | 36,485 |  |  |      | 22.6 | 
|             
|             
|             
|             
|              | Pressure Pumping |                          |        | 9,324  |  |      |      | 39.9 |  |   |        | 8,308  |  |  |      | 39.7 | 
|             
|             
|             
|             
|              | Other            |                          |        | 77     |  |      |      | 40.1 |  |   |        | 145    |  |  |      | 58.2 | 
|              |                  |                          |        |        |  |      |      |      |  |   |        |        |  |  |      |     
|              |                  | $                        | 47,222 |        |  |      | 25.4 |      |  | $ | 44,938 |        |  |  | 24.6 |     
|              |                  |                          |        |        |  |      |      |      |  |   |        |        |  |  |      |     

Selling, general and administrative expenses increased
$.8 million during the year ended December 31, 1998
compared to the year ended December 31, 1997. This was
primarily due to acquisitions consummated during the second and
third quarters of 1997 and during 1998.

Provisions for bad debts increased $.5 million for the year
ended December 31, 1998 compared to the year ended
December 31, 1997. This was primarily due to existing
industry conditions during that time period.

The other charges of $.8 million for the year ended
December 31, 1998 was the result of the streamlining of
certain contract drilling operations and changes to the
accounting and administrative functions.

Depreciation and amortization expense increased $8.5 million
 during the year ended December 31, 1998 compared to the
year ended December 31, 1997. This was primarily due to
depreciation and amortization on assets acquired during the
second and third quarters of 1997 and during 1998.

20



---



##### Table of Contents



Interest expense decreased $.5 million during the year ended
 December 31, 1998 compared to the year ended
December 31, 1997. This decrease was primarily due to a
reduction in outstanding debt for the year ended
December 31, 1998 compared to the same period of 1997. The
following table shows other significant data regarding UTIs
 debt:

|                         |  |                   |               |                   |  |  |               | 
|------------------------ |  | ----------------- | ------------- | ----------------- |  |  | ------------- | 
|                         |  | Year Ended        |               | Year Ended       
|                         |  | December 31, 1998 |               | December 31, 1997
|                         |  |                   |               |                  
|Average Debt Outstanding |  |                   | $26.7 million |                   |  |  | $35.7 million | 
|Effective Interest Rate  |  |                   | 14.3%         |                   |  |  | 12.1%         | 

Income taxes decreased $2.4 million during the year ended
December 31, 1998 compared to the year ended
December 31, 1997, primarily due to lower taxable income in
1998. UTIs effective tax rate for the year ended
December 31, 1998 was 40.0%. UTIs effective tax rate
for the year ended December 31, 1997 was 37.8%. This
increase from 37.8% to 40.0% was primarily attributable to
goodwill amortization associated with acquisitions that is
nondeductible for tax purposes.

Liquidity and Capital Resources



| |                
| | ---------------
| | Working Capital

Historically, UTI has needed cash:



| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | to fund working capital requirements                                      
|
| |  | to make capital expenditures to replace and expand its drilling
	rig fleet
|
| |  | for acquisitions                                                          

UTI has funded ongoing operations through:



| |   |                              
| | - | -----------------------------
| |  | available cash               
|
| |  | cash provided from operations
|
| |  | borrowings                   

To date, UTI has funded acquisitions with:



| |   |                                                                
| | - | ---------------------------------------------------------------
| |  | available cash                                                 
|
| |  | borrowings                                                     
|
| |  | issuances of common stock and warrants to purchase common stock

Operations provided net cash of $14.4 million in 1999 and
$31.6 million in 1998. UTI used these funds along with
available cash balances on hand to fund acquisitions and capital
expenditures. Capital expenditures, excluding acquisitions, was
$9.4 million for the year ended December 31, 1999.
Capital expenditures, excluding acquisitions, was
$37.4 million for the year ended December 31, 1998.

21



---



##### Table of Contents



UTI had $7.5 million in cash and cash equivalents and no
borrowings under the working capital line as of December 31,
 1999. This is compared to $10.3 million in cash and cash
equivalents and no borrowings under the working capital line as
of December 31, 1998.



| |                          
| | -------------------------
| | Long Term Debt Facilities

As of December 31, 1999, UTI had outstanding debt, net of
unamortized discounts, of $32.2 million. This indebtedness
included $25.0 million associated with a 1997 private
placement of debt securities in connection with an acquisition
and refinancing of existing indebtedness and $7.8 million of
 notes associated with an acquisition completed in 1998.

Revolving Credit Facility. On November 22, 1999, UTI
entered into a four-year revolving credit facility. This
revolving credit facility provides for maximum borrowings of up
to $65.0 million. Under the revolving credit facility, UTI
may use up to $10.0 million for letters of credit. The
revolving credit facility calls for periodic interest payments at
 a floating rate ranging from LIBOR plus 1.75% to LIBOR plus
2.75%. The actual rate charged above LIBOR is based on UTIs
 trailing twelve-month EBITDA. UTIs assets secure the new
facility. As of December 31, 1999, UTI had no
outstanding borrowings under this facility.

Subordinated Notes. On April 11, 1997, UTI issued
$25.0 million principal amount of 12.0% subordinated
notes. These subordinated notes come due 2001. The subordinated
notes were issued at a 2.0% discount along with seven-year
warrants to purchase 1.2 million shares of UTIs common
 stock at an exercise price of $10.83 per share. The
subordinated notes contain various affirmative and negative
covenants customary in such private placements, including
restrictions on additional indebtedness, restrictions on
dividends, distributions and other restricted payments.

Promissory Notes. On July 31, 1998, UTI issued
$7.8 million principal amount of unsecured promissory notes.
 In the event the average trading value of UTIs common
stock for thirty consecutive days exceeds $30.00 per share,
then $3.5 million of the principal amount becomes payable
within 90 days following the event. The triggering event
occurred on March 9, 2000. The notes bear interest at 7.0%
and mature on July 31, 2002. The notes were issued in
connection with an acquisition.



| |                                      
| | -------------------------------------
| | Future Acquisitions and Capital Needs

Management believes UTI will be able to meet its working capital,
 capital expenditure and debt service requirements for the next
twelve months by using:



| |   |                                                 
| | - | ------------------------------------------------
| |  | internally generated cash                       
|
| |  | availability under the revolving credit facility
|
| |  | cash balances on hand                           

The Company believes that UTIs strong liquidity position
will allow it to react quickly to opportunities in the land
drilling industry. These opportunities include making strategic
acquisitions.

22



---



##### Table of Contents



Inflation

Inflation has not had a significant impact on UTIs
comparative results of operations.

Year 2000

In late 1999, UTI completed remediating and testing its
Year 2000 readiness systems. UTI did not experience any
significant disruptions in mission critical information
technology and non-information technology systems. UTI believes
those systems successfully responded to the Year 2000 date
change.

UTI is not aware of any material problems resulting from
Year 2000 issues, either with:



| |   |                                       
| | - | --------------------------------------
| |  | UTIs products and services           
|
| |  | UTIs internal systems                
|
| |  | products and services of third parties

UTI will continue to monitor the mission critical computer
applications of the following parties throughout the
Year 2000:



| |   |                
| | - | ---------------
| |  | UTI            
|
| |  | UTIs suppliers
|
| |  | UTIs vendors  

New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
(SFAS 133). SFAS 133, as amended by Statement of
Financial Accounting Standards No. 137, Accounting for
Derivative Instruments and Hedging Activities 
Deferral of the Effective Date of FASB Statement No. 133
 (SFAS 137) which is effective for fiscal years beginning
after June 15, 2000, requires all derivatives to be
recognized at fair value on the balance sheet. UTI plans to adopt
 SFAS 133 no later than January 1, 2001. The change is
not expected to have a significant effect on UTIs financial
 statements.

Risks Associated with Forward-Looking Statements

From time to time, UTI may make certain statements that contain
forward-looking information. Forward looking
statements speak to the future. Words such as
anticipate, believe, expect,
estimate, predict, project,
should and similar expressions usually identify such
forward-looking statements. Forward-looking statements may be
made by management both orally or in writing. Written
forward-looking statements may appear:



| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in press releases                                                                                                                                               
|
| |  | as part of the Business, Properties and
	Managements Discussion and Analysis of Financial
	Conditions and Results of Operations contained in this
	report
|
| |  | in UTIs other filings with the Securities and Exchange
	Commission                                                                                             

23



---



##### Table of Contents



UTI believes that the expectations reflected in these
forward-looking statements are reasonable. However, UTI cannot
give any assurance that such expectations will materialize. These
 forward-looking statements are subject to:



| |   |              
| | - | -------------
| |  | risks        
|
| |  | uncertainties
|
| |  | assumptions  

If any of these risks or uncertainties materialize, actual
results of current and future operations may not be as expected.
Therefore, readers should not place undue reliance on these
forward-looking statements. These forward-looking statements
speak only as of their dates.

Among the factors that will directly affect UTIs results of
 operations and the contract drilling service industry are:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in the prices of oil and natural gas                                                                                                   
|
| |  | the volatility of the contract drilling service industry in
	general                                                                           
|
| |  | UTIs ability to successfully integrate recent acquisitions                                                                                    
|
| |  | contractual risk associated with turnkey and footage contracts                                                                                 
|
| |  | presence of competitors with greater financial resources                                                                                       
|
| |  | labor shortages                                                                                                                                
|
| |  | operating risks inherent in the contract drilling service
	industry, such as blowouts, explosions, cratering, sour gas, well
	 fires and spills
|
| |  | domestic and world-wide political stability and economic growth                                                                                
|
| |  | risks associated with UTIs successful execution of internal
	 operating plans                                                                 
|
| |  | regulatory uncertainties                                                                                                                       
|
| |  | legal proceedings                                                                                                                              

24



---



##### Table of Contents



Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

The tables below present expected cash flows and related
weighted-average interest rates expected by maturity dates. UTI
is not subject to interest rate risk due to its indebtedness
having fixed rates of interest. The fair value of fixed rate debt
 is based on the estimated yield to maturity for each debt issue
as of December 31, 1999 and 1998.

|               |                                 |                                                 |   |       |   |      |   |      |   |       |   |          |   |  |   |   |  |  |   |      |   |  |   |      | 
|-------------- | ------------------------------- | ----------------------------------------------- | - | ----- | - | ---- | - | ---- | - | ----- | - | -------- | - |  | - | - |  |  | - | ---- | - |  | - | ---- | 
|               |                                 |                                                 |   |      
|               |                                 | Expected Maturity Date                          |   | Fair 
|               |                                 |                                                 |   | Value
|               |                                 | 2000                                            |   | 2001  |   | 2002 |   | 2003 |   | Total |   | 12/31/99
|               |                                 |                                                 |   |       |   |      |   |      |   |       |   |         
|               |                                 |                                                 |   |      
|               |                                 | (in millions, except interest rate percentages) |   |      
|Long Term Debt |                                 |                                                 |   |       |   |      |   |      |   |       |   |          |   |  |   |   |  |  |   |      |   |  |   |     
|              
|              
|              
|              
|               | Debt service(a)                 |                                                 | $ | 3.5   |   |      | $ | 27.0 |   |       | $ | 8.1      |   |  | $ |  |  |  | $ | 38.6 |   |  | $ | 33.2 | 
|              
|              
|              
|              
|               | Average effective interest rate |                                                 |   | 12.3  | % |      |   | 10.4 | % |       |   | 7.0      | % |  |   |  |  |  |   | 11.3 | % |  |   |      | 

|               |                                 |                                                 |   |       |   |      |   |      |   |       |   |          |   |  |   |     |   |  |   |      |   |  |   |      | 
|-------------- | ------------------------------- | ----------------------------------------------- | - | ----- | - | ---- | - | ---- | - | ----- | - | -------- | - |  | - | --- | - |  | - | ---- | - |  | - | ---- | 
|               |                                 |                                                 |   |      
|               |                                 | Expected Maturity Date                          |   | Fair 
|               |                                 |                                                 |   | Value
|               |                                 | 1999                                            |   | 2000  |   | 2001 |   | 2002 |   | Total |   | 12/31/98
|               |                                 |                                                 |   |       |   |      |   |      |   |       |   |         
|               |                                 |                                                 |   |      
|               |                                 | (in millions, except interest rate percentages) |   |      
|Long Term Debt |                                 |                                                 |   |       |   |      |   |      |   |       |   |          |   |  |   |     |   |  |   |      |   |  |   |     
|              
|              
|              
|              
|               | Debt service(a)                 |                                                 | $ | 3.5   |   |      | $ | 3.5  |   |       | $ | 27.0     |   |  | $ | 8.1 |   |  | $ | 42.1 |   |  | $ | 33.0 | 
|              
|              
|              
|              
|               | Average effective interest rate |                                                 |   | 12.3  | % |      |   | 12.3 | % |       |   | 10.4     | % |  |   | 7.0 | % |  |   | 11.7 | % |  |   |      | 



---



|    |  |                                                                  
|--- |  | -----------------------------------------------------------------
|(a) |  | Assumes scheduled maturities are funded with available resources.



|        |                                            
|------- | -------------------------------------------
|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statements of UTI meeting the requirements of
Regulation S-X (except Section 210.3-05 and
Article 11 thereof) are included on pages F-1 through F-25
hereof.

Other financial statements and schedules required under
Regulation S-X, if any, are filed under Item 14,
Exhibits, Financial Statement Schedules and Reports on
Form 8-K of this Form 10-K.



|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
	AND FINANCIAL DISCLOSURE

None.

25



---



##### Table of Contents






PART III

The information required by Part III, Items 10
through 13, of Form 10-K is incorporated by reference
from UTIs Definitive Proxy Statement for the
2000 Annual Meeting of Shareholders. This proxy statement
shall be filed with the Securities and Exchange Commission not
later than 120 days after December 31, 1999, which is
the end of the fiscal year.




PART IV



|         |                                                                 
|-------- | ----------------------------------------------------------------
|Item 14. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
	8-K

(a)  The following documents are filed as part of this
Annual Report on Form 10-K:

|                                              |                                                                                                                                                                                                                                        |      |  |     | 
|--------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  | --- | 
|                                              |                                                                                                                                                                                                                                        | Page
|                                              |                                                                                                                                                                                                                                        |     
|(1) Financial Statements of UTI Energy Corp.: |                                                                                                                                                                                                                                        |      |  |    
|                                              | Contents                                                                                                                                                                                                                               |      |  | F-1 | 
|                                              | Report of Independent Auditors                                                                                                                                                                                                         |      |  | F-2 | 
|                                              | Consolidated Balance Sheets at December 31, 1999 and 1998                                                                                                                                                                              |      |  | F-3 | 
|                                              | Consolidated Statements of Operations for the Years Ended
	December 31, 1999, 1998 and 1997                                                                                                                                            |      |  | F-4 | 
|                                              | Consolidated Statements of Changes in Shareholders Equity
	for the Years Ended December 31, 1999, 1998 and 1997                                                                                                                       |      |  | F-5 | 
|                                              | Consolidated Statements of Cash Flows for the Years Ended
	December 31, 1999, 1998 and 1997                                                                                                                                            |      |  | F-6 | 
|                                              | Notes to Consolidated Financial Statements                                                                                                                                                                                             |      |  | F-7 | 
|                                             
|                                             
|                                             
|                                             
|                                             
|(2) Financial Statement Schedule:             |                                                                                                                                                                                                                                        |      |  |    
|                                              | Schedule II  Valuation and Qualifying Accounts                                                                                                                                                                                        |      |  | S-1 | 
|                                              | All other schedules for which provision is made in the applicable
	 accounting regulation of the Securities and Exchange Commission
	are not required under the related instructions or do not apply
	and therefore have been omitted. |      |  |     | 

26



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##### Table of Contents



(3)  The following Exhibits are filed as part of this Annual
 Report on Form 10-K.

|               |     |  |  |                      |  |                                                                                                                                                                                                                                                                                                                    
|-------------- | --- |  |  | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |     |  |  | Title or Description
|               |     |  |  |                     
|               | 3.1 |  |  |                     |  | Restated Certificate of Incorporation of UTI (incorporated by
	reference to Amendment No. 1 to UTIs Registration
	Statement on Form S-1 (No. 33-69726)).                                                                                                                                                          
|               | 3.2 |  |  |                     |  | Amendment to Restated Certificate of Incorporation (incorporated
	by reference to Amendment No. 1 to UTIs Registration
	Statement on Form S-1 (No. 33-69726)).                                                                                                                                                    
|               | 3.3 |  |  |                     |  | Amendment to Restated Certificate of Incorporation (incorporated
	by reference to UTIs Annual Report on Form  10-K for
	the year ended December 31, 1994).                                                                                                                                                        
|               | 3.4 |  |  |                     |  | Amendment to Restated Certificate of Incorporation, dated
	August 28, 1997 (incorporated by reference to
	Exhibit 3.4 to UTIs Registration Statement on
	Form S-3 (No.  333-35109)).                                                                                                                              
|               | 3.5 |  |  |                     |  | By-laws of UTI, as amended (incorporated by reference to
	Exhibit 3.3 to UTIs Annual Report on Form 10-K
	for the year ended December 31, 1993).                                                                                                                                                                  
|               | 3.6 |  |  |                     |  | Rights Agreement, dated February 26, 1999, between UTI
	Energy Corp. and ChaseMellon Shareholder Services, L.L.C. as
	 Rights Agent (incorporated by reference to Exhibit 4.1 to
	UTIs Current Report on Form 8-K, dated
	February 26, 1999, filed with the Securities and Exchange
	Commission on March 4, 1999).
|               | 3.7 |  |  |                     |  | Certificate of Designation, Powers, Preferences and Rights of
	Series I Preferred Stock, dated February 26, 1999
	(incorporated by reference to Exhibit 4.2 to UTIs
	Current Report on Form 8-K, dated February 26, 1999,
	filed with the Securities and Exchange Commission on
	March 4, 1999).                  
|               | 3.8 |  |  |                     |  | Form of Right Certificate (incorporated by reference to
	Exhibit 4.3 to UTIs Current Report on Form 8-K,
	dated February 26, 1999, filed with the Securities and
	Exchange Commission on March 4, 1999).                                                                                                          
|               | 4.1 |  |  |                     |  | See Exhibit No. 3.1 through 3.8 for provisions of the
	Restated Certificate of Incorporation and amended By-laws of UTI
	defining the rights of the holders of Common Stock.                                                                                                                                       
|               | 4.2 |  |  |                     |  | Form of Common Stock Certificate (incorporated by reference to
	Amendment No. 1 to UTIs Registration Statement on
	Form  S-1 (No. 33-69726)).                                                                                                                                                                     
|               | 4.3 |  |  |                     |  | Registration Rights Agreement with Bear Stearns &
	Co.  Inc., dated March 25, 1994, as assigned to Remy
	Capital Partners III, L.P. (incorporated by reference
	to Exhibit  10.17 to UTIs Annual Report on
	Form 10-K for the year ended December 31, 1993).                                                      
|               | 4.4 |  |  |                     |  | Stock Option Agreement, dated December 19, 1995, between UTI
	 and Remy Consultants Incorporated (incorporated by reference to
	Exhibit 2 to UTIs Amendment No. 1 to
	Schedule 13D dated August 8, 1996).                                                                                                         

27



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##### Table of Contents



|               |            |  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-------------- | ---------- |  |  | -------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |            |  |  | Title or Description
|               |            |  |  |                     
|               | 4.5(1)     |  |  |                     |  | Amended and Restated UTI Energy Corp. 1996 Employee Stock Option
	Plan (incorporated by reference to Exhibit 4.6 to UTIs
	 Annual Report on Form 10-K for the year ended
	December 31, 1997).                                                                                                                                                                                                                                                                                                       
|               | 4.6        |  |  |                     |  | Note Purchase Agreement, dated April 11, 1997, by and among
	FWA Drilling Company, Inc., International Petroleum Service
	Company, Triad Drilling Company, Universal Well Services, 
	Inc., USC, Incorporated, Panther Drilling, Inc. and
	Canpartners Investments IV, LLC (incorporated by reference
	to Schedule 13D relating to UTI filed on April 22, 1997
	 by Canpartners Investments IV, LLC, Canpartners
	Incorporated, Mitchell R. Julis, Joshua S. Friedman
	and R. Christian  B. Evensen).
|               | 4.7        |  |  |                     |  | Note, dated April 11, 1997, payable by FWA Drilling
	Company, Inc., International Petroleum Service Company,
	Triad Drilling Company, Universal Well Services, Inc., USC,
	Incorporated and Panther Drilling, Inc. to Canpartners
	Investments IV, LLC (incorporated by reference to
	Exhibit  10.5 to UTIs Current Report on Form 8-K
	dated April 11, 1997).                                                                                                                                      
|               | 4.8        |  |  |                     |  | Warrant Agreement, dated April 11, 1997, by and between UTI
	Energy Corp. and Southland Drilling Company, Ltd.
	(incorporated by reference to Exhibit 10.1 to UTIs
	Current Report on Form 8-K dated April 11, 1997).                                                                                                                                                                                                                                                                               
|               | 4.9(1)     |  |  |                     |  | Amended and Restated UTI Energy Corp. Non-Employee Director Stock
	 Option Plan (incorporated by reference to Exhibit  4.18 to
	UTIs Annual Report on Form 10-K for the year ended
	December 31, 1997).                                                                                                                                                                                                                                                                                             
|               | 4.10(1)    |  |  |                     |  | Amended and Restated 1997 Long-Term Incentive Plan (incorporated
	by reference to Exhibit 4.2 to UTIs Annual Report on
	Form 10-K for the year ended December 31, 1997).                                                                                                                                                                                                                                                                                                                            
|               | 4.11(1)(2) |  |  |                     |  | Amendment No. 1 to the Amended and Restated 1997 Long-Term
	Incentive Plan, adopted by the Board of Directors on April 
	26, 1999.                                                                                                                                                                                                                                                                                                                                                                   
|               | 4.12       |  |  |                     |  | Form of Warrant to purchase an aggregate of 75,000 shares of
	 Common Stock at $26.50 per share, which was issued to the
	former shareholders of Suits Enterprises, Inc. listed on
	such exhibit in the amounts set forth opposite such former
	shareholders name on such exhibit (incorporated by
	reference from UTIs Quarterly Report on Form 10-Q for
	the six months ended June 30, 1998).                                                                                                    
|               | 4.13       |  |  |                     |  | Form of Warrant to purchase an aggregate of 25,000 shares of
	 Common Stock at $35.00 per share, which was issued to the
	former shareholders of Suits Enterprises, Inc. listed on
	such exhibit in the amounts set forth opposite such former
	shareholders name on such exhibit (incorporated by
	reference from UTIs Quarterly Report on Form 10-Q for
	the six months ended June 30, 1998).                                                                                                    

28



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##### Table of Contents



|               |         |  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------- | ------- |  |  | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |         |  |  | Title or Description
|               |         |  |  |                     
|               | 4.14    |  |  |                     |  | Form of Note Payable, in the aggregate amount of $7.79 
	million, which was issued to the former shareholders of Suits
	Enterprises, Inc. listed on such exhibit in the amounts set
	forth opposite such former shareholders name on such
	exhibit (incorporated by reference from UTIs Quarterly
	Report on Form 10-Q for the six months ended June 30,
	1998).                                                                                                                                     
|               | 4.15(2) |  |  |                     |  | Loan and Security Agreement, dated November 22, 1999, by and
	 among The CIT Group/ Business Credit, Inc., GMAC Business
	Credit, LLC and Foothill Capital Corporation as Lenders, UTI
	 Energy Corp., UTICO, Inc., UTICO Hard Rock
	Boring, Inc., International Petroleum Service Company and
	Norton Drilling Services, Inc. as Guarantors and UTI
	Drilling, L.P., Norton Drilling Company, Universal Well
	Services, Inc., UTI Management Services, L.P. and SUITS
	 Drilling Company as Borrowers.
|               | 10.1    |  |  |                     |  | For additional material contracts see Exhibits 4.3 through 
	4.15.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 10.2(1) |  |  |                     |  | Amended and Restated Employment Agreement with Vaughn E.
	Drum, dated December 19, 1996 (incorporated by reference to
	Exhibit 10.4 to UTIs Current Report on Form 8-K
	dated January 27, 1997).                                                                                                                                                                                                                                                                                                      
|               | 10.3    |  |  |                     |  | Agreement and Plan of Merger, dated April 26, 1999, by and
	between UTI Energy Corp. and Norton Drilling Services, Inc.
	(incorporated by reference to Exhibit 2.1 to UTIs
	Current Report on Form 8-K dated July 26, 1999).                                                                                                                                                                                                                                                                          
|               | 21.1(2) |  |  |                     |  | List of subsidiaries of UTI.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 23.1(2) |  |  |                     |  | Consent of Ernst & Young LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|               | 27.1(2) |  |  |                     |  | Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



---



|    |                                                                                                  
|--- | -------------------------------------------------------------------------------------------------
|(1) | Management contract or compensatory plan, identified as required
	by Item  14(a)(3) of Form 10-K.
|   
|(2) | Filed herewith as part of this Form 10-K.                                                        

As permitted by Item 601(b)(4)(iii)(A) of
Regulation S-K, UTI has not filed with this Form 10-K
certain instruments defining the right of holders of long-term
debt of UTI and its subsidiaries. This is because the total
amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of UTI and its
subsidiaries on a consolidated basis. UTI agrees to furnish a
copy of any of these agreements to the Securities and Exchange
Commission upon request.

(b)  Reports on Form 8-K

UTI did not submit a Form 8-K during the quarter that ended
December 31, 1999

29



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##### Table of Contents



UTI ENERGY CORP.

CONSOLIDATED FINANCIAL STATEMENTS

Contents

|                                          |                                                            |  |  |     | 
|----------------------------------------- | ---------------------------------------------------------- |  |  | --- | 
|AUDITED CONSOLIDATED FINANCIAL STATEMENTS |                                                            |  |  |    
|                                         
|                                         
|                                         
|                                         
|                                          | Report of Independent Auditors                             |  |  | F-2 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Consolidated Balance Sheets                                |  |  | F-3 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Consolidated Statements of Operations                      |  |  | F-4 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Consolidated Statements of Changes in Shareholders Equity |  |  | F-5 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Consolidated Statements of Cash Flows                      |  |  | F-6 | 
|                                         
|                                         
|                                         
|                                         
|                                          | Notes to Consolidated Financial Statements                 |  |  | F-7 | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT AUDITORS

To the Board of Directors



We have audited the accompanying consolidated balance sheets of
UTI Energy Corp. as of December 31, 1999 and 1998 and
the related consolidated statements of operations, changes in
shareholders equity and cash flows for each of the three
years in the period ended December 31, 1999. Our audits also
 included the financial statement schedule listed in the Index at
 Item 14(a). These financial statements and schedule are the
 responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
 about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to
 above present fairly, in all material respects, the consolidated
 financial position of UTI Energy Corp. at December 31,
 1999 and 1998, and the consolidated results of its operations
and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as
 a whole, presents fairly in all material respects the
information set forth therein.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Houston, Texas



F-2



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##### Table of Contents



UTI ENERGY CORP.






CONSOLIDATED BALANCE SHEETS


(in thousands)


ASSETS

|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |         |  
|------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ------- | ------- | - | - | ------- | ------- | -
|                                                                                     |                                                                                                                                                                                           |             
|                                                                                     |                                                                                                                                                                                           | December 31,
|                                                                                     |                                                                                                                                                                                           |             
|                                                                                     |                                                                                                                                                                                           | 1999         |         | 1998   
|                                                                                     |                                                                                                                                                                                           |              |         |        
|CURRENT ASSETS                                                                       |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Cash and cash equivalents                                                                                                                                                                 |              | $       | 7,547   |   |   | $       | 10,337  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accounts receivable, net of allowance for doubtful accounts of
        $3,143 in 1999 and $1,919 in 1998                                                                                  |              |         | 33,522  |   |   |         | 25,485  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Federal income tax receivables                                                                                                                                                            |              |         | 5,043   |   |   |         | 3,200   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Materials and supplies                                                                                                                                                                    |              |         | 748     |   |   |         | 887     |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Deferred income taxes                                                                                                                                                                     |              |         | 1,762   |   |   |         | 1,954   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Prepaid expenses                                                                                                                                                                          |              |         | 1,487   |   |   |         | 4,648   |  
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           |              | 50,109  |         |   |   | 46,511  |        
|PROPERTY AND EQUIPMENT                                                               |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Land                                                                                                                                                                                      |              |         | 1,224   |   |   |         | 1,224   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Buildings and improvements                                                                                                                                                                |              |         | 3,538   |   |   |         | 3,324   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Machinery and equipment                                                                                                                                                                   |              |         | 244,657 |   |   |         | 202,698 |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Oil and gas working interests                                                                                                                                                             |              |         | 1,856   |   |   |         | 1,943   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Construction in process                                                                                                                                                                   |              |         | 376     |   |   |         | 2,729   |  
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           |              | 251,651 |         |   |   | 211,918 |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Less accumulated depreciation and amortization                                                                                                                                            |              |         | 62,807  |   |   |         | 47,070  |  
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           |              | 188,844 |         |   |   | 164,848 |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|GOODWILL, less accumulated amortization of $3,616 in 1999 and
        $2,086 in 1998 |                                                                                                                                                                                           |              | 19,261  |         |   |   | 20,791  |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|OTHER ASSETS                                                                         |                                                                                                                                                                                           |              | 2,368   |         |   |   | 1,871   |        
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           | $            | 260,582 |         |   | $ | 234,021 |        
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|LIABILITIES AND SHAREHOLDERS EQUITY                                                
|                                                                                    
|CURRENT LIABILITIES                                                                  |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accounts payable                                                                                                                                                                          |              | $       | 19,672  |   |   | $       | 17,649  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accrued payroll and related costs                                                                                                                                                         |              |         | 4,536   |   |   |         | 2,387   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Accrued health insurance                                                                                                                                                                  |              |         | 1,058   |   |   |         | 1,284   |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Other accrued expenses                                                                                                                                                                    |              |         | 3,948   |   |   |         | 2,599   |  
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           |              | 29,214  |         |   |   | 23,919  |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|LONG-TERM DEBT                                                                       |                                                                                                                                                                                           |              | 32,196  |         |   |   | 31,721  |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|DEFERRED INCOME TAXES                                                                |                                                                                                                                                                                           |              | 41,668  |         |   |   | 33,579  |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|OTHER LIABILITIES                                                                    |                                                                                                                                                                                           |              | 472     |         |   |   | 656     |        
|                                                                                    
|COMMITMENTS AND CONTINGENCIES                                                        |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|SHAREHOLDERS EQUITY                                                                 |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Preferred Stock, $.01 par value, 5,000 shares
        authorized, 0 shares issued or outstanding in 1999 and 
         1998                                                               |              |         |        |   |   |         |        |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Common Stock, $.001 par value, 50,000 shares
        authorized, 18,432 shares issued and 17,829 outstanding in
        1999, 16,612 shares issued and 16,009 outstanding
        in 1998 |              |         | 18      |   |   |         | 17      |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Additional capital                                                                                                                                                                        |              |         | 144,312 |   |   |         | 128,825 |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Retained earnings                                                                                                                                                                         |              |         | 22,707  |   |   |         | 25,309  |  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                     | Treasury Stock, 603 shares in 1999 and 1998, at cost                                                                                                                                      |              |         | (10,005 | ) |   |         | (10,005 | )
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           |              | 157,032 |         |   |   | 144,146 |        
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        
|                                                                                     |                                                                                                                                                                                           | $            | 260,582 |         |   | $ | 234,021 |        
|                                                                                     |                                                                                                                                                                                           |              |         |         |   |   |         |        

See accompanying notes.

F-3



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##### Table of Contents



UTI ENERGY CORP.






CONSOLIDATED STATEMENTS OF OPERATIONS


(in thousands, except per share amounts)


|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |        |  
|---------------------------------------- | ----------------------------------- | ------------------------ | ------- | ------ | - | ---- | ------- | ------ | - | - | ------- | ------ | -
|                                         |                                     |                         
|                                         |                                     | Years Ended December 31,
|                                         |                                     |                         
|                                         |                                     | 1999                     |         | 1998   |   | 1997
|                                         |                                     |                          |         |        |   |     
|REVENUES                                 |                                     | $                        | 155,775 |        |   | $    | 186,157 |        |   | $ | 182,437 |       
|                                        
|                                        
|                                        
|                                        
|                                        
|COST OF REVENUES                         |                                     |                          | 123,240 |        |   |      | 138,935 |        |   |   | 137,499 |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|GROSS PROFIT                             |                                     |                          | 32,535  |        |   |      | 47,222  |        |   |   | 44,938  |       
|                                        
|OTHER COSTS AND EXPENSES                 |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Selling, general and administrative |                          |         | 10,170 |   |      |         | 10,781 |   |   |         | 10,011 |  
|                                        
|                                        
|                                        
|                                        
|                                         | Provisions for bad debts            |                          |         | 548    |   |      |         | 1,143  |   |   |         | 623    |  
|                                        
|                                        
|                                        
|                                        
|                                         | Other charges                       |                          |         | 260    |   |      |         | 785    |   |   |         |       |  
|                                        
|                                        
|                                        
|                                        
|                                         | Depreciation and amortization       |                          |         | 24,122 |   |      |         | 19,529 |   |   |         | 11,075 |  
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                         |                                     |                          | 35,100  |        |   |      | 32,238  |        |   |   | 21,709  |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|OPERATING INCOME (LOSS)                  |                                     |                          | (2,565  | )      |   |      | 14,984  |        |   |   | 23,229  |       
|                                        
|OTHER INCOME (EXPENSE)                   |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Interest expense                    |                          |         | (4,168 | ) |      |         | (3,815 | ) |   |         | (4,330 | )
|                                        
|                                        
|                                        
|                                        
|                                         | Interest income                     |                          |         | 602    |   |      |         | 1,084  |   |   |         | 689    |  
|                                        
|                                        
|                                        
|                                        
|                                         | Other, net                          |                          |         | 3,104  |   |      |         | 850    |   |   |         | 546    |  
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                         |                                     |                          | (462    | )      |   |      | (1,881  | )      |   |   | (3,095  | )     
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|INCOME (LOSS) BEFORE INCOME TAXES        |                                     |                          | (3,027  | )      |   |      | 13,103  |        |   |   | 20,134  |       
|                                        
|                                        
|                                        
|                                        
|                                        
|INCOME TAXES                             |                                     |                          | (425    | )      |   |      | 5,235   |        |   |   | 7,609   |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|NET INCOME (LOSS)                        |                                     | $                        | (2,602  | )      |   | $    | 7,868   |        |   | $ | 12,525  |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|BASIC EARNINGS (LOSS) PER COMMON SHARE   |                                     | $                        | (0.15   | )      |   | $    | 0.49    |        |   | $ | 0.96    |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|DILUTED EARNINGS (LOSS) PER COMMON SHARE |                                     | $                        | (0.15   | )      |   | $    | 0.47    |        |   | $ | 0.83    |       
|                                         |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|AVERAGE COMMON SHARES OUTSTANDING        |                                     |                          |         |        |   |      |         |        |   |   |         |       
|                                        
|                                        
|                                        
|                                        
|                                         | Basic                               |                          |         | 16,992 |   |      |         | 16,070 |   |   |         | 13,083 |  
|                                        
|                                        
|                                        
|                                        
|                                         | Diluted                             |                          |         | 16,992 |   |      |         | 16,795 |   |   |         | 15,069 |  

See accompanying notes.

F-4



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##### Table of Contents



UTI ENERGY CORP.






CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


(in thousands)


|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |       |        |        |   |   |      |    |  |   |         |        |   |   |         |        |  
|---------------------------- | -------------------------------- | ------------ | ------ | ----- | - | ---------- | -- | ---------- |  | ------------ | ------- | ----------- |  | ----- | ------ | ------ | - | - | ---- | -- |  | - | ------- | ------ | - | - | ------- | ------ | -
|                             |                                  |              |        |       |   |            |    |            |  |              |         |            
|                             |                                  | Common Stock |        |       |   |            |    | Restricted |  |              |         |            
|                             |                                  |              |        |       |   |            |    | Stock Plan |  |              |         |            
|                             |                                  | Number       |        | Par   |   | Additional |    | Retained   |  | Unearned     |         | Treasury    |  |      
|                             |                                  | of Shares    |        | $.001 |   | Capital    |    | Earnings   |  | Compensation |         | Stock Total |  | Total
|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |      
|Balance at December 31, 1996 |                                  |              | 10,807 |       |   | $          | 11 |            |  | $            | 17,870  |             |  | $     | 4,916  |        |   | $ | (101 | )  |  | $ |        |        |   | $ | 22,696  |       
|                            
|                            
|                            
|                            
|                            
|                             | Net income                       |              |        |      |   |            |    |           |  |              |         |            |  |       |        | 12,525 |   |   |      |   |  |   |         |       |   |   |         | 12,525 |  
|                            
|                            
|                            
|                            
|                             | Issuance of Common Stock         |              |        | 2,836 |   |            |    | 3          |  |              |         | 84,528      |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 84,531 |  
|                            
|                            
|                            
|                            
|                             | Warrants issued                  |              |        |      |   |            |    |           |  |              |         | 1,410       |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 1,410  |  
|                            
|                            
|                            
|                            
|                             | Exercise of warrants             |              |        | 2,193 |   |            |    | 2          |  |              |         | 14,308      |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 14,310 |  
|                            
|                            
|                            
|                            
|                             | Exercise of options              |              |        | 311   |   |            |    |           |  |              |         | 2,092       |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 2,092  |  
|                            
|                            
|                            
|                            
|                             | Vesting of restricted stock plan |              |        |      |   |            |    |           |  |              |         |            |  |       |        |       |   |   |      | 56 |  |   |         |       |   |   |         | 56     |  
|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |       |        |        |   |   |      |    |  |   |         |        |   |   |         |       
|Balance at December 31, 1997 |                                  |              | 16,147 |       |   |            | 16 |            |  |              | 120,208 |             |  |       | 17,441 |        |   |   | (45  | )  |  |   |        |        |   |   | 137,620 |       
|                            
|                            
|                            
|                            
|                            
|                             | Net income                       |              |        |      |   |            |    |           |  |              |         |            |  |       |        | 7,868  |   |   |      |   |  |   |         |       |   |   |         | 7,868  |  
|                            
|                            
|                            
|                            
|                             | Redemption of Redeemable Stock   |              |        |      |   |            |    | 1          |  |              |         | 6,701       |  |       |        |       |   |   |      |   |  |   |         | (6,702 | ) |   |         |       |  
|                            
|                            
|                            
|                            
|                             | Warrants issued                  |              |        |      |   |            |    |           |  |              |         | 411         |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 411    |  
|                            
|                            
|                            
|                            
|                             | Exercise of options              |              |        | 156   |   |            |    |           |  |              |         | 1,505       |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 1,505  |  
|                            
|                            
|                            
|                            
|                             | Purchase of Treasury Stock       |              |        | (294  | ) |            |    |           |  |              |         |            |  |       |        |       |   |   |      |   |  |   |         | (3,303 | ) |   |         | (3,303 | )
|                            
|                            
|                            
|                            
|                             | Vesting of restricted stock plan |              |        |      |   |            |    |           |  |              |         |            |  |       |        |       |   |   |      | 45 |  |   |         |       |   |   |         | 45     |  
|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |       |        |        |   |   |      |    |  |   |         |        |   |   |         |       
|Balance at December 31, 1998 |                                  |              | 16,009 |       |   |            | 17 |            |  |              | 128,825 |             |  |       | 25,309 |        |   |   |     |    |  |   | (10,005 | )      |   |   | 144,146 |       
|                            
|                            
|                            
|                            
|                            
|                             | Net loss                         |              |        |      |   |            |    |           |  |              |         |            |  |       |        | (2,602 | ) |   |      |   |  |   |         |       |   |   |         | (2,602 | )
|                            
|                            
|                            
|                            
|                             | Issuance of Common Stock         |              |        | 1,298 |   |            |    | 1          |  |              |         | 13,264      |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 13,265 |  
|                            
|                            
|                            
|                            
|                             | Exercise of options              |              |        | 522   |   |            |    |           |  |              |         | 2,223       |  |       |        |       |   |   |      |   |  |   |         |       |   |   |         | 2,223  |  
|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |       |        |        |   |   |      |    |  |   |         |        |   |   |         |       
|Balance at December 31, 1999 |                                  |              | 17,829 |       |   | $          | 18 |            |  | $            | 144,312 |             |  | $     | 22,707 |        |   | $ |     |    |  | $ | (10,005 | )      |   | $ | 157,032 |       
|                             |                                  |              |        |       |   |            |    |            |  |              |         |             |  |       |        |        |   |   |      |    |  |   |         |        |   |   |         |       

See accompanying notes.

F-5



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##### Table of Contents



UTI ENERGY CORP.






CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)


|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |         |        |         |         |  
|------------------------------------------------------ | ------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------------------------ | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------- | ------- | -
|                                                       |                                                                                |                                                                                         
|                                                       |                                                                                | Years Ended December 31,                                                                
|                                                       |                                                                                |                                                                                         
|                                                       |                                                                                | 1999                                                                                     |                               | 1998                                             |        | 1997  
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |       
|CASH FLOWS FROM OPERATING ACTIVITIES                   |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net income (loss)                                                              |                                                                                          | $                             | (2,602                                           | )      |        | $       | 7,868   |        |        | $       | 12,525  |       
|                                                       | Adjustments to reconcile net income to net cash provided by
        operations |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |         |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Depreciation                                                                             |                               |                                                  | 21,924 |        |         |         | 17,630 |        |         |         | 10,410 |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Amortization                                                                             |                               |                                                  | 2,198  |        |         |         | 1,899  |        |         |         | 665    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Deferred income taxes                                                                    |                               |                                                  | 2,208  |        |         |         | 2,549  |        |         |         | 1,012  |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Amortization of debt discount                                                            |                               |                                                  | 475    |        |         |         | 475    |        |         |         | 402    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Stock compensation expense                                                               |                               |                                                  |       |        |         |         | 45     |        |         |         | 56     |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Provisions for bad debts                                                                 |                               |                                                  | 282    |        |         |         | 1,104  |        |         |         | 510    |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                | Gain on disposal of fixed assets                                                         |                               |                                                  | (3,121 | )      |         |         | (579   | )      |         |         | (774   | )      
|                                                       |                                                                                | Change in operating assets and liabilities, net of effect of
        businesses acquired |                               |                                                  |        |        |         |         |        |        |         |         |        |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                |                                                                                          | Receivables and prepaids      |                                                  |        | (4,079 | )       |         |        | 5,445  |         |         |        | (16,670 | )      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                |                                                                                          | Materials and supplies        |                                                  |        | (109   | )       |         |        | 477    |         |         |        | (489    | )      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                |                                                                                          | Accounts payable and accruals |                                                  |        | (1,556 | )       |         |        | (2,622 | )       |         |        | 16,357  |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                |                                                                                          | Other                         |                                                  |        | (1,220 | )       |         |        | (2,723 | )       |         |        | 217     |        
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                       |                                                                                |                                                                                          |                               | Net cash provided by operating activities        |        |        | 14,400  |         |        |        | 31,568  |         |        |         | 24,221  |  
|CASH FLOWS FROM INVESTING ACTIVITIES                   |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Capital expenditures                                                           |                                                                                          |                               | (9,444                                           | )      |        |         | (37,429 | )      |        |         | (18,356 | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Acquisitions, net of cash                                                      |                                                                                          |                               | (7,540                                           | )      |        |         | (34,300 | )      |        |         | (36,847 | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net proceeds from disposition                                                  |                                                                                          |                               | 4,935                                            |        |        |         |        |        |        |         |        |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from sale of property and equipment                                   |                                                                                          |                               | 1,286                                            |        |        |         | 1,530   |        |        |         | 1,373   |       
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                       |                                                                                |                                                                                          |                               | Net cash used by investing activities            |        |        | (10,763 | )       |        |        | (70,199 | )       |        |         | (53,830 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                   |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from issuance of long-term debt                                       |                                                                                          |                               |                                                 |        |        |         |        |        |        |         | 58,900  |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Repayments of long-term debt                                                   |                                                                                          |                               | (7,951                                           | )      |        |         | (52     | )      |        |         | (52,559 | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Repurchased stock                                                              |                                                                                          |                               |                                                 |        |        |         | (10,005 | )      |        |         |        |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from issuance of Common Stock                                         |                                                                                          |                               | 1,524                                            |        |        |         | 678     |        |        |         | 81,045  |       
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                       |                                                                                |                                                                                          |                               | Net cash provided (used) by financing activities |        |        | (6,427  | )       |        |        | (9,379  | )       |        |         | 87,386  |  
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   |                                                                                |                                                                                          | (2,790                        | )                                                |        |        | (48,010 | )       |        |        | 57,777  |        
|                                                      
|                                                      
|                                                      
|                                                      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF
        YEAR |                                                                                |                                                                                          | 10,337                        |                                                  |        |        | 58,347  |         |        |        | 570     |        
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF YEAR               |                                                                                | $                                                                                        | 7,547                         |                                                  |        | $      | 10,337  |         |        | $      | 58,347  |        
|                                                       |                                                                                |                                                                                          |                               |                                                  |        |        |         |         |        |        |         |        
|                                                      
|See accompanying notes.                                |                                                                               

F-6



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##### Table of Contents



UTI ENERGY CORP.






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

UTI Energy Corp. is a leading provider of onshore contract
drilling services to exploration and production companies. UTI
operates one of the largest land drilling rig fleets in the
United States. UTIs drilling operations currently are
concentrated in the prolific oil and natural gas producing basins
 of Texas, Oklahoma, New Mexico and Wyoming. As of
December 31, 1999, UTIs fleet consisted of 125 land
drilling rigs that were well suited to the requirements of its
markets. UTI also provides pressure pumping services in the
Appalachian Basin.

Principles of Consolidation

The consolidated financial statements include the accounts of UTI
 and its subsidiaries. All of UTIs subsidiaries are wholly
owned. Intercompany accounts and transactions have been
eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.

Cash and Cash Equivalents

UTI considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.

Materials and Supplies

Materials and supplies are composed of replacement parts and
supplies held for use in the operations of UTI. Material and
supplies are stated at the lower of cost or market. Cost is
determined by the first in, first out method.

Property and Equipment

Property and equipment are stated at cost. Improvements are
capitalized and depreciated over the period of benefit. UTI
periodically reviews its long-lived assets for impairment.
Provisions for impairment are charged to income when indicators
of impairment are present and when it is considered probable that
 the carrying values of producing asset groups may not be
recovered over their remaining service lives based on estimates
of future net cash flows on an undiscounted basis.

F-7



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##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



1.  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued)


Upon retirement or other disposal of fixed assets, the cost and
related accumulated depreciation are removed from the respective
accounts. Any gains or losses are included in results of
operations. Depreciation is determined by the straight-line
method over the estimated useful lives of the related assets
which are as follows:



| |   |                                     
| | - | ------------------------------------
| |  | buildings  30 years                
|
| |  | building improvements  7-10 years  
|
| |  | machinery and equipment  2-15 years

Goodwill

Excess of cost over the fair value of net assets acquired
(goodwill) is amortized on a straight-line basis over
15 years. UTI periodically assesses goodwill for impairment.
 Goodwill associated with assets acquired in a purchase business
combination is included in impairment evaluations when events or
changes in circumstances indicate that the carrying amount of
those assets may not be recoverable. If this review indicates
that goodwill will not be recoverable, as determined based on the
 estimated undiscounted cash flows of the entity acquired over
the remaining amortization period, the carrying amount of the
goodwill is reduced by the estimated shortfall of cash flows.

Revenue Recognition

Revenues are recognized when services have been performed.
Revenues from footage and turnkey drilling contracts are
recognized using the percentage of completion method of
accounting. Any losses are provided for in the period in which
the loss is determinable.

Stock-Based Compensation

UTI follows the method of accounting for employee stock
compensation plans prescribed by APB No. 25, which is
permitted by Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation
(SFAS 123). In accordance with APB No. 25, UTI has not
recognized compensation expense for stock options. This is
because the exercise price of the options equal the market price
of the underlying stock on the date of grant, which is the
measurement date.

F-8



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##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES  (Continued)

New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
(SFAS 133).  SFAS 133, as amended by
Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging
Activities  Deferral of the Effective Date of FASB
Statement No. 133(SFAS 137), which is effective
for fiscal years beginning after June 15, 2001, and requires
 all derivatives to be recognized at fair value on the balance
sheet. UTI plans to adopt SFAS 133 no later than
January 1, 2001. The change is not expected to have a
significant effect on UTIs financial statements.

Reclassifications

Certain items in the prior years financial statements have
been reclassified to conform with the presentation in the current
 year.

2.  ACQUISITIONS

(a)  Quarles Drilling Corporation

On January 27, 1997, UTI acquired the land drilling assets
of Quarles Drilling Corporation for $16.2 million. This
$16.2 million consisted of $8.1 million in cash and
approximately .7 million shares of UTIs common stock.
The acquisition was accounted for using the purchase
method.  Quarles operating results since
January 27, 1997 have been consolidated with the operating
results of UTI. No goodwill was recorded because the estimated
fair market value of the assets acquired exceeded the purchase
price. The acquired assets consisted of:



| |   |                                                        
| | - | -------------------------------------------------------
| |  | nine land drilling rigs                                
|
| |  | drilling equipment                                     
|
| |  | rig components                                         
|
| |  | other equipment used in Quarles land drilling business

F-9



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##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

2.  ACQUISITIONS  (Continued)

(b)  Southland Drilling Company

On April 11, 1997, UTI acquired the land drilling operations
 of Southland Drilling Company Ltd. for approximately
$27.1 million in cash and a five-year warrant to purchase
 .3 million shares of UTIs common stock at an exercise
price of $16.00 per share. The acquisition was accounted for
 using the purchase method. Southlands operating results
since April 11, 1997 have been consolidated with the
operating results of UTI. Goodwill of $10.1 million has been
 recorded related to this acquisition. The acquired assets
consisted of:



| |   |                                                           
| | - | ----------------------------------------------------------
| |  | nine land drilling rigs                                   
|
| |  | drilling equipment                                        
|
| |  | rig components                                            
|
| |  | other equipment used in Southlands land drilling business

(c)  J.S.M. & Associates, Inc.

On September 11, 1997, UTI acquired all of the capital stock
 of J.S.M. & Associates, Inc. for approximately
 .6 million shares of UTIs common stock and
$2.6 million in cash. The acquisition was accounted for
using the purchase method of accounting. JSMs operating
results since September 11, 1997 have been consolidated with
 the operating results of UTI. Goodwill of $9.1 million has
been recorded related to this acquisition. JSMs assets
included:



| |   |                                                  
| | - | -------------------------------------------------
| |  | seven land drilling rigs                         
|
| |  | drilling equipment                               
|
| |  | approximately $1.0 million in net working capital

(d)  Peterson Drilling Company

On April 9, 1998, UTI acquired Peterson Drilling Company for
 a total purchase price of $20.4 million in cash. The
acquisition has been accounted for under the purchase method of
accounting.  Goodwill of $3.6 million has been
recorded related to this acquisition. Petersons operating
results since April 9, 1998 have been consolidated with the
operating results of UTI. Petersons assets included:



| |   |                                                  
| | - | -------------------------------------------------
| |  | eight land drilling rigs                         
|
| |  | drilling equipment                               
|
| |  | approximately $4.5 million in net working capital

F-10



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



2.  ACQUISITIONS  (Continued)


(e)  LaMunyon Drilling Corporation

On June 24, 1998, UTI acquired the land drilling assets of
LaMunyon Drilling Corporation for $12.2 million in cash. The
 acquisition has been accounted for using the purchase method of
accounting. LaMunyons operating results since June 24,
 1998 have been consolidated with the operating results of UTI.
No goodwill was recorded because the estimated fair market value
of the assets acquired exceed the purchase price. The acquired
assets consisted of:



| |   |                                                       
| | - | ------------------------------------------------------
| |  | five land drilling rigs                               
|
| |  | drilling equipment                                    
|
| |  | rolling stock                                         
|
| |  | other assets used in LaMunyons land drilling business

(f)  Suits Enterprises, Inc.

On July 31, 1998, UTI acquired Suits Enterprises, Inc.
for approximately $11.1 million. This $11.1 million was
 comprised of $2.9 million in cash, $7.8 million in
7% four-year notes and 100,000 five-year warrants of
UTIs common stock. The acquisition has been accounted for
using the purchase method of accounting. Suits operating
results since July 31, 1998 have been consolidated with the
operating results of UTI. No goodwill was recorded because the
estimated fair market value of the assets acquired exceed the
purchase price. Suits assets included:



| |   |                         
| | - | ------------------------
| |  | seven land drilling rigs
|
| |  | drilling equipment      
|
| |  | rolling stock           

(g)  Norton Drilling Services, Inc.

On July 27, 1999, UTI acquired Norton Drilling
Services, Inc., for approximately 1.3 million shares of
 UTIs common stock. UTI also repaid approximately
$8.0 million of Nortons existing debt upon the
acquisition. The acquisition has been accounted for under the
purchase method of accounting. Nortons operating results
since July 27, 1999 have been consolidated with the
operating results of UTI. No goodwill was recorded because the
estimated fair market value of the assets acquired exceed the
purchase price. Nortons assets included:



| |   |                           
| | - | --------------------------
| |  | sixteen land drilling rigs
|
| |  | drilling equipment        
|
| |  | rolling stock             

F-11



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



2.  ACQUISITIONS  (Continued)


(h)  Schneider Drilling Corporation

On December 14, 1999, UTI acquired the land drilling assets
of Schneider Drilling Corporation for $7.5 million in cash.
The acquisition has been accounted for under the purchase method
of accounting. Schneiders operating results since
December 14, 1999 have been consolidated with the operating
results of UTI. No goodwill was recorded because the estimated
fair market value of the assets acquired exceeded the purchase
price. Schneiders assets included:



| |   |                                                       
| | - | ------------------------------------------------------
| |  | three land drilling rigs                              
|
| |  | major components for two additional land drilling rigs
|
| |  | drilling equipment                                    

3.  DISPOSITIONS

In March 1999, UTI sold certain land drilling assets of
International Petroleum Service Company, its wholly owned
subsidiary, to an unrelated party for $5.6 million. A
pre-tax gain of $2.8 million was realized as a result of the
 sale. Included in the sale were:



| |   |                          
| | - | -------------------------
| |  | five land drilling rigs  
|
| |  | related support equipment
|
| |  | rolling stock            
|
| |  | spare parts and supplies 

4.  LONG-TERM DEBT

UTIs long-term debt at December 31, 1999 and 1998
consisted of the following:

|                           |  |                |        |      |  |   |        | 
|-------------------------- |  | -------------- | ------ | ---- |  | - | ------ | 
|                           |  |               
|                           |  | December 31,  
|                           |  |               
|                           |  | 1999           |        | 1998
|                           |  |                |        |     
|                           |  |               
|                           |  | (in thousands)
|                          
|                          
|                          
|                          
|Subordinated notes         |  | $              | 25,000 |      |  | $ | 25,000 | 
|                          
|                          
|                          
|                          
|Promissory notes           |  |                | 7,790  |      |  |   | 7,790  | 
|                           |  |                |        |      |  |   |        | 
|                           |  |                | 32,790 |      |  |   | 32,790 | 
|                          
|                          
|                          
|                          
|Less: unamortized discount |  |                | 594    |      |  |   | 1,069  | 
|                           |  |                |        |      |  |   |        | 
|                           |  | $              | 32,196 |      |  | $ | 31,721 | 
|                           |  |                |        |      |  |   |        | 

F-12



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



4.  LONG-TERM DEBT  (Continued)


Subordinated Notes

On April 11, 1997, UTI issued $25.0 million principal
amount of 12.0% subordinated notes due 2001. The
subordinated notes were issued along with seven-year warrants to
purchase 1.2 million shares of UTIs common stock at an
 exercise price of $10.83 per share. UTI assigned a value of
 $1.4 million to the warrants issued. UTI is amortizing the
cost of the warrants to interest expense over the life of the
borrowing. The subordinated notes contain various affirmative and
 negative covenants customary in such private placements,
including restrictions on:



| |   |                          
| | - | -------------------------
| |  | additional indebtedness  
|
| |  | dividends                
|
| |  | distributions            
|
| |  | other restricted payments

Promissory Notes

On July 31, 1998, UTI issued approximately $7.8 million
 principal amount of unsecured promissory notes. In the event the
 average trading value of UTIs common stock for thirty
consecutive trading days exceeds $30.00 per share, then
$3.5 million of the principal amount becomes payable within
ninety days following the event. The triggering event occurred on
 March 9, 2000. The notes bear interest at 7.0% and mature
on July 31, 2002. The notes were issued in connection with
the acquisition of Suits.

Working Capital Line

UTI entered into a $65.0 million four-year revolving credit
agreement with certain financial institutions on
November 22, 1999. The credit facility calls for periodic
interest at a floating rate ranging from LIBOR plus 1.75% to
LIBOR plus 2.75%. The facility has restrictions customary in
financial instruments of this type including restrictions on
certain investments, acquisitions and loans. If availability
under the facility is less than $15.0 million then covenants
 related to net worth and earnings before income taxes and
depreciation apply. UTIs assets secure the facility. There
were no borrowings under this facility in 1999. UTI incurs a fee
of .375% on the unused facility amount. A $2.6 million
standby letter of credit is issued under this agreement.

Prior to entering into the $65.0 million revolving credit
agreement, UTI maintained a $30.0 million revolving credit
agreement with a bank. There were no borrowings under this
facility in 1998 or 1999. A $1.6 million standby letter of
credit was issued under this agreement.

F-13



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

5.  LEASES

Future minimum payments, for each year and in the aggregate,
under noncancellable operating leases with initial or remaining
terms of one year or more consist of the following at
December 31, 1999 (in thousands):

|                             |  |   |     | 
|---------------------------- |  | - | --- | 
|                            
|                            
|                            
|                            
|2000                         |  | $ | 421 | 
|                            
|                            
|                            
|                            
|2001                         |  |   | 307 | 
|                            
|                            
|                            
|                            
|2002                         |  |   | 203 | 
|                            
|                            
|                            
|                            
|2003                         |  |   | 38  | 
|                             |  |   |     | 
|Total minimum lease payments |  | $ | 969 | 
|                             |  |   |     | 

The following table shows the approximate rental expense for all
operating leases for the last three years:

|     |         |      |  |      |         |  |  |   |         | 
|---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|1999 |         | 1998 |  | 1997
|     |         |      |  |     
|$    | 469,000 |      |  | $    | 511,000 |  |  | $ | 472,000 | 

6.  CONTINGENCIES

UTI is involved in several claims arising in the ordinary course
of business. UTIs management believes that all of these
claims are covered by insurance. UTIs management believes
that these matters will not have a material adverse effect on
UTIs financial position.

UTI is partially self-insured for employee health insurance
claims. UTI was self-insured for workers compensation for certain
 years prior to 1999. UTI incurs a maximum of $100,000 per
employee under medical claims and a maximum of $250,000 per
event for workers compensation claims. Although UTI believes that
 adequate reserves have been provided for expected liabilities
arising from its self-insured obligations, managements
estimates of these liabilities may change in the future as
circumstances develop.

F-14



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

7.  OTHER CHARGES

During 1999 and 1998, UTI incurred charges related to a series of
 actions taken to:



| |   |                                              
| | - | ---------------------------------------------
| |  | improve efficiency                           
|
| |  | increase productivity                        
|
| |  | make UTI more competitive in the market place

The actions included the reduction of regional operating offices
and reductions of UTIs administrative staff. These charges
were $.3 million and $.8 million for the years ended
December 31, 1999 and 1998, respectively. There were no
accruals at December 31, 1999 or December 31, 1998
related to these charges.

8.  INCOME TAXES

Deferred income taxes reflect the tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts for
income tax purposes. Significant components of UTIs
deferred tax assets and liabilities as of December 31, 1999
and 1998, are as follows:

|                     |                                 |                          |   |         |       |  |   |         |       | 
|-------------------- | ------------------------------- | ------------------------ | - | ------- | ----- |  | - | ------- | ----- | 
|                     |                                 |                         
|                     |                                 | December 31,            
|                     |                                 |                         
|                     |                                 | 1999                     |   | 1998   
|                     |                                 |                          |   |        
|                     |                                 |                         
|                     |                                 | (in thousands)          
|                    
|                    
|                    
|                    
|Deferred tax assets: |                                 |                          |   |         |       |  |   |        
|                    
|                    
|                    
|                    
|                     | Alternative minimum tax credits |                          | $ | 614     |       |  | $ | 36      |      
|                    
|                    
|                    
|                    
|                     | Investment tax credits          |                          |   | 21      |       |  |   | 184     |      
|                    
|                    
|                    
|                    
|                     | Accrued expenses                |                          |   | 1,988   |       |  |   | 1,845   |      
|                     |                                 |                          |   |         |       |  |   |        
|                     |                                 | Total deferred tax asset |   |         | 2,623 |  |   |         | 2,065 | 
|                    
|                    
|                    
|                    
|                     | Deferred tax liabilities:       |                          |   |         |       |  |   |         |      
|                    
|                    
|                    
|                    
|                     | Depreciation                    |                          |   | (42,529 | )     |  |   | (33,690 | )    
|                     |                                 |                          |   |         |       |  |   |        
|                     | Net deferred tax liability      |                          | $ | (39,906 | )     |  | $ | (31,625 | )    
|                     |                                 |                          |   |         |       |  |   |        

UTIs investment tax credit carryforwards will expire in
2000 if not utilized. UTI uses the flow-through method for
recognizing investment tax credits. UTIs alternative
minimum tax credit carryforwards may be carried forward
indefinitely. UTIs valuation allowance related to these tax
 credit carryforwards is zero since management believes that
these credits will be utilized to offset future tax. UTIs
management adjusts the valuation allowance as circumstances
change affecting the expected realization of the deferred tax
assets.

F-15



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



8.  INCOME TAXES  (Continued)


The components of the provision for income taxes are as follows:

|          |         |                          |        |        |   |      |       |       |  |   |       |       | 
|--------- | ------- | ------------------------ | ------ | ------ | - | ---- | ----- | ----- |  | - | ----- | ----- | 
|          |         |                         
|          |         | Years Ended December 31,
|          |         |                         
|          |         | 1999                     |        | 1998   |   | 1997
|          |         |                          |        |        |   |     
|          |         |                         
|          |         | (in thousands)          
|         
|         
|         
|         
|Current:  |         |                          |        |        |   |      |       |       |  |   |       |      
|         
|         
|         
|         
|          | Federal |                          | $      | (3,031 | ) |      | $     | 2,372 |  |   | $     | 5,681 | 
|         
|         
|         
|         
|          | State   |                          |        | 398    |   |      |       | 314   |  |   |       | 916   | 
|          |         |                          |        |        |   |      |       |       |  |   |       |      
|          |         |                          | (2,633 | )      |   |      | 2,686 |       |  |   | 6,597 |      
|         
|         
|         
|         
|Deferred: |         |                          |        |        |   |      |       |       |  |   |       |      
|         
|         
|         
|         
|          | Federal |                          |        | 2,281  |   |      |       | 2,540 |  |   |       | 1,005 | 
|         
|         
|         
|         
|          | State   |                          |        | (73    | ) |      |       | 9     |  |   |       | 7     | 
|          |         |                          |        |        |   |      |       |       |  |   |       |      
|          |         |                          | 2,208  |        |   |      | 2,549 |       |  |   | 1,012 |      
|          |         |                          |        |        |   |      |       |       |  |   |       |      
|          |         | $                        | (425   | )      |   | $    | 5,235 |       |  | $ | 7,609 |      
|          |         |                          |        |        |   |      |       |       |  |   |       |      

The difference between tax expense computed at the federal income
 tax rate of 35% for 1999, 1998 and 1997 and actual tax expense
is as follows:

|                                                          |  |                          |        |      |  |      |       |   |  |   |       |  
|--------------------------------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                          |  |                         
|                                                          |  | Years Ended December 31,
|                                                          |  |                         
|                                                          |  | 1999                     |        | 1998 |  | 1997
|                                                          |  |                          |        |      |  |     
|                                                          |  |                         
|                                                          |  | (in thousands)          
|                                                         
|                                                         
|                                                         
|                                                         
|Taxes applied to pre-tax income                           |  | $                        | (1,059 | )    |  | $    | 4,586 |   |  | $ | 7,047 |  
|                                                         
|                                                         
|                                                         
|                                                         
|State income tax                                          |  |                          | 211    |      |  |      | 204   |   |  |   | 595   |  
|                                                         
|                                                         
|                                                         
|                                                         
|Change in statutory tax rate                              |  |                          |       |      |  |      |      |   |  |   | 435   |  
|                                                         
|                                                         
|                                                         
|                                                         
|Permanent differences, principally nondeductible expenses |  |                          | 423    |      |  |      | 588   |   |  |   | 38    |  
|                                                         
|                                                         
|                                                         
|                                                         
|Change in valuation allowance                             |  |                          |       |      |  |      |      |   |  |   | (232  | )
|                                                         
|                                                         
|                                                         
|                                                         
|Other                                                     |  |                          |       |      |  |      | (143  | ) |  |   | (274  | )
|                                                          |  |                          |        |      |  |      |       |   |  |   |       |  
|                                                          |  | $                        | (425   | )    |  | $    | 5,235 |   |  | $ | 7,609 |  
|                                                          |  |                          |        |      |  |      |       |   |  |   |       |  

F-16



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##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

9.  EARNINGS PER SHARE

The following table sets forth the computation of basic and
diluted earnings per share:

|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |        |        | 
|------------ | ------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|             |                                                                     |                                                                                                     
|             |                                                                     | Years Ended December 31,                                                                            
|             |                                                                     |                                                                                                     
|             |                                                                     | 1999                                                                                                 |   | 1998   |        | 1997
|             |                                                                     |                                                                                                      |   |        |        |     
|             |                                                                     |                                                                                                     
|             |                                                                     | (in thousands, except per                                                                           
|             |                                                                     | share amounts)                                                                                      
|            
|            
|            
|            
|Numerator:   |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|            
|            
|            
|            
|             | Net income (loss)                                                   |                                                                                                      | $ | (2,602 | )      |      | $ | 7,868  |        |  | $ | 12,525 |       
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|Denominator: |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|            
|            
|            
|            
|             | Denominator for basic earnings per share 
	weighted-average shares |                                                                                                      |   | 16,992 |        |      |   | 16,070 |        |  |   | 13,083 |       
|            
|            
|            
|            
|             | Effect of dilutive securities:                                      |                                                                                                      |   |        |        |      |   |        |        |  |   |        |       
|            
|            
|            
|            
|             |                                                                     | Stock options                                                                                        |   |        |       |      |   |        | 649    |  |   |        | 1,286  | 
|            
|            
|            
|            
|             |                                                                     | Warrants                                                                                             |   |        |       |      |   |        | 76     |  |   |        | 676    | 
|            
|            
|            
|            
|             |                                                                     | Other                                                                                                |   |        |       |      |   |        |       |  |   |        | 24     | 
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|             |                                                                     | Dilutive potential common shares                                                                     |   |        |       |      |   |        | 725    |  |   |        | 1,986  | 
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|             |                                                                     | Denominator for diluted earnings per share-adjusted
	weighted-average shares and assumed conversions |   |        | 16,992 |      |   |        | 16,795 |  |   |        | 15,069 | 
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|             | Basic earnings (loss) per share                                     |                                                                                                      | $ | (0.15  | )      |      | $ | 0.49   |        |  | $ | 0.96   |       
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       
|             | Diluted earnings (loss) per share                                   |                                                                                                      | $ | (0.15  | )      |      | $ | 0.47   |        |  | $ | 0.83   |       
|             |                                                                     |                                                                                                      |   |        |        |      |   |        |        |  |   |       

Options to purchase 530,000 shares of UTIs common
stock and warrants to purchase 147,000 shares of UTIs
common stock were not included in the computation of diluted
earnings per share for 1999 as the effect would have been
antidilutive due to the net loss for the year.

10.  RELATED-PARTY TRANSACTIONS

A director of UTI is an officer of one of UTIs vendors. UTI
 purchased $2.2 million of supplies, materials and drill
pipe from that vendor during 1999. UTI owed that vendor
$1.2 million at December 31, 1999.

UTI has employment contracts with certain of its executive
officers.

F-17



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

11.  SUPPLEMENTAL CASH FLOW INFORMATION

|                                            |                                                                         |                          |   |        |  |  |   |       | 
|------------------------------------------- | ----------------------------------------------------------------------- | ------------------------ | - | ------ |  |  | - | ----- | 
|                                            |                                                                         |                         
|                                            |                                                                         | Years Ended December 31,
|                                            |                                                                         |                         
|                                            |                                                                         | 1999                     |   | 1998  
|                                            |                                                                         |                          |   |       
|                                            |                                                                         |                         
|                                            |                                                                         | (in thousands)          
|                                           
|                                           
|                                           
|                                           
|Noncash Investing and Financing Activities: |                                                                         |                          |   |        |  |  |   |      
|                                           
|                                           
|                                           
|                                           
|                                            | Tax benefit of exercised stock options reflected in additional
	capital |                          | $ | 699    |  |  | $ | 828   | 
|                                           
|                                           
|                                           
|                                           
|                                            | Peterson acquisition, deferred tax liability recorded                   |                          |   |       |  |  |   | 7,360 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Suits acquisition with long-term debt issued                            |                          |   |       |  |  |   | 7,790 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Suits acquisition with warrants granted                                 |                          |   |       |  |  |   | 411   | 
|                                           
|                                           
|                                           
|                                           
|                                            | Suits acquisition, deferred tax liability recorded                      |                          |   |       |  |  |   | 6,460 | 
|                                           
|                                           
|                                           
|                                           
|                                            | Norton acquisition with UTI common stock                                |                          |   | 13,284 |  |  |   |      | 
|                                           
|                                           
|                                           
|                                           
|                                            | Norton acquisition, deferred tax liability recorded                     |                          |   | 6,073  |  |  |   |      | 

|                                 |              |                          |   |       |  |      |   |       |  |  |   |       | 
|-------------------------------- | ------------ | ------------------------ | - | ----- |  | ---- | - | ----- |  |  | - | ----- | 
|                                 |              |                         
|                                 |              | Years Ended December 31,
|                                 |              |                         
|                                 |              | 1999                     |   | 1998  |  | 1997
|                                 |              |                          |   |       |  |     
|                                 |              |                         
|                                 |              | (in thousands)          
|                                
|                                
|                                
|                                
|Cash Paid During the Period for: |              |                          |   |       |  |      |   |       |  |  |   |      
|                                
|                                
|                                
|                                
|                                 | Interest     |                          | $ | 3,561 |  |      | $ | 3,239 |  |  | $ | 3,523 | 
|                                
|                                
|                                
|                                
|                                 | Income taxes |                          |   | 964   |  |      |   | 7,996 |  |  |   | 1,624 | 

12.  WARRANTS

The following warrants to purchase UTI common stock were
outstanding at December 31, 1999:

|                      |  |           |         |          |  |            |             |  |  |  |                       | 
|--------------------- |  | --------- | ------- | -------- |  | ---------- | ----------- |  |  |  | --------------------- | 
|Related               |  | Number of |         | Exercise |  | Expiration
|Event                 |  | Shares    |         | Price    |  | Date      
|                      |  |           |         |          |  |           
|Subordinated Notes    |  |           | 480,000 |          |  | $          | 10.83       |  |  |  | April 11, 2004        | 
|                     
|                     
|                     
|                     
|Southland Acquisition |  |           | 195,000 |          |  |            | 16.00       |  |  |  | April 11, 2002        | 
|                     
|                     
|                     
|                     
|Suits Acquisition     |  |           | 100,000 |          |  |            | 26.50-35.00 |  |  |  | July 31, 2003         | 
|                     
|                     
|                     
|                     
|Norton Acquisition    |  |           | 36,264  |          |  |            | 9.50-14.82  |  |  |  | February 24, 2004 and | 
|                      |  |           |         |          |  |            |             |  |  |  | April 1, 2002         | 

F-18



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

13.  STOCK PLANS

UTI has authorized options to purchase UTI common stock under the
 following stock plans:

|                                        |  |                    |           |               |  |  |         | 
|--------------------------------------- |  | ------------------ | --------- | ------------- |  |  | ------- | 
|                                        |  |                    |           | Options      
|                                        |  |                    |           | Available for
|Plan Name                               |  | Authorized Options |           | Future Grants
|                                        |  |                    |           |              
|1993 Non-Qualified Stock Option Plan    |  |                    | 1,459,800 |               |  |  | 0       | 
|                                       
|                                       
|                                       
|                                       
|Remy Investors Stock Option Agreement   |  |                    | 360,000   |               |  |  | 0       | 
|                                       
|                                       
|                                       
|                                       
|Non-Employee Director Stock Option Plan |  |                    | 300,000   |               |  |  | 217,500 | 
|                                       
|                                       
|                                       
|                                       
|1996 Employee Stock Option Plan         |  |                    | 900,000   |               |  |  | 92,300  | 
|                                       
|                                       
|                                       
|                                       
|1997 Long-Term Incentive Plan           |  |                    | 1,500,000 |               |  |  | 370,250 | 
|                                       
|                                       
|                                       
|                                       
|Norton 1997 Stock Option Plan           |  |                    | 106,825   |               |  |  | 0       | 

Other pertinent data related to the stock option plans are as
follows:

|                                        |  |         |           |      |  |  |            | 
|--------------------------------------- |  | ------- | --------- | ---- |  |  | ---------- | 
|Plan Name                               |  | Vesting |           | Term
|                                        |  |         |           |     
|1993 Non-Qualified Stock Option Plan    |  |         | 5 years   |      |  |  | 5 years    | 
|                                       
|                                       
|                                       
|                                       
|Remy Investors Stock Option Agreement   |  |         | Immediate |      |  |  | 5 years    | 
|                                       
|                                       
|                                       
|                                       
|Non-Employee Director Stock Option Plan |  |         | 1 year    |      |  |  | 5 years    | 
|                                       
|                                       
|                                       
|                                       
|1996 Employee Stock Option Plan         |  |         | 1-5 years |      |  |  | 5-10 years | 
|                                       
|                                       
|                                       
|                                       
|1997 Long-Term Incentive Plan           |  |         | 1-5 years |      |  |  | 5-10 years | 
|                                       
|                                       
|                                       
|                                       
|Norton 1997 Stock Option Plan           |  |         | 3 years   |      |  |  | 10 years   | 

SFAS 123 requires that pro forma information regarding net
income and earnings per share be presented as if UTI had
accounted for its employee stock options under the fair value
method as defined in that Statement for options granted or
modified after December 31, 1994. The fair value for
applicable options was estimated at the date of grant using a
Black-Scholes option pricing model with the following
weighted-average assumptions:

|                             |  |      |           |      |  |      |            |   |  |  |            |  
|---------------------------- |  | ---- | --------- | ---- |  | ---- | ---------- | - |  |  | ---------- | -
|                             |  | 1999 |           | 1998 |  | 1997
|                             |  |      |           |      |  |     
|Risk-free interest rates:    |  |      | 4.53      | %    |  |      | 4.91       | % |  |  | 5.11       | %
|                            
|                            
|                            
|                            
|Dividend yield:              |  |      | 0.00      | %    |  |      | 0.00       | % |  |  | 0.00       | %
|                            
|                            
|                            
|                            
|Volatility factors:          |  |      | 1.219     |      |  |      | .669       |   |  |  | .529       |  
|                            
|                            
|                            
|                            
|Expected life of the option: |  |      | 2.0 years |      |  |      | 3.20 years |   |  |  | 2.60 years |  

F-19



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##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

13.  STOCK PLANS  (Continued)

The Black-Scholes option valuation model was developed for use in
 estimating the fair value of traded options which have no
vesting restriction and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
UTIs management believes that the existing models do not
necessarily provide a reliable single measure of the fair value
of its employee stock options because:



| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | UTIs employee stock options have characteristics
	significantly different from those of trade options
|
| |  | changes in the subjective input assumptions can materially affect
	 the fair value estimate           

For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options
vesting period. UTIs pro forma information follows:

|                                                         |         |                                 |        |       |   |      |       |      |  |   |        |      | 
|-------------------------------------------------------- | ------- | ------------------------------- | ------ | ----- | - | ---- | ----- | ---- |  | - | ------ | ---- | 
|                                                         |         |                                
|                                                         |         | Years Ended December 31,       
|                                                         |         |                                
|                                                         |         | 1999                            |        | 1998  |   | 1997
|                                                         |         |                                 |        |       |   |     
|                                                         |         |                                
|                                                         |         | (in thousands, except per share
|                                                         |         | amounts)                       
|                                                        
|                                                        
|                                                        
|                                                        
|Pro forma net income (loss)                              |         | $                               | (4,381 | )     |   | $    | 5,105 |      |  | $ | 10,359 |     
|                                                         |         |                                 |        |       |   |      |       |      |  |   |        |     
|Pro forma earnings (loss) per share:                     |         |                                 |        |       |   |      |       |      |  |   |        |     
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Basic   |                                 | $      | (0.26 | ) |      | $     | 0.32 |  |   | $      | 0.79 | 
|                                                         |         |                                 |        |       |   |      |       |      |  |   |        |     
|                                                         | Diluted |                                 | $      | (0.26 | ) |      | $     | 0.30 |  |   | $      | 0.69 | 
|                                                         |         |                                 |        |       |   |      |       |      |  |   |        |     
|Weighted-average fair value of options granted per share |         | $                               | 6.84   |       |   | $    | 5.12  |      |  | $ | 8.72   |     

F-20



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

13.  STOCK PLANS  (Continued)

A summary of UTIs stock option activity and related
information for the years ended December 31 follows:

|                               |           |        |           |           |   |   |       |       | 
|------------------------------ | --------- | ------ | --------- | --------- | - | - | ----- | ----- | 
|                               |           |        |           | Weighted-
|                               |           | Shares |           | Average  
|                               |           | Under  |           | Exercise 
|                               |           | Option |           | Price    
|                               |           |        |           |          
|Outstanding, December 31, 1996 |           |        | 1,569,630 |           |   | $ | 2.43  |      
|                              
|                              
|                              
|                              
|                               | Granted   |        |           | 997,825   |   |   |       | 21.22 | 
|                              
|                              
|                              
|                              
|                               | Exercised |        |           | (592,980  | ) |   |       | 2.02  | 
|                               |           |        |           |           |   |   |       |      
|Outstanding, December 31, 1997 |           |        | 1,974,475 |           |   |   | 12.05 |      
|                              
|                              
|                              
|                              
|                               | Granted   |        |           | 1,006,375 |   |   |       | 10.51 | 
|                              
|                              
|                              
|                              
|                               | Exercised |        |           | (156,480  | ) |   |       | 4.33  | 
|                              
|                              
|                              
|                              
|                               | Canceled  |        |           | (907,125  | ) |   |       | 22.17 | 
|                               |           |        |           |           |   |   |       |      
|Outstanding, December 31, 1998 |           |        | 1,917,245 |           |   |   | 7.05  |      
|                              
|                              
|                              
|                              
|                               | Granted   |        |           | 742,877   |   |   |       | 11.14 | 
|                              
|                              
|                              
|                              
|                               | Exercised |        |           | (521,555  | ) |   |       | 2.92  | 
|                              
|                              
|                              
|                              
|                               | Canceled  |        |           | (34,031   | ) |   |       | 10.78 | 
|                               |           |        |           |           |   |   |       |      
|Outstanding, December 31, 1999 |           |        | 2,104,536 |           |   | $ | 9.47  |      
|                               |           |        |           |           |   |   |       |      
|Exercisable, December 31,      |           |        |           |           |   |   |       |      
|                              
|                              
|                              
|                              
|                               | 1996      |        |           | 923,040   |   |   | $     | 1.88  | 
|                              
|                              
|                              
|                              
|                               | 1997      |        |           | 1,123,172 |   |   |       | 7.85  | 
|                              
|                              
|                              
|                              
|                               | 1998      |        |           | 1,302,620 |   |   |       | 5.45  | 
|                              
|                              
|                              
|                              
|                               | 1999      |        |           | 1,045,674 |   |   |       | 8.16  | 

Exercise price for options outstanding as of December 31,
1999, ranged from $1.79 per share to $28.50 per share.
The weighted-average remaining contractual life of those options
is 7.06 years.

F-21



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

14.  DEFINED CONTRIBUTION PLANS

UTI maintains defined contribution plans for the benefit of its
employees. Prior to January 1, 2000, employees were eligible
 to participate upon reaching 21 years of age and completion
 of one year of service with 1,000 or more active work hours.
Effective January 1, 2000, employees are eligible to
participate after one hour of service without regard to their
age. UTI matches $.50 for each dollar contributed by the employee
 up to 4% of the employees total annual compensation. UTI
may make an additional discretionary contribution. The following
table shows the matching contributions that UTI made for the last
 three years:

|     |         |      |  |      |         |  |  |   |         | 
|---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|1999 |         | 1998 |  | 1997
|     |         |      |  |     
|$    | 289,000 |      |  | $    | 298,000 |  |  | $ | 396,000 | 

15.  FINANCIAL INSTRUMENTS

Cash, cash equivalents and trade accounts receivable are the
financial instruments that potentially subject UTI to significant
 concentrations of credit risk. UTI performs ongoing credit
evaluations of its customers and generally does not require
material collateral. UTI provides allowances for potential credit
 losses when necessary.

UTI maintains cash balances with various financial institutions.
These financial institutions are located throughout the country.
UTIs policy is designed to limit exposure to any one
institution. However, at December 31, 1999, UTI had 75% of
its cash and cash equivalents in one institution. UTI performs
periodic evaluations of the relative credit standing of those
financial institutions to ensure high credit quality.

Cash and cash equivalents, accounts receivable and accounts
payable: The carrying amounts reported in the balance sheets
approximate fair value.

Long-term debt: The carrying amounts included in the
balance sheets of UTIs borrowings under its subordinated
notes and promissory notes approximate fair value. The fair value
 of the subordinated notes and the promissory notes are estimated
 to be $33.2 million versus its carrying value of
$32.2 million. The fair value was estimated by management
based upon estimates of current interest rates available at the
balance sheet date for similar issues.

F-22



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

16.  INDUSTRY SEGMENT INFORMATION

UTI has two reportable segments: land drilling and pressure
pumping. Reportable segments are business units that offer
different services.

UTI evaluates performance and allocates resources based on profit
 or loss from operations before other income or expense and
income taxes. The accounting policies of the reportable segments
are the same as those described in the summary of significant
accounting policies.

The other category in the segment breakdown is attributable to
investments in oil and gas properties. This segment has not met
the quantitative thresholds for determining reportable segments.
There are no intersegment sales and transfers.

|                                     |                     |                          |         |         |   |      |         |         |   |   |         |         |  
|------------------------------------ | ------------------- | ------------------------ | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                     |                     |                         
|                                     |                     | Years Ended December 31,
|                                     |                     |                         
|                                     |                     | 1999                     |         | 1998    |   | 1997
|                                     |                     |                          |         |         |   |     
|                                     |                     |                         
|                                     |                     | (in thousands)          
|                                    
|                                    
|                                    
|                                    
|Revenues:                            |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Land Drilling       |                          | $       | 134,870 |   |      | $       | 162,600 |   |   | $       | 161,265 |  
|                                    
|                                    
|                                    
|                                    
|                                     | Pressure Pumping    |                          |         | 20,721  |   |      |         | 23,365  |   |   |         | 20,923  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Other               |                          |         | 184     |   |      |         | 192     |   |   |         | 249     |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     | $                        | 155,775 |         |   | $    | 186,157 |         |   | $ | 182,437 |        
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|Selling, General and Administrative: |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Land Drilling       |                          | $       | 2,818   |   |      | $       | 3,767   |   |   | $       | 4,206   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Pressure Pumping    |                          |         | 3,457   |   |      |         | 3,216   |   |   |         | 2,945   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Other               |                          |         |        |   |      |         |        |   |   |         |        |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     |                          | 6,275   |         |   |      | 6,983   |         |   |   | 7,151   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate           |                          |         | 3,895   |   |      |         | 3,798   |   |   |         | 2,860   |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     | $                        | 10,170  |         |   | $    | 10,781  |         |   | $ | 10,011  |        
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|Operating Income (Loss):             |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Land Drilling(1)    |                          | $       | (1,953  | ) |      | $       | 13,915  |   |   | $       | 21,499  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Pressure Pumping(1) |                          |         | 3,662   |   |      |         | 5,098   |   |   |         | 4,540   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Other(1)            |                          |         | 39      |   |      |         | 19      |   |   |         | 91      |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     |                          | 1,748   |         |   |      | 19,032  |         |   |   | 26,130  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other Charge        |                          |         | (260    | ) |      |         | (785    | ) |   |         |        |  
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate           |                          |         | (4,053  | ) |      |         | (3,263  | ) |   |         | (2,901  | )
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     | $                        | (2,565  | )       |   | $    | 14,984  |         |   | $ | 23,229  |        
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|Depreciation and Amortization:       |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Land Drilling       |                          | $       | 22,490  |   |      | $       | 18,350  |   |   | $       | 10,252  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Pressure Pumping    |                          |         | 1,391   |   |      |         | 1,043   |   |   |         | 728     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Other               |                          |         | 82      |   |      |         | 58      |   |   |         | 54      |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     |                          | 23,963  |         |   |      | 19,451  |         |   |   | 11,034  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate           |                          |         | 159     |   |      |         | 78      |   |   |         | 41      |  
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        
|                                     |                     | $                        | 24,122  |         |   | $    | 19,529  |         |   | $ | 11,075  |        
|                                     |                     |                          |         |         |   |      |         |         |   |   |         |        

F-23



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)



16.  INDUSTRY SEGMENT INFORMATION  (Continued)


|                      |                  |                          |       |       |  |      |        |        |  |   |        |        | 
|--------------------- | ---------------- | ------------------------ | ----- | ----- |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                      |                  |                         
|                      |                  | Years Ended December 31,
|                      |                  |                         
|                      |                  | 1999                     |       | 1998  |  | 1997
|                      |                  |                          |       |       |  |     
|                      |                  |                         
|                      |                  | (in thousands)          
|                     
|                     
|                     
|                     
|Capital Expenditures: |                  |                          |       |       |  |      |        |        |  |   |        |       
|                     
|                     
|                     
|                     
|                      | Land Drilling    |                          | $     | 7,116 |  |      | $      | 32,912 |  |   | $      | 16,282 | 
|                     
|                     
|                     
|                     
|                      | Pressure Pumping |                          |       | 2,307 |  |      |        | 3,895  |  |   |        | 1,676  | 
|                     
|                     
|                     
|                     
|                      | Other            |                          |       |      |  |      |        | 50     |  |   |        | 136    | 
|                      |                  |                          |       |       |  |      |        |        |  |   |        |       
|                      |                  |                          | 9,423 |       |  |      | 36,857 |        |  |   | 18,094 |       
|                     
|                     
|                     
|                     
|                      | Corporate        |                          |       | 21    |  |      |        | 572    |  |   |        | 262    | 
|                      |                  |                          |       |       |  |      |        |        |  |   |        |       
|                      |                  | $                        | 9,444 |       |  | $    | 37,429 |        |  | $ | 18,356 |       
|                      |                  |                          |       |       |  |      |        |        |  |   |        |       

|                |                  |                |         |              |  |   |         |         | 
|--------------- | ---------------- | -------------- | ------- | ------------ |  | - | ------- | ------- | 
|                |                  | December 31,   |         | December 31,
|                |                  | 1999           |         | 1998        
|                |                  |                |         |             
|                |                  |               
|                |                  | (in thousands)
|               
|               
|               
|               
|Segment Assets: |                  |                |         |              |  |   |         |        
|               
|               
|               
|               
|                | Land Drilling    |                | $       | 233,341      |  |   | $       | 204,283 | 
|               
|               
|               
|               
|                | Pressure Pumping |                |         | 16,399       |  |   |         | 14,799  | 
|               
|               
|               
|               
|                | Other            |                |         | 318          |  |   |         | 404     | 
|                |                  |                |         |              |  |   |         |        
|                |                  |                | 250,058 |              |  |   | 219,486 |        
|               
|               
|               
|               
|                | Corporate        |                |         | 10,524       |  |   |         | 14,535  | 
|                |                  |                |         |              |  |   |         |        
|                |                  | $              | 260,582 |              |  | $ | 234,021 |        
|                |                  |                |         |              |  |   |         |        



---



|    |                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Operating income is total operating revenues less operating
	expenses, depreciation and amortization and does not include
	general corporate expenses, other charge, interest or income
	taxes.

One customer of UTIs land drilling segment, Anadarko
Petroleum Corp., represented approximately 10% of
consolidated revenue in 1999 and 11% of consolidated revenue
 in 1998. Furthermore, Anadarko represented approximately
10% of total accounts receivable at December 31, 1998.

F-24



---



##### Table of Contents



UTI ENERGY CORP.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

17.  SELECTED QUARTERLY FINANCIAL RESULTS (Unaudited)

Quarterly financial information for the years ended
December 31, 1999, 1998 and 1997 is as follows:

|     |                              |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |         |       |  
|---- | ---------------------------- | ---------------------------------------- | - | ------- | ----- | ------- | - | ------- | ----- | ----- | - | ------ | ----- | - | - | ------ | ----- | - | - | ------- | ----- | -
|     |                              | 1st Qtr                                  |   | 2nd Qtr |       | 3rd Qtr |   | 4th Qtr |       | Total
|     |                              |                                          |   |         |       |         |   |         |       |      
|     |                              |                                         
|     |                              | (in thousands, except per share amounts)
|1999 |                              |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |        
|    
|    
|    
|    
|     | Revenues                     |                                          | $ | 32,536  |       |         | $ | 28,884  |       |       | $ | 42,396 |       |   | $ | 51,959 |       |   | $ | 155,775 |      
|    
|    
|    
|    
|     | Gross Profit                 |                                          |   | 6,629   |       |         |   | 5,868   |       |       |   | 9,133  |       |   |   | 10,905 |       |   |   | 32,535  |      
|    
|    
|    
|    
|     | Net Income (Loss)            |                                          |   | (256    | )     |         |   | (2,928  | )     |       |   | (355   | )     |   |   | 937    |       |   |   | (2,602  | )    
|     | Earnings (Deficit) Per Share |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |         |      
|    
|    
|    
|    
|     |                              | Basic                                    |   |         | (0.02 | )       |   |         | (0.18 | )     |   |        | (0.02 | ) |   |        | 0.05  |   |   |         | (0.15 | )
|    
|    
|    
|    
|     |                              | Diluted                                  |   |         | (0.02 | )       |   |         | (0.18 | )     |   |        | (0.02 | ) |   |        | 0.05  |   |   |         | (0.15 | )
|1998 |                              |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |        
|    
|    
|    
|    
|     | Revenues                     |                                          | $ | 48,317  |       |         | $ | 48,403  |       |       | $ | 48,690 |       |   | $ | 40,747 |       |   | $ | 186,157 |      
|    
|    
|    
|    
|     | Gross Profit                 |                                          |   | 12,927  |       |         |   | 13,088  |       |       |   | 12,426 |       |   |   | 8,781  |       |   |   | 47,222  |      
|    
|    
|    
|    
|     | Net Income (Loss)            |                                          |   | 3,547   |       |         |   | 3,102   |       |       |   | 1,624  |       |   |   | (405   | )     |   |   | 7,868   |      
|     | Earnings (Deficit) Per Share |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |         |      
|    
|    
|    
|    
|     |                              | Basic                                    |   |         | 0.22  |         |   |         | 0.19  |       |   |        | 0.10  |   |   |        | (0.03 | ) |   |         | 0.49  |  
|    
|    
|    
|    
|     |                              | Diluted                                  |   |         | 0.21  |         |   |         | 0.18  |       |   |        | 0.10  |   |   |        | (0.03 | ) |   |         | 0.47  |  
|1997 |                              |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |        
|    
|    
|    
|    
|     | Revenues                     |                                          | $ | 34,368  |       |         | $ | 42,440  |       |       | $ | 50,310 |       |   | $ | 55,319 |       |   | $ | 182,437 |      
|    
|    
|    
|    
|     | Gross Profit                 |                                          |   | 6,750   |       |         |   | 9,184   |       |       |   | 12,987 |       |   |   | 16,017 |       |   |   | 44,938  |      
|    
|    
|    
|    
|     | Net Income                   |                                          |   | 1,844   |       |         |   | 1,777   |       |       |   | 3,894  |       |   |   | 5,010  |       |   |   | 12,525  |      
|     | Earnings Per Share           |                                          |   |         |       |         |   |         |       |       |   |        |       |   |   |        |       |   |   |         |      
|    
|    
|    
|    
|     |                              | Basic                                    |   |         | 0.16  |         |   |         | 0.15  |       |   |        | 0.31  |   |   |        | 0.30  |   |   |         | 0.96  |  
|    
|    
|    
|    
|     |                              | Diluted                                  |   |         | 0.14  |         |   |         | 0.13  |       |   |        | 0.26  |   |   |        | 0.28  |   |   |         | 0.83  |  

F-25



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##### Table of Contents



UTI ENERGY CORP.






SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS


|                             |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |   |       | 
|---------------------------- | ----------------------------- | ------------------------------- |  | ------------ | ----- | ----------- |  | ---------- | ----- | --------- |  | - | --- |  |  | - | ----- | - |  | - | ----- | 
|                             |                               |                                 |  |              |       |             |  |           
|                             |                               |                                 |  | Additions(1) |       |             |  |           
|                             |                               |                                 |  |              |       |             |  |           
|                             |                               | Balance at                      |  | Charged to   |       | Charged to  |  |            |       | Balance  
|                             |                               | Beginning                       |  | Costs and    |       | Acquisition |  |            |       | at End of
|Description                  |                               | of Period                       |  | Expenses     |       | Costs       |  | Deductions |       | Period   
|                             |                               |                                 |  |              |       |             |  |            |       |          
|                             |                               |                                
|                             |                               | (in thousands)                 
|Year Ended December 31, 1999 |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  
|                            
|                            
|                            
|                            
|                             | Deducted from asset accounts: |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |   |      
|                            
|                            
|                            
|                            
|                             |                               | Allowance for doubtful accounts |  | $            | 1,919 |             |  | $          | 548   |           |  | $ | 942 |  |  | $ | 266(2 | ) |  | $ | 3,143 | 
|                             |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  
|Year Ended December 31, 1998 |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  
|                            
|                            
|                            
|                            
|                             | Deducted from asset accounts: |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |   |      
|                            
|                            
|                            
|                            
|                             |                               | Allowance for doubtful accounts |  | $            | 815   |             |  | $          | 1,143 |           |  | $ |    |  |  | $ | 39(2  | ) |  | $ | 1,919 | 
|                             |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  
|Year Ended December 31, 1997 |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  
|                            
|                            
|                            
|                            
|                             | Deducted from asset accounts: |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |   |      
|                            
|                            
|                            
|                            
|                             |                               | Allowance for doubtful accounts |  | $            | 305   |             |  | $          | 623   |           |  | $ |    |  |  | $ | 113(2 | ) |  | $ | 815   | 
|                             |                               |                                 |  |              |       |             |  |            |       |           |  |   |     |  |  |   |       |   |  |  



---



|    |                                    
|--- | -----------------------------------
|(1) | Net of recoveries.                 
|   
|(2) | Uncollectible accounts written off.

S-1



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 of the Securities
 Exchange Act of 1934, UTI has duly caused this report to be
signed on its behalf by the undersigned, who has been duly
authorized.



| |                 
| | ----------------
| | UTI ENERGY CORP.



| |     |                   
| | --- | ------------------
| | By: | /s/ VAUGHN E. DRUM

| |                                     
| | ------------------------------------
| |                                     
| | Vaughn E. Drum, President,          
| | Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.

|                                           |  |                                                              |  |               
|------------------------------------------ |  | ------------------------------------------------------------ |  | --------------
|Signature                                  |  | Title                                                        |  | Date          
|                                           |  |                                                              |  |               
|                                          
|/s/ MARK S. SIEGELMark S. Siegel           |  | Chairman and Director                                        |  | March 24, 2000
|                                          
|/s/ VAUGHN E. DRUMVaughn E. Drum           |  | President, Chief Executive Officer and Director              |  | March 24, 2000
|                                          
|/s/ JOHN E. VOLLMER IIIJohn E. Vollmer III |  | Senior Vice President, Treasurer and Chief Financial Officer |  | March 24, 2000
|                                          
|/s/ BRUCE SAUERSBruce Sauers               |  | Vice President and Chief Accounting Officer                  |  | March 24, 2000
|                                          
|/s/ KENNETH N. BERNSKenneth N. Berns       |  | Director                                                     |  | March 24, 2000
|                                          
|/s/ CURTIS W. HUFFCurtis W. Huff           |  | Director                                                     |  | March 24, 2000
|                                          
|Terry H. Hunt                              |  | Director                                                     |  |               
|                                          
|Nadine C. Smith                            |  | Director                                                     |  |               
|                                          
|/s/ ROBERT B. SPEARSRobert B. Spears       |  | Director                                                     |  | March 24, 2000



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##### Table of Contents



EXHIBIT INDEX

|               |     |                      |  |                                                                                                                                                                                                                                                                                                                       
|-------------- | --- | -------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |     | Title or Description
|               |     |                     
|               | 3.1 |                      |  |  Restated Certificate of Incorporation of UTI
	(incorporated by reference to Amendment No. 1 to UTIs
	Registration Statement on Form S-1 (No. 33-69726)).                                                                                                                                                           
|               | 3.2 |                      |  |  Amendment to Restated Certificate of Incorporation
	(incorporated by reference to Amendment No. 1 to UTIs
	Registration Statement on Form S-1 (No. 33-69726)).                                                                                                                                                     
|               | 3.3 |                      |  |  Amendment to Restated Certificate of Incorporation
	(incorporated by reference to UTIs Annual Report on
	Form 10-K for the year ended December 31, 1994).                                                                                                                                                          
|               | 3.4 |                      |  |  Amendment to Restated Certificate of Incorporation,
	dated August 28, 1997 (incorporated by reference to
	Exhibit  3.4 to UTIs Registration Statement on
	Form S-3 (No.  333-35109)).                                                                                                                              
|               | 3.5 |                      |  |  By-laws of UTI, as amended (incorporated by reference
	 to Exhibit 3.3 to UTIs Annual Report on
	Form 10-K for the year ended December 31, 1993).                                                                                                                                                                  
|               | 3.6 |                      |  |  Rights Agreement, dated February 26, 1999,
	between UTI Energy Corp. and ChaseMellon Shareholder
	Services,  L.L.C. as Rights Agent (incorporated by reference
	 to Exhibit 4.1 to UTIs Current Report on
	Form 8-K, dated February 26, 1999, filed with the
	Securities and Exchange Commission on March 4, 1999).
|               | 3.7 |                      |  |  Certificate of Designation, Powers, Preferences and
	Rights of Series I Preferred Stock, dated February 26,
	1999 (incorporated by reference to Exhibit 4.2 to UTIs
	 Current Report on Form 8-K, dated February 26, 1999,
	filed with the Securities and Exchange Commission on
	March 4, 1999).                  
|               | 3.8 |                      |  |  Form of Right Certificate (incorporated by reference
	to Exhibit 4.3 to UTIs Current Report on
	Form 8-K, dated February 26, 1999, filed with the
	Securities and Exchange Commission on March 4, 1999).                                                                                                           
|               | 4.1 |                      |  |  See Exhibit No. 3.1 through 3.8 for
	provisions of the Restated Certificate of Incorporation and
	amended By-laws of UTI defining the rights of the holders of
	Common Stock.                                                                                                                                       
|               | 4.2 |                      |  |  Form of Common Stock Certificate (incorporated by
	reference to Amendment No. 1 to UTIs Registration
	Statement on Form S-1 (No. 33-69726)).                                                                                                                                                                       
|               | 4.3 |                      |  |  Registration Rights Agreement with Bear
	Stearns & Co.  Inc., dated March 25, 1994, as
	assigned to Remy Capital Partners III, L.P.
	(incorporated by reference to Exhibit 10.17 to UTIs
	Annual Report on Form 10-K for the year ended
	December 31, 1993).                                                       
|               | 4.4 |                      |  |  Stock Option Agreement, dated December 19, 1995,
	 between UTI and Remy Consultants Incorporated (incorporated by
	reference to Exhibit 2 to UTIs Amendment No. 1 to
	 Schedule 13D dated August 8, 1996).                                                                                                         



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##### Table of Contents



|        |            |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---------- | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |                     
|Number  |            | Title or Description
|        |            |                     
|        | 4.5(1)     |                      |  |  Amended and Restated UTI Energy Corp. 1996 Employee
	Stock Option Plan (incorporated by reference to Exhibit 4.6
	to UTIs Annual Report on Form 10-K for the year ended
	December 31, 1997).                                                                                                                                                                                                                                                                                                        
|        | 4.6        |                      |  |  Note Purchase Agreement, dated April 11, 1997,
	by and among FWA Drilling Company, Inc., International
	Petroleum Service Company, Triad Drilling Company, Universal Well
	 Services, Inc., USC, Incorporated, Panther
	Drilling, Inc. and Canpartners Investments IV,  LLC
	(incorporated by reference to Schedule 13D relating to UTI
	filed on April 22, 1997 by Canpartners Investments
	IV, LLC, Canpartners Incorporated, Mitchell  R. Julis,
	Joshua S. Friedman and R. Christian B. Evensen).
|        | 4.7        |                      |  |  Note, dated April 11, 1997, payable by FWA
	Drilling Company, Inc., International Petroleum Service
	Company, Triad Drilling Company, Universal Well
	Services, Inc., USC, Incorporated and Panther
	Drilling, Inc. to Canpartners Investments IV, LLC
	(incorporated by reference to Exhibit 10.5 to UTIs
	Current Report on Form 8-K dated April 11, 1997).                                                                                                                                       
|        | 4.8        |                      |  |  Warrant Agreement, dated April 11, 1997, by and
	between UTI Energy Corp. and Southland Drilling
	Company, Ltd. (incorporated by reference to
	Exhibit 10.1 to UTIs Current Report on Form 8-K
	dated April 11, 1997).                                                                                                                                                                                                                                                                              
|        | 4.9(1)     |                      |  |  Amended and Restated UTI Energy Corp. Non-Employee
	Director Stock Option Plan (incorporated by reference to
	Exhibit 4.18 to UTIs Annual Report on Form 10-K
	for the year ended December 31, 1997).                                                                                                                                                                                                                                                                                               
|        | 4.10(1)    |                      |  |  Amended and Restated 1997 Long-Term Incentive Plan
	(incorporated by reference to Exhibit 4.2 to UTIs
	Annual Report on Form 10-K for the year ended December 
	 31, 1997).                                                                                                                                                                                                                                                                                                                         
|        | 4.11(1)(2) |                      |  |  Amendment No. 1 to the Amended and Restated 1997
	 Long-Term Incentive Plan, adopted by the Board of Directors on
	April 26, 1999.                                                                                                                                                                                                                                                                                                                                                                   
|        | 4.12       |                      |  |  Form of Warrant to purchase an aggregate of
	75,000  shares of Common Stock at $26.50 per share,
	which was issued to the former shareholders of Suits
	Enterprises,  Inc. listed on such exhibit in the amounts set
	 forth opposite such former shareholders name on such
	exhibit (incorporated by reference from UTIs Quarterly
	Report on Form 10-Q for the six months ended June 30,
	1998).                                                                                                 
|        | 4.13       |                      |  |  Form of Warrant to purchase an aggregate of
	25,000  shares of Common Stock at $35.00 per share,
	which was issued to the former shareholders of Suits
	Enterprises,  Inc. listed on such exhibit in the amounts set
	 forth opposite such former shareholders name on such
	exhibit (incorporated by reference from UTIs Quarterly
	Report on Form 10-Q for the six months ended June 30,
	1998).                                                                                                 



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##### Table of Contents



|        |         |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ------- | -------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |                     
|Number  |         | Title or Description
|        |         |                     
|        | 4.14    |                      |  |  Form of Note Payable, in the aggregate amount of
	$7.79  million, which was issued to the former shareholders
	of Suits Enterprises, Inc. listed on such exhibit in the
	amounts set forth opposite such former shareholders name on
	 such exhibit (incorporated by reference from UTIs
	Quarterly Report on Form 10-Q for the six months ended
	June 30, 1998).                                                                                                                                  
|        | 4.15(2) |                      |  |  Loan and Security Agreement, dated November 22,
	1999, by and among The CIT Group/ Business Credit, Inc.,
	GMAC Business Credit, LLC and Foothill Capital Corporation
	as Lenders, UTI Energy Corp., UTICO, Inc., UTICO Hard Rock
	Boring, Inc., International Petroleum Service Company and
	Norton Drilling Services, Inc. as Guarantors and UTI
	Drilling, L.P., Norton Drilling Company, Universal Well
	Services, Inc., UTI Management Services, L.P. and SUITS
	 Drilling Company as Borrowers.
|        | 10.1    |                      |  |  For additional material contracts see Exhibits 4.3
	through 4.15.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 10.2(1) |                      |  |  Amended and Restated Employment Agreement with
	Vaughn E. Drum, dated December 19, 1996 (incorporated
	by reference to Exhibit 10.4 to UTIs Current Report on
	 Form 8-K dated January 27, 1997).                                                                                                                                                                                                                                                                                                   
|        | 10.3    |                      |  |  Agreement and Plan of Merger, dated April 26,
	1999, by and between UTI Energy Corp. and Norton Drilling
	Services, Inc. (incorporated by reference to exhibit 2.1 to
	UTIs Current Report on Form 8-K dated July 26,
	1999).                                                                                                                                                                                                                                                                       
|        | 21.1(2) |                      |  |  List of subsidiaries of UTI.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 23.1(2) |                      |  |  Consent of Ernst & Young LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 27.1(2) |                      |  |  Financial Data Schedule.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



---



|    |                                                                                                  
|--- | -------------------------------------------------------------------------------------------------
|(1) | Management contract or compensatory plan, identified as required
	by Item  14(a)(3) of Form 10-K.
|   
|(2) | Filed herewith as part of this Form 10-K.