##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
     Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 0-22664
      Patterson-UTI Energy,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

75-2504748(I.R.S. Employer
    Identification No.)450 Gears Road, Suite 500, Houston, Texas(Address of principal
    executive offices)

77067(Zip
    Code)   Registrants telephone number, including area code:
 (281) 765-7100
  Securities Registered Pursuant to 12(b) of the Act:
 None
  Securities Registered Pursuant to 12(g) of the Act:
 (Title of class)
  Common Stock, $.01 Par Value
  Preferred Share Purchase Rights
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   o þ




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##### Table of Contents





FORWARD-LOOKING
    STATEMENTS AND CAUTIONARY STATEMENTS FOR PURPOSES OF THE
    SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
    LITIGATION REFORM ACT OF 1995
  Form 10-K Form 10-K
  Form 10-K
  PART I
  Item 1.
    Business  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K 1-800-SEC-0330.
  Overview
   1




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##### Table of Contents



Industry
    Segments
    
    contract drilling,
    pressure pumping services,
    drilling and completion fluids services, and
    oil and natural gas exploration and production.      Contract
    Drilling Operations
  General 
  
    93 in west Texas and southeastern New Mexico,
    92 in north central and eastern Texas, northern Louisiana,
    Mississippi and Alabama,
    56 in the Rocky Mountain region (Colorado, Arizona, Utah,
    Wyoming, Montana, North Dakota and South Dakota),
    50 in south Texas and southern Louisiana,
    27 in the Texas panhandle, Oklahoma and Arkansas,
    6 in the Appalachian Basin, and
    20 in western Canada.   2




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##### Table of Contents



Drilling Contracts 
    on-site
  Daywork
    Contracts
    Footage
    Contracts
   3




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##### Table of Contents



Turnkey
    Contracts
    Contract Drilling Activity
  Year Ended December 31,2008


2007


2006Average rigs operating(1)


254



244



296Number of rigs operated


315



338



331Number of wells drilled


4,218



4,237



5,050Number of operating days


93,068



89,095



108,221     (1)
    
    A rig is considered to be operating if it is earning revenue
    pursuant to a contract on a given day.  Drilling Rigs and Related Equipment
  Number of RigsDepth Rating (Ft.)

U.S.


Canada


Total5,000 to 7,999






3



38,000 to 11,999


65



9



7412,000 to 15,999


197



8



20516,000 to 30,000


62







62Totals


324



20



344       Pressure
    Pumping Operations
  General
 4




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##### Table of Contents



Equipment
  
    42 cement pumper trucks,
    66 triplex pumper trucks,
    54 nitrogen pumper trucks,
    5 quintiplex pump trailers,
    31 blender trucks,
    28 bulk acid trucks/acid pumper trucks,
    47 bulk cement trucks,
    27 bulk nitrogen trucks,
    6 bulk nitrogen tractor trailer combinations,
    69 bulk sand trucks,
    14 sand pneumatic trucks,
    7 sand pneumatic trailers,
    9 flatbed material trucks,
    24 connection trucks,
    2 shale fracturing manifold trailers,
    1 shale fracturing iron trailer,
    8 shale fracturing sand field bins with conveyors,
    2 shale fracturing large conveyors, and
    21 tractors.  Drilling
    and Completion Fluids Operations
  General
  Drilling Fluids
  Completion Fluids
 5




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##### Table of Contents



Raw Materials
  Drilling
    Completion
      Barite Grinding Facility
  Other Equipment
  Oil and
    Natural Gas Operations
  General
  Customers
    Competition
  Contract Drilling and Pressure Pumping
    Businesses
  Drilling and Completion Fluids Business
  Government
    and Environmental Regulation
    
    drilling of oil and natural gas wells,
    containment and disposal of hazardous materials, oilfield waste,
    other waste materials and acids,
    use of underground storage tanks, and
    use of underground injection wells.   6




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##### Table of Contents




    owners and operators of sites, and
    persons who disposed of or arranged for the disposal of
    hazardous substances found at sites.  and/or
    
    the prevention of discharges, including oil and produced water
    spills, and
    liability for drainage into waters.  clean-up.
  clean-up
   7




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##### Table of Contents



Risks and
    Insurance
    
    accidents at the work location,
    blow-outs,
    cratering,
    fires, and
    explosions.    
    personal injury or death,
    suspension of drilling operations, or
    serious damage or destruction of the equipment involved and, in
    addition to environmental damage, could cause substantial damage
    to producing formations and surrounding areas.    
    oil or produced water spillage,
    natural gas leaks, and
    fires.      
    all-risk physical damages,
    employers liability,
    commercial general liability, and
    workers compensation insurance.    
    personal injury,
    well disasters,
    extensive fire damage,
    damage to the environment, or
    other hazards.   8




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##### Table of Contents




    we will be able to maintain the type and amount of coverage that
    we believe to be adequate at reasonable rates, or
    any particular types of coverage will be available.    Employees
    Seasonality
    Raw
    Materials and Subcontractors
    Item 1A.
    Risk
    Factors.    Global
    Economic Conditions May Adversely Affect Our Operating
    Results.
    We are
    Dependent on the Oil and Natural Gas Industry and Market Prices
    for Oil and Natural Gas. Declines in Oil and Natural Gas Prices
    Have Adversely Affected Our Operating Results.
    
    market supply and demand,
    international military, political and economic
    conditions, and
    the ability of the Organization of Petroleum Exporting
    Countries, commonly known as OPEC, to set and maintain
    production and price targets. 9




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##### Table of Contents



A
    General Excess of Operable Land Drilling Rigs Adversely Affects
    Our Profit Margins Particularly in Times of Weaker
    Demand.
      
    movement of drilling rigs from region to region,
    reactivation of land-based drilling rigs, or
    construction of new drilling rigs.    Shortages
    of Drill Pipe, Replacement Parts and Other Related Rig Equipment
    Adversely Affects Our Operating Results.
    The
    Oil Service Business Segments in Which We Operate Are Highly
    Competitive with Excess Capacity, which Adversely Affect Our
    Operating Results.
         10




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##### Table of Contents



Labor
    Shortages Adversely Affect Our Operating Results.
    Continued
    Growth Through Rig Acquisition is Not Assured.
      
    have sufficient capital resources to complete additional
    acquisitions,
    successfully integrate acquired operations and assets,
    effectively manage the growth and increased size,
    successfully deploy idle or stacked rigs,
    maintain the crews and market share to operate drilling rigs
    acquired, or
    successfully improve our financial condition, results of
    operations, business or prospects as a result of any completed
    acquisition.    The
    Nature of our Business Operations Presents Inherent Risks of
    Loss that, if not Insured or Indemnified Against, Could
    Adversely Affect Our Operating Results.
      Violations
    of Environmental Laws and Regulations Could Materially Adversely
    Affect Our Operating Results.
   11




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##### Table of Contents



Anti-takeover
    Measures in Our Charter Documents and Under State Law Could
    Discourage an Acquisition and Thereby Affect the Related
    Purchase Price.
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties  (281) 765-7100.
  Contract Drilling Operations
  Pressure Pumping
  Drilling and Completion Fluids
  Oil and Natural Gas Working Interests
    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   12




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##### Table of Contents



PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  (a)
    Market
    Information    High


Low2007:First quarter

$
24.89


$
21.13Second quarter


27.66



22.17Third quarter


26.48



20.79Fourth quarter


23.22



18.442008:First quarter

$
26.38


$
17.40Second quarter


36.40



25.71Third quarter


37.45



17.85Fourth quarter


19.64



8.64   (b)
    Holders    (c)
    Dividends
    and Buyback Program    Per Share


Total(In thousands)2007:Paid on March 30, 2007

$
0.08


$
12,527Paid on June 29, 2007


0.12



18,860Paid on September 28, 2007


0.12



18,690Paid on December 28, 2007


0.12



18,484Total cash dividends

$
0.44


$
68,5612008:Paid on March 28, 2008

$
0.12


$
18,493Paid on June 27, 2008


0.16



25,011Paid on September 29, 2008


0.16



24,803Paid on December 29, 2008


0.16



24,558Total cash dividends

$
0.60


$
92,865  13




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##### Table of Contents



ApproximateTotal number


dollar valueof shares


of shares(or units)


that may yetpurchased as


be purchasedpart of


under theTotal number


Average price


publicly announced


plans orof shares


paid per


plans or


programsPeriod covered

purchased


share


programs(1)


(In thousands)(1)October 131, 2008





$







$
129,285November 130, 2008


671,000


$
11.13



671,000


$
121,815December 131, 2008


829,000


$
10.24



829,000


$
113,326Total


1,500,000


$
10.64



1,500,000


$
113,326     (1)
    
    On August 2, 2007, we announced that our Board of Directors
    approved a stock buyback program authorizing purchases of up to
    $250 million of our common stock in open market or
    privately negotiated transactions.  (d)
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans    Equity Compensation Plan InformationNumber ofNumber of





SecuritiesSecurities to





Remaining Availablebe Issued upon





for Future IssuanceExercise of


Weighted-Average


under EquityOutstanding


Exercise Price


Compensation PlansOptions,


of Outstanding


(Excluding SecuritiesWarrants and


Options, Warrants


Reflected inPlan Category

Rights


and Rights


Column(a))(a)


(b)


(c)Equity compensation plans approved by security holders(1)


5,684,634


$
21.70



4,637,004Equity compensation plans not approved by security holders(2)


248,938


$
9.94



Total


5,933,572


$
21.20



4,637,004     (1)
    
    The Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan, as
    amended (the 2005 Plan), provides for awards of
    incentive stock options, non-incentive stock options, tandem and
    freestanding stock appreciation rights, restricted stock awards,
    other stock unit awards, performance share awards, performance
    unit awards and dividend equivalents to key employees, officers
    and directors, which are subject to certain vesting and
    forfeiture provisions. All options are granted with an exercise
    price equal to or greater than the fair market value of the
    common stock at the time of grant. The vesting schedule and term
    are set by the Compensation Committee of the Board of Directors.
    All securities remaining available for future issuance under
    equity compensation plans approved by security holders in column
    (c) are available under this plan.(2)
    
    The Amended and Restated Patterson-UTI Energy, Inc. 2001
    Long-Term Incentive Plan (the 2001 Plan) was
    approved by the Board of Directors in July 2001. In connection
    with the approval of the 2005 Plan, the Board of Directors
    approved a resolution that no further options, restricted stock
    or other awards would be granted under any equity compensation
    plan, other than the 2005 Plan. The terms of the 2001 Plan
    provided for grants of stock options, stock appreciation rights,
    shares of restricted stock and performance awards to eligible
    employees other than officers and directors. No Incentive Stock
    Options could be awarded under the Plan. All options were
    granted with an exercise price equal to or greater than the fair
    market value of the common stock at the time of grant. The
    vesting schedule and term were set by the Compensation Committee
    of the Board of Directors. 14




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##### Table of Contents



(e)
    Performance
    Graph    
  Fiscal Year Ended December 31,2003


2004


2005


2006


2007


2008Company/Index

($)


($)


($)


($)


($)


($)Patterson-UTI Energy, Inc.


100.00



118.70



202.23



144.15



123.54



75.182007 Peer Group Index


100.00



129.84



198.24



160.02



166.05



69.512008 Peer Group Index


100.00



129.64



201.19



161.53



151.57



76.18S&P 500 Stock Index


100.00



110.88



116.33



134.70



142.10



89.53Oilfield Service Index (OSX)


100.00



135.32



202.85



231.52



339.83



138.31S&P MidCap Index


100.00



116.48



131.11



144.64



156.18



99.59    15




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##### Table of Contents



Item 6.
    Selected
    Financial Data.    Years Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share amounts)Income Statement Data:Operating revenues:Contract drilling

$
1,804,026


$
1,741,647


$
2,169,370


$
1,485,684


$
809,691Pressure pumping


217,494



202,812



145,671



93,144



66,654Drilling and completion fluids


145,246



128,098



192,358



122,011



90,557Oil and natural gas


42,360



41,637



39,187



39,616



33,867Total


2,209,126



2,114,194



2,546,586



1,740,455



1,000,769Operating costs and expenses:Contract drilling


1,038,327



963,150



1,002,001



776,313



556,869Pressure pumping


132,570



105,273



77,755



54,956



37,561Drilling and completion fluids


126,900



108,752



150,372



98,530



76,503Oil and natural gas


12,793



10,864



13,374



9,566



7,978Goodwill impairment


9,964















Depreciation, depletion and other impairment


268,431



249,206



196,370



156,393



122,800Selling, general and administrative


68,190



64,623



55,065



39,110



31,983Embezzlement costs (recoveries)






(43,955
)


3,081



20,043



19,122Net loss (gain) on asset disposals/retirements


6,071



(16,545
)


3,819



(1,231
)


(1,411
)Other operating expenses


4,350



2,550



5,585



5,479



897Total


1,667,596



1,443,918



1,507,422



1,159,159



852,302Operating income


541,530



670,276



1,039,164



581,296



148,467Other income


1,418



531



4,670



3,463



680Income before income taxes and cumulative effect of change in
    accounting principle


542,948



670,807



1,043,834



584,759



149,147Income tax expense


195,879



232,168



371,267



212,019



54,801Income before cumulative effect of change in accounting principle


347,069



438,639



672,567



372,740



94,346Cumulative effect of change in accounting principle, net of
    related income tax expense of $398










687







Net income

$
347,069


$
438,639


$
673,254


$
372,740


$
94,346Income before cumulative effect of change in accounting
    principle per common share:Basic

$
2.26


$
2.83


$
4.07


$
2.19


$
0.57Diluted

$
2.24


$
2.79


$
4.02


$
2.15


$
0.56 16




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##### Table of Contents



Years Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share amounts)Net income per common share:Basic

$
2.26


$
2.83


$
4.08


$
2.19


$
0.57Diluted

$
2.24


$
2.79


$
4.02


$
2.15


$
0.56Cash dividends per common share

$
0.60


$
0.44


$
0.28


$
0.16


$
0.06Weighted average number of common shares outstanding:Basic


153,379



154,755



165,159



170,426



166,258Diluted


154,717



156,997



167,413



173,767



169,211Balance Sheet Data:Total assets

$
2,712,817


$
2,465,199


$
2,192,503


$
1,795,781


$
1,256,785Borrowings under line of credit






50,000



120,000







Stockholders equity


2,126,942



1,896,030



1,562,466



1,367,011



961,501Working capital


338,761



227,577



335,052



382,448



235,480  17




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Management Overview
  2008


2007


2006Contract drilling

$
1,804,026



82
%

$
1,741,647



82
%

$
2,169,370



84
%Pressure pumping


217,494



10



202,812



10



145,671



6Drilling and completion fluids


145,246



6



128,098



6



192,358



8Oil and natural gas


42,360



2



41,637



2



39,187



2$
2,209,126



100
%

$
2,114,194



100
%

$
2,546,586



100
%        18




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##### Table of Contents



Commitments and Contingencies
    Trading and investing
  Description of business
  Critical
    Accounting Policies
    Property and equipment
 19




---



##### Table of Contents



Oil and natural gas properties
  lease-by-lease
  Goodwill
 20




---



##### Table of Contents



Revenue recognition
  Use of estimates
    
    allowance for doubtful accounts,
    depreciation and depletion, 21




---



##### Table of Contents




    goodwill and long-lived asset impairments,
    reserves for self-insured levels of insurance coverage, and
    fair values of assets acquired and liabilities assumed in
    acquisitions.    Liquidity
    and Capital Resources
    
    $675 million from operating activities,
    $11.6 million in proceeds from the disposal of property and
    equipment, and
    $41.8 million from the exercise of stock options and
    related tax benefits associated with stock-based compensation.    
    to build new drilling rigs,
    to make capital expenditures for the betterment and
    refurbishment of our drilling rigs,
    to acquire and procure drilling equipment and facilities to
    support our drilling operations,
    to fund capital expenditures for our pressure pumping and
    drilling and completion fluids segments, and
    to fund investments in oil and natural gas properties on a
    working interest basis.    Per Share


Total(In thousands)Paid on March 28, 2008

$
0.12


$
18,493Paid on June 27, 2008


0.16



25,011Paid on September 29, 2008


0.16



24,803Paid on December 29, 2008


0.16



24,558Total cash dividends

$
0.60


$
92,865        22




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##### Table of Contents



Contractual
    Obligations
    Payments Due by PeriodLess Than 1








More Than 5Total


Year


1-3 Years


3-5 Years


YearsBorrowings under line of credit(1)

$



$



$



$



$
Commitments to purchase equipment(2)


268,934



162,052



106,882







$
268,934


$
162,052


$
106,882


$



$
     (1)
    
    No borrowings were outstanding on our revolving line of credit
    as of December 31, 2008. Our revolving line of credit
    matures on December 16, 2009.(2)
    
    Represents commitments to purchase major equipment to be
    delivered in 2009 and 2010 based on expected delivery dates.  Off-Balance
    Sheet Arrangements
    Results
    of Operations
  Comparison
    of the years ended December 31, 2008 and 2007
  The following tables summarize operations by business segment
    for the years ended December 31, 2008 and 2007:
  Year Ended December 31,Contract Drilling

2008


2007


% Change(Dollars in thousands)Revenues

$
1,804,026


$
1,741,647



3.6
%Direct operating costs

$
1,038,327


$
963,150



7.8
%Selling, general and administrative

$
5,363


$
5,893



(9.0
)%Depreciation

$
229,311


$
213,812



7.2
%Operating income

$
531,025


$
558,792



(5.0
)%Operating days


93,068



89,095



4.5
%Average revenue per operating day

$
19.38


$
19.55



(0.9
)%Average direct operating costs per operating day

$
11.16


$
10.81



3.2
%Average rigs operating


254



244



4.1
%Capital expenditures

$
360,645


$
539,506



(33.2
)%  23




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##### Table of Contents



1st Quarter


2nd Quarter


3rd Quarter


4th Quarter


Year2007:Average natural gas price(1)

$
7.44


$
7.76


$
6.35


$
7.19


$
7.182008:Average natural gas price(1)

$
8.92


$
11.74


$
9.28


$
6.60


$
9.13     (1)
    
    The average natural gas price represents the Henry Hub Spot
    price as reported by the United States Energy Information
    Administration.    Year Ended December 31,Pressure Pumping

2008


2007


% Change(Dollars in thousands)Revenues

$
217,494


$
202,812



7.2
%Direct operating costs

$
132,570


$
105,273



25.9
%Selling, general and administrative

$
23,305


$
18,971



22.8
%Depreciation

$
19,600


$
14,311



37.0
%Operating income

$
42,019


$
64,257



(34.6
)%Total jobs


12,900



14,094



(8.5
)%Average revenue per job

$
16.86


$
14.39



17.2
%Average direct operating costs per job

$
10.28


$
7.47



37.6
%Capital expenditures

$
61,289


$
47,582



28.8
%     24




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##### Table of Contents



Year Ended December 31,Drilling and Completion Fluids

2008


2007


% Change(Dollars in thousands)Revenues

$
145,246


$
128,098



13.4
%Direct operating costs

$
126,900


$
108,752



16.7
%Selling, general and administrative

$
10,110


$
9,958



1.5
%Depreciation

$
2,830


$
2,860



(1.0
)%Goodwill impairment

$
9,964


$




N/A
%Operating income (loss)

$
(4,558
)

$
6,528



N/A
%Capital expenditures

$
3,467


$
3,082



12.5
%     Year Ended December 31,Oil and Natural Gas Production and Exploration

2008


2007


% Change(Dollars in thousands, except commodity prices)Revenues

$
42,360


$
41,637



1.7
%Direct operating costs

$
12,793


$
10,864



17.8
%Selling, general and administrative

$



$
2,365



(100.0
)%Depreciation, depletion and impairment

$
15,856


$
17,410



(8.9
)%Operating income

$
13,711


$
10,998



24.7
%Capital expenditures

$
22,981


$
17,516



31.2
%Average net daily oil production (Bbls)


801



971



(17.5
)%Average net daily gas production (Mcf)


3,755



4,996



(24.8
)%Average oil sales price (per Bbl)

$
98.70


$
68.82



43.4
%Average gas sales price (per Mcf)

$
9.77


$
7.37



32.6
%     25




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##### Table of Contents



Year Ended December 31,Corporate and Other

2008


2007


% Change(Dollars in thousands)Selling, general and administrative

$
29,412


$
27,436



7.2
%Depreciation

$
834


$
813



2.6
%Other operating expenses

$
4,350


$
2,550



70.6
%Embezzlement recoveries

$



$
(43,955
)


(100.0
)%Net loss (gain) on asset disposals/retirements

$
6,071


$
(16,545
)


N/A
%Interest income

$
1,555


$
2,355



(34.0
)%Interest expense

$
639


$
2,187



(70.8
)%Other income

$
502


$
363



38.3
%Capital expenditures

$
511


$




N/A
%       Comparison
    of the years ended December 31, 2007 and 2006
  The following tables summarize operations by business segment
    for the years ended December 31, 2007 and 2006:
  Year Ended December 31,Contract Drilling

2007


2006


% Change(Dollars in thousands)Revenues

$
1,741,647


$
2,169,370



(19.7
)%Direct operating costs

$
963,150


$
1,002,001



(3.9
)%Selling, general and administrative

$
5,893


$
7,313



(19.4
)%Depreciation

$
213,812


$
168,607



26.8
%Operating income

$
558,792


$
991,449



(43.6
)%Operating days


89,095



108,192



(17.7
)%Average revenue per operating day

$
19.55


$
20.05



(2.5
)%Average direct operating costs per operating day

$
10.81


$
9.26



16.7
%Average rigs operating


244



296



(17.6
)%Capital expenditures

$
539,506


$
531,087



1.6
%  26




---



##### Table of Contents



1st Quarter


2nd Quarter


3rd Quarter


4th Quarter


Year2006:Average natural gas price(1)

$
7.93


$
6.74


$
6.26


$
6.87


$
6.942007:Average natural gas price(1)

$
7.44


$
7.76


$
6.35


$
7.19


$
7.18     (1)
    
    The average natural gas price represents the Henry Hub Spot
    price as reported by the United States Energy Information
    Administration.    Year Ended December 31,Pressure Pumping

2007


2006


% Change(Dollars in thousands)Revenues

$
202,812


$
145,671



39.2
%Direct operating costs

$
105,273


$
77,755



35.4
%Selling, general and administrative

$
18,971


$
13,185



43.9
%Depreciation

$
14,311


$
9,896



44.6
%Operating income

$
64,257


$
44,835



43.3
%Total jobs


14,094



11,650



21.0
%Average revenue per job

$
14.39


$
12.50



15.1
%Average direct operating costs per job

$
7.47


$
6.67



12.0
%Capital expenditures

$
47,582


$
41,262



15.3
%     27




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##### Table of Contents



Year Ended December 31,Drilling and Completion Fluids

2007


2006


% Change(Dollars in thousands)Revenues

$
128,098


$
192,358



(33.4
)%Direct operating costs

$
108,752


$
150,372



(27.7
)%Selling, general and administrative

$
9,958


$
10,521



(5.4
)%Depreciation

$
2,860


$
2,706



5.7
%Operating income

$
6,528


$
28,759



(77.3
)%Capital expenditures

$
3,082


$
4,222



(27.0
)%     Year Ended December 31,2007


2006


% ChangeOil and Natural Gas Production and Exploration

(Dollars in thousands, except commodity prices)Revenues

$
41,637


$
39,187



6.3
%Direct operating costs

$
10,864


$
13,374



(18.8
)%Selling, general and administrative

$
2,365


$
2,785



(15.1
)%Depreciation, depletion and impairment

$
17,410


$
14,368



21.2
%Operating income

$
10,998


$
8,660



27.0
%Capital expenditures

$
17,516


$
21,198



(17.4
)%Average net daily oil production (Bbls)


971



983



(1.2
)%Average net daily gas production (Mcf)


4,996



5,143



(2.9
)%Average oil sales price (per Bbl)

$
68.82


$
63.83



7.8
%Average gas sales price (per Mcf)

$
7.37


$
6.82



8.1
%     Year Ended December 31,Corporate and Other

2007


2006


% Change(Dollars in thousands)Selling, general and administrative

$
27,436


$
21,261



29.0
%Depreciation

$
813


$
793



2.5
%Other operating expenses

$
2,550


$
5,585



(54.3
)%Embezzlement costs (recoveries)

$
(43,955
)

$
3,081



N/A
%Net loss (gain) on asset disposals/retirements

$
(16,545
)

$
3,819



N/A
%Interest income

$
2,355


$
5,925



(60.3
)%Interest expense

$
2,187


$
1,602



36.5
%Other income

$
363


$
347



4.6
%Capital expenditures

$



$
150



(100.0
)%    28




---



##### Table of Contents



Income
    Taxes
  Year Ended December 31,2008


2007


2006(Dollars in thousands)Income before income tax

$
542,948


$
670,807


$
1,043,834Income tax expense


195,879



232,168



371,267Effective tax rate


36.1
%


34.6
%


35.6
%     2008


2007


2006Statutory tax rate


35.0
%


35.0
%


35.0
%State income taxes


1.7



1.4



1.4Permanent differences


(0.4
)


(1.6
)


(0.8
)Other, net


(0.2
)


(0.2
)


0.0Effective tax rate


36.1
%


34.6
%


35.6
%       Volatility
    of Oil and Natural Gas Prices and its Impact on
    Operations
   29




---



##### Table of Contents



Impact of
    Inflation
    Recently
    Issued Accounting Standards
  Fair Value Measurements
  Business Combinations Noncontrolling Interests in
    Consolidated Financial Statements, an amendment of ARB
    No. 51 Business
    Combinations
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1). EITF 03-6-1 earnings-per-share EITF 03-6-1 earnings-per-share EITF 03-6-1 earnings-per-share EITF 03-6-1. EITF 03-6-1 EITF 03-6-1
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   30




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  page F-1,
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure
    Controls and Procedures:
  Rules 13a-15(e) 15d-15(e) Form 10-K.
  Managements
    Report on Internal Control over Financial Reporting:
  Rule 13a-15(f). Internal Control-Integrated Framework
  page F-2 Form 10-K.
  Changes
    in Internal Control over Financial Reporting:
    Item 9B.
    Other
    Information   31




---



##### Table of Contents



PART III
    Item 10.
    Directors,
    Executive Officers and Corporate Governance.    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   32




---



##### Table of Contents



PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedule.  Financial Statements
  page F-1
  Financial Statement Schedule
  page S-1.
    Exhibits
    3
.1

Restated Certificate of Incorporation, as amended (filed August
    9, 2004 as Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).3
.2

Amendment to Restated Certificate of Incorporation, as amended
    (filed August 9, 2004 as Exhibit 3.2 to the Companys
    Quarterly Report on Form 10-Q for the quarterly period ended
    June 30, 2004 and incorporated herein by reference).3
.3

Second Amended and Restated Bylaws (filed August 6, 2007 as
    Exhibit 3.3 to the Companys Quarterly Report on Form 10-Q
    for the quarterly period ended June 30, 2007 and incorporated
    herein by reference).4
.1

Rights Agreement dated January 2, 1997, between Patterson
    Energy, Inc. and Continental Stock Transfer & Trust Company
    (filed January 14, 1997 as Exhibit 2 to the Companys
    Registration Statement on Form 8-A and incorporated herein by
    reference).4
.2

Amendment to Rights Agreement dated as of October 23, 2001
    (filed October 31, 2001 as Exhibit 3.4 to the Companys
    Quarterly Report on Form 10-Q for the quarterly period ended
    September 30, 2001 and incorporated herein by reference).4
.3

Restated Certificate of Incorporation, as amended (See Exhibits
    3.1 and 3.2).4
.4

Registration Rights Agreement with Bear, Stearns and Co. Inc.,
    dated March 25, 1994, as assigned by REMY Capital Partners III,
    L.P. (filed March 19, 2002 as Exhibit 4.3 to the Companys
    Annual Report on Form 10-K for the fiscal year ended December
    31, 2001 and incorporated herein by reference).10
.1

For additional material contracts, see Exhibits 4.1, 4.2 and 4.4.10
.2

Patterson-UTI Energy, Inc., 1993 Stock Incentive Plan, as
    amended (filed March 13, 1998 as Exhibit 10.1 to the
    Companys Registration Statement on Form S-8 (File No.
    333-47917) and incorporated herein by reference).*10
.3

Amended and Restated Patterson-UTI Energy, Inc. 2001 Long-Term
    Incentive Plan (filed November 27, 2002 as Exhibit 4.4 to Post
    Effective Amendment No. 1 to the Companys Registration
    Statement on Form S-8 (File No. 333-60470) and incorporated
    herein by reference).*10
.4

Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term
    Incentive Plan (filed July 28, 2003 as Exhibit 4.7 to the
    Companys Quarterly Report on Form 10-Q for the quarterly
    period ended June 30, 2003 and incorporated herein by
    reference).*10
.5

Amendment to the Patterson-UTI Energy, Inc. Amended and Restated
    1997 Long-Term Incentive Plan (filed August 9, 2004 as Exhibit
    10.7 to the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2004 and incorporated herein by
    reference).*10
.6

Amended and Restated Patterson-UTI Energy, Inc. Non-Employee
    Director Stock Option Plan(filed July 28, 2003 as Exhibit
    4.8 to the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2003 and incorporated herein by
    reference).*10
.7

Amended and Restated Patterson-UTI Energy, Inc. 1996 Employee
    Stock Option Plan (filed July 25, 2001 as Exhibit 4.4 to
    Post-Effective Amendment No. 1 to the Companys
    Registration Statement on Form S-8 (File No. 333-60466) and
    incorporated herein by reference).* 33




---



##### Table of Contents



10
.8

Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan,
    including Form of Executive Officer Restricted Stock Award
    Agreement, Form of Executive Officer Stock Option Agreement,
    Form of Non-Employee Director Restricted Stock Award Agreement
    and Form of Non-Employee Director Stock Option Agreement (filed
    June 21, 2005 as Exhibit 10.1 to the Companys Current
    Report on Form 8-K, and incorporated herein by reference).*10
.9

First Amendment to the Patterson-UTI Energy, Inc. 2005 Long-Term
    Incentive Plan (filed June 6, 2008 as Exhibit 10.1 to the
    Companys Current Report on Form 8-K and incorporated
    herein by reference).10
.10

Second Amendment to the Patterson-UTI Energy, Inc. 2005
    Long-Term Incentive Plan (filed June 6, 2008 as Exhibit 10.2 to
    the Companys Current Report on Form 8-K and incorporated
    herein by reference).10
.11

Restricted Stock Award Agreement dated April 28, 2004 between
    Patterson-UTI Energy, Inc. and Mark S. Siegel (filed
    August 9, 2004 as Exhibit 10.1 to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and incorporated
    herein by reference).*10
.12

Restricted Stock Award Agreement dated April 28, 2004 between
    Patterson-UTI Energy, Inc. and Cloyce A. Talbott (filed August
    9, 2004 as Exhibit 10.2 to the Companys Quarterly Report
    on Form 10-Q for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.13

Restricted Stock Award Agreement dated April 28, 2004 between
    Patterson-UTI Energy, Inc. and Kenneth N. Berns (filed August 9,
    2004 as Exhibit 10.4 to the Companys Quarterly Report on
    Form 10-Q for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.14

Restricted Stock Award Agreement dated April 28, 2004 between
    Patterson-UTI Energy, Inc. and John E. Vollmer III (filed
    August 9, 2004 as Exhibit 10.6 to the Companys Quarterly
    Report on Form 10-Q for the quarterly period ended June 30, 2004
    and incorporated herein by reference).*10
.15

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between Patterson-UTI
    Energy, Inc. and Mark S. Siegel (filed on February 4, 2004 as
    Exhibit 10.2 to the Companys Annual Report on Form 10-K
    for the year ended December 31, 2003 and incorporated herein by
    reference).*10
.16

Employment Agreement, dated as of September 1, 2007 between
    Patterson-UTI Energy, Inc. and Cloyce A. Talbott
    (filed on September 24, 2007 as Exhibit 10.1 to the
    Companys Current Report on Form 8-K, and incorporated
    herein by reference).*10
.17

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between Patterson-UTI
    Energy, Inc. and Kenneth N. Berns (filed on February 4, 2004 as
    Exhibit 10.5 to the Companys Annual Report on Form 10-K
    for the year ended December 31, 2003 and incorporated herein by
    reference).*10
.18

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between Patterson-UTI
    Energy, Inc. and John E. Vollmer III (filed on February 4,
    2004 as Exhibit 10.7 to the Companys Annual Report on Form
    10-K for the year ended December 31, 2003 and incorporated
    herein by reference).*10
.19

Form of Letter Agreement regarding termination, effective as of
    January 29, 2004, entered into by Patterson-UTI Energy, Inc.
    with each of Mark S. Siegel, Kenneth N. Berns and John E.
    Vollmer III (filed on February 25, 2005 as Exhibit 10.23 to
    the Companys Annual Report on Form 10-K for the year ended
    December 31, 2004 and incorporated herein by reference).*10
.20

Form of Indemnification Agreement entered into by Patterson-UTI
    Energy, Inc. with each of Mark S. Siegel, Cloyce A.
    Talbott, Douglas J. Wall, Kenneth N. Berns, Curtis W. Huff,
    Terry H. Hunt, Kenneth R. Peak, Charles O. Buckner,
    John E. Vollmer III, William L. Moll, Jr. and Gregory W. Pipkin
    (filed April 28, 2004 as Exhibit 10.11 to the Companys
    Annual Report on Form 10-K, as amended, for the year ended
    December 31, 2003 and incorporated herein by reference).*10
.21

Severance Agreement between Patterson-UTI Energy, Inc. and
    Douglas J. Wall, effective as of August 31, 2007 (filed
    September 4, 2007 as Exhibit 10.3 to the Companys Current
    Report on Form 8-K and incorporated herein by reference).*10
.22

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of August 31, 2007, by and between Patterson-UTI
    Energy, Inc. and Douglas J. Wall (filed September 4, 2007 as
    Exhibit 10.2 to the Companys Current Report on Form 8-K
    and incorporated herein by reference).* 34




---



##### Table of Contents



10
.23

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of August 31, 2007, by and between Patterson-UTI
    Energy, Inc. and William L. Moll, Jr. (filed November 5, 2007 as
    Exhibit 10.7 to the Companys Quarterly Report on Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.24

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Mark S. Siegel, entered into
    November 1, 2007 (filed November 5, 2007 as Exhibit 10.8 to the
    Companys Quarterly Report on Form 10-Q for the quarterly
    period ended September 30, 2007 and incorporated herein by
    reference).*10
.25

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Douglas J. Wall, entered into
    November 1, 2007 (filed November 5, 2007 as Exhibit 10.9 to the
    Companys Quarterly Report on Form 10-Q for the quarterly
    period ended September 30, 2007 and incorporated herein by
    reference).*10
.26

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and John E. Vollmer, III,
    entered into November 1, 2007 (filed November 5, 2007 as Exhibit
    10.10 to the Companys Quarterly Report on Form 10-Q for
    the quarterly period ended September 30, 2007 and incorporated
    herein by reference).*10
.27

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Kenneth N. Berns, entered into
    November 1, 2007 (filed November 5, 2007 as Exhibit 10.11 to the
    Companys Quarterly Report on Form 10-Q for the quarterly
    period ended September 30, 2007 and incorporated herein by
    reference).*10
.28

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and William L. Moll, Jr., entered
    into November 1, 2007 (filed November 5, 2007 as Exhibit 10.12
    to the Companys Quarterly Report on Form 10-Q for the
    quarterly period ended September 30, 2007 and incorporated
    herein by reference).*10
.29

Credit Agreement dated as of December 17, 2004 among
    Patterson-UTI Energy, Inc., as the Borrower, Bank of America,
    N.A., as administrative agent, L/C Issuer and a Lender and the
    other lenders and agents party thereto (filed on December 23,
    2004 as Exhibit 10.1 to the Companys Current Report on
    Form 8-K and incorporated herein by reference).10
.30

Commitment Increase and Joinder Agreement, dated as of August 2,
    2006, by and among Patterson-UTI Energy, Inc., the guarantors
    party thereto, the lenders party thereto, and Bank of America,
    N.A. as Administrative Agent, L/C Issuer and Lender (filed
    August 21, 2006 as Exhibit 10.1 to the Companys Current
    Report on Form 8-K and incorporated herein by reference).10
.31

Letter Agreement dated February 6, 2006 between Patterson-UTI
    Energy, Inc. and John E. Vollmer III (filed May 1, 2006 as
    Exhibit 10.25 to the Companys Annual Report on Form 10-K,
    as amended, and incorporated herein by reference).*14
.1

Patterson-UTI Energy, Inc. Code of Business Conduct and Ethics
    for Senior Financial Executives (filed on February 4, 2004 as
    Exhibit 14.1 to the Companys Annual Report on Form 10-K
    for the year ended December 31, 2003 and incorporated herein by
    reference).21
.1

Subsidiaries of the Registrant.23
.1

Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to Rule
    13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
    amended.31
.2

Certification of Chief Financial Officer pursuant to Rule
    13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
    amended.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 USC Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Management Contract or Compensatory Plan identified as required
    by Item 15(a)(3) of
    Form 10-K. 35




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Financial Statements:Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-3Consolidated Statements of Income for the years
    ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Changes In
    Stockholders Equity for the years ended December 31,
    2008, 2007 and 2006


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-7Financial Statement Schedule


S-1EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders of 
    Patterson-UTI Energy, Inc.:



In our opinion, the consolidated financial statements listed in
    the accompanying index present fairly, in all material respects,
    the financial position of Patterson-UTI Energy, Inc. and its
    subsidiaries at December 31, 2008 and 2007, and the results
    of their operations and their cash flows for each of the three
    years in the period ended December 31, 2008 in conformity
    with accounting principles generally accepted in the United
    States of America. In addition, in our opinion, the financial
    statement schedule listed in the index appearing under
    Item 15(a)(2) presents fairly, in all material respects,
    the information set forth therein when read in conjunction with
    the related consolidated financial statements. Also in our
    opinion, the Company maintained, in all material respects,
    effective internal control over financial reporting as of
    December 31, 2008, based on criteria established in
    Internal Control  Integrated Frameworkissued
    by the Committee of Sponsoring Organizations of the Treadway
    Commission (COSO). The Companys management is responsible
    for these financial statements and financial statement schedule,
    for maintaining effective internal control over financial
    reporting and for its assessment of the effectiveness of
    internal control over financial reporting, included in
    Managements Report on Internal Control over Financial
    Reporting appearing under Item 9A. Our responsibility is to
    express opinions on these financial statements, on the financial
    statement schedule, and on the Companys internal control
    over financial reporting based on our integrated audits. We
    conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audits to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement and whether effective internal
    control over financial reporting was maintained in all material
    respects. Our audits of the financial statements included
    examining, on a test basis, evidence supporting the amounts and
    disclosures in the financial statements, assessing the
    accounting principles used and significant estimates made by
    management, and evaluating the overall financial statement
    presentation. Our audit of internal control over financial
    reporting included obtaining an understanding of internal
    control over financial reporting, assessing the risk that a
    material weakness exists, and testing and evaluating the design
    and operating effectiveness of internal control based on the
    assessed risk. Our audits also included performing such other
    procedures as we considered necessary in the circumstances. We
    believe that our audits provide a reasonable basis for our
    opinions.



A companys internal control over financial reporting is a
    process designed to provide reasonable assurance regarding the
    reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with
    generally accepted accounting principles. A companys
    internal control over financial reporting includes those
    policies and procedures that (i) pertain to the maintenance
    of records that, in reasonable detail, accurately and fairly
    reflect the transactions and dispositions of the assets of the
    company; (ii) provide reasonable assurance that
    transactions are recorded as necessary to permit preparation of
    financial statements in accordance with generally accepted
    accounting principles, and that receipts and expenditures of the
    company are being made only in accordance with authorizations of
    management and directors of the company; and (iii) provide
    reasonable assurance regarding prevention or timely detection of
    unauthorized acquisition, use, or disposition of the
    companys assets that could have a material effect on the
    financial statements.



Because of its inherent limitations, internal control over
    financial reporting may not prevent or detect misstatements.
    Also, projections of any evaluation of effectiveness to future
    periods are subject to the risk that controls may become
    inadequate because of changes in conditions, or that the degree
    of compliance with the policies or procedures may deteriorate.



/s/ PricewaterhouseCoopers LLP



Houston, Texas

February 18, 2009

F-2




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
81,223


$
17,434Accounts receivable, net of allowance for doubtful accounts of
    $9,330 and $10,014 at December 31, 2008 and 2007,
    respectively


414,531



373,279Federal and state income taxes receivable


10,175



Inventory


41,999



44,416Deferred tax assets, net


35,928



35,370Other


57,518



52,286Total current assets


641,374



522,785Property and equipment, net


1,937,112



1,841,404Goodwill


86,234



96,198Deposits on equipment purchases


43,944



Other


4,153



4,812Total assets

$
2,712,817


$
2,465,199LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
169,958


$
156,916Federal and state income taxes payable






1,458Accrued expenses


132,655



136,834Total current liabilities


302,613



295,208Borrowings under line of credit






50,000Deferred tax liabilities, net


277,717



219,490Other


5,545



4,471Total liabilities


585,875



569,169Commitments and contingencies (see Note 8)






Stockholders equity:Preferred stock, par value $.01; authorized
    1,000,000 shares, no shares issued






Common stock, par value $.01; authorized 300,000,000 shares
    with 180,192,093 and 177,385,808 issued and 153,094,803 and
    153,942,800 outstanding at December 31, 2008 and 2007,
    respectively


1,801



1,773Additional paid-in capital


765,512



703,581Retained earnings


1,970,824



1,716,620Accumulated other comprehensive income


5,774



20,207Treasury stock, at cost, 27,097,290 shares and
    23,443,008 shares at December 31, 2008 and 2007,
    respectively


(616,969
)


(546,151
)Total stockholders equity


2,126,942



1,896,030Total liabilities and stockholders equity

$
2,712,817


$
2,465,199    F-3




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
  Year Ended December 31,2008


2007


2006(In thousands, except per share data)Operating revenues:Contract drilling

$
1,804,026


$
1,741,647


$
2,169,370Pressure pumping


217,494



202,812



145,671Drilling and completion fluids


145,246



128,098



192,358Oil and natural gas


42,360



41,637



39,1872,209,126



2,114,194



2,546,586Operating costs and expenses:Contract drilling


1,038,327



963,150



1,002,001Pressure pumping


132,570



105,273



77,755Drilling and completion fluids


126,900



108,752



150,372Oil and natural gas


12,793



10,864



13,374Goodwill impairment


9,964







Depreciation, depletion and other impairment


268,431



249,206



196,370Selling, general and administrative


68,190



64,623



55,065Embezzlement costs (recoveries)






(43,955
)


3,081Net loss (gain) on asset disposals/retirements


6,071



(16,545
)


3,819Other operating expenses


4,350



2,550



5,5851,667,596



1,443,918



1,507,422Operating income


541,530



670,276



1,039,164Other income (expense):Interest income


1,555



2,355



5,925Interest expense


(639
)


(2,187
)


(1,602
)Other


502



363



3471,418



531



4,670Income before income taxes and cumulative effect of change in
    accounting principle


542,948



670,807



1,043,834Income tax expense (benefit):Current


129,840



193,897



375,373Deferred


66,039



38,271



(4,106
)195,879



232,168



371,267Income before cumulative effect of change in accounting principle


347,069



438,639



672,567Cumulative effect of change in accounting principle, net of
    related income tax expense of $398










687Net income

$
347,069


$
438,639


$
673,254Income before cumulative effect of change in accounting
    principle per common share:Basic

$
2.26


$
2.83


$
4.07Diluted

$
2.24


$
2.79


$
4.02Net income per common share:Basic

$
2.26


$
2.83


$
4.08Diluted

$
2.24


$
2.79


$
4.02Weighted average number of common shares outstanding:Basic


153,379



154,755



165,159Diluted


154,717



156,997



167,413Cash dividends per common share

$
0.60


$
0.44


$
0.28    F-4




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedCommon Stock


Additional








OtherNumber of





Paid-in


Deferred


Retained


Comprehensive


TreasuryShares


Amount


Capital


Compensation


Earnings


Income


Stock


Total(In thousands)Balance, December 31, 2005


175,909


$
1,759


$
672,151


$
(9,287
)

$
719,113


$
8,565


$
(25,290
)

$
1,367,011Comprehensive income:Net income


















673,254











673,254Foreign currency translation adjustment, (net of tax of $6)






















(175
)






(175
)Total comprehensive income


















673,254



(175
)






673,079Elimination of deferred compensation due to change in accounting
    principle










(9,287
)


9,287















Issuance of restricted stock


613



6



(6
)


















Forfeitures of restricted shares


(47
)


(1
)


1



















Exercise of stock options


181



2



1,944



















1,946Tax benefit related to stock-based compensation










1,087



















1,087Stock-based compensation, net of cumulative effect of change in
    accounting principle










15,179



















15,179Payment of cash dividend


















(45,825
)










(45,825
)Purchase of treasury stock


























(450,011
)


(450,011
)Balance, December 31, 2006


176,656



1,766



681,069







1,346,542



8,390



(475,301
)


1,562,466Comprehensive income:Net income


















438,639











438,639Foreign currency translation adjustment, (net of tax of $6,755)






















11,817







11,817Total comprehensive income


















438,639



11,817







450,456Issuance of restricted stock


601



6



(6
)


















Forfeitures of restricted shares


(101
)


(1
)


1



















Exercise of stock options


230



2



2,048



















2,050Tax benefit related to stock-based compensation










1,105



















1,105Stock-based compensation










19,364



















19,364Payment of cash dividend


















(68,561
)










(68,561
)Purchase of treasury stock


























(70,850
)


(70,850
)Balance, December 31, 2007


177,386



1,773



703,581







1,716,620



20,207



(546,151
)


1,896,030Comprehensive income:Net income


















347,069











347,069Foreign currency translation adjustment, (net of tax of $8,368)






















(14,433
)






(14,433
)Total comprehensive income


















347,069



(14,433
)






332,636Issuance of restricted stock


577



6



(6
)


















Forfeitures of restricted shares


(75
)


(1
)


1



















Exercise of stock options


2,304



23



25,525



















25,548Tax benefit related to stock-based compensation










16,280



















16,280Stock-based compensation










20,131



















20,131Payment of cash dividend


















(92,865
)










(92,865
)Purchase of treasury stock


























(70,818
)


(70,818
)Balance, December 31, 2008


180,192


$
1,801


$
765,512


$



$
1,970,824


$
5,774


$
(616,969
)

$
2,126,942    F-5




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2008


2007


2006(In thousands)Cash flows from operating activities:Net income

$
347,069


$
438,639


$
673,254Adjustments to reconcile net income to net cash provided by
    operating activities:Goodwill impairment


9,964







Depreciation, depletion and other impairment


268,431



249,206



196,370Provision for bad debts


4,350



2,550



5,400Dry holes and abandonments


1,617



1,309



4,338Deferred income tax expense (benefit)


66,039



38,271



(3,708
)Stock-based compensation expense


20,131



19,364



15,179Net loss (gain) on asset disposals/retirements


6,071



(16,545
)


3,819Changes in operating assets and liabilities:Accounts receivable


(50,567
)


112,353



(67,417
)Income taxes receivable/payable


(11,258
)


7,174



(16,231
)Inventory and other current assets


5,492



4,853



(47,406
)Accounts payable


10,341



(40,317
)


27,184Accrued expenses


(3,750
)


(6,104
)


32,972Other liabilities


1,074



1,471



13,416Net cash provided by operating activities


675,004



812,224



837,170Cash flows from investing activities:Acquisitions






(29,000
)


Purchases of property and equipment


(448,893
)


(607,686
)


(597,919
)Proceeds from disposal of assets


11,617



34,224



10,934Net cash used in investing activities


(437,276
)


(602,462
)


(586,985
)Cash flows from financing activities:Purchases of treasury stock


(70,818
)


(70,850
)


(450,011
)Dividends paid


(92,865
)


(68,561
)


(45,825
)Tax benefit related to stock-based compensation


16,280



1,105



1,087Proceeds from borrowings under line of credit






142,500



274,000Repayment of borrowings under line of credit


(50,000
)


(212,500
)


(154,000
)Line of credit issuance costs










(342
)Proceeds from exercise of stock options


25,548



2,050



1,946Net cash used in financing activities


(171,855
)


(206,256
)


(373,145
)Effect of foreign exchange rate changes on cash


(2,084
)


543



(53
)Net increase (decrease) in cash and cash equivalents


63,789



4,049



(123,013
)Cash and cash equivalents at beginning of year


17,434



13,385



136,398Cash and cash equivalents at end of year

$
81,223


$
17,434


$
13,385Supplemental disclosure of cash flow information:Net cash paid during the year for:Interest expense

$
(323
)

$
(1,808
)

$
(1,278
)Income taxes


(126,331
)


(176,281
)


(377,847
)    F-6




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Description
    of Business and Summary of Significant Accounting
    Policies  A
    description of the business and basis of presentation
    follows:
  Description of business
  Basis of presentation
    A
    summary of the significant accounting policies
    follows:
  Management estimates
  Revenue recognition
  Accounts receivable
 F-7




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##### Table of Contents



Inventories first-in,
  Property and equipment
  Useful LivesDrilling rigs and other equipment


2-15Buildings


15-20Other


3-12     Oil and natural gas properties
  lease-by-lease
  Goodwill Goodwill
    and Other Intangible Assets
  Maintenance and repairs
  Disposals/retirements
 F-8




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##### Table of Contents



Net income per common share
  2008


2007


2006Net income

$
347,069


$
438,639


$
673,254Weighted average number of common shares outstanding, excluding
    non-vested restricted stock


153,379



154,755



165,159Basic net income per common share

$
2.26


$
2.83


$
4.08Weighted average number of common shares outstanding, excluding
    non-vested restricted stock


153,379



154,755



165,159Dilutive effect of stock options and restricted shares


1,338



2,242



2,254Weighted average number of diluted common shares outstanding


154,717



156,997



167,413Diluted net income per common share

$
2.24


$
2.79


$
4.02Potentially dilutive securities excluded as anti-dilutive


2,455



2,460



800   Income taxes
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
  Stock based compensation Accounting for Stock
    Issued to Employees Share-Based Payment
 F-9




---



##### Table of Contents



Statement of cash flows
  Recently Issued Accounting Standards Fair
    Value Measurements
  Business Combinations Noncontrolling Interests in
    Consolidated Financial Statements, an amendment of ARB
    No. 51 Business
    Combinations
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1). EITF 03-6-1 earnings-per-share EITF 03-6-1 earnings-per-share EITF 03-6-1 earnings-per-share EITF 03-6-1. EITF 03-6-1 EITF 03-6-1
  Reclassifications
  2.
    Acquisitions   F-10




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##### Table of Contents



3.
    Property
    and Equipment    2008


2007Equipment

$
2,897,431


$
2,748,007Oil and natural gas properties


89,809



75,732Buildings


61,529



50,955Land


10,196



9,9913,058,965



2,884,685Less accumulated depreciation and depletion


(1,121,853
)


(1,043,281
)Property and equipment, net

$
1,937,112


$
1,841,404   Depreciation, depletion and other impairment
  2008


2007


2006Depreciation and impairment expense

$
256.9


$
235.8


$
187.3Depletion expense


11.5



13.4



9.1Total

$
268.4


$
249.2


$
196.4   Accounting for the Impairment or Disposal of
    Long-Lived Assets
       F-11




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##### Table of Contents



4.
    Goodwill    2008


2007Contract Drilling:Goodwill at beginning of year

$
86,234


$
89,092Changes to goodwill






(2,858
)Goodwill at end of period


86,234



86,234Drilling and completion fluids:Goodwill at beginning of year


9,964



9,964Changes to goodwill


(9,964
)


Goodwill at end of period






9,964Total goodwill

$
86,234


$
96,198            F-12




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##### Table of Contents



5.
    Accrued
    Expenses    2008


2007Salaries, wages, payroll taxes and benefits

$
30,334


$
33,816Workers compensation liability


70,439



70,989Sales, use and other taxes


12,015



12,119Insurance, other than workers compensation


14,209



16,308Other


5,658



3,602$
132,655


$
136,834   6.
    Asset
    Retirement Obligation  Accounting for Asset Retirement Obligations
  2008


2007Balance at beginning of year

$
1,593


$
1,829Liabilities incurred


516



276Liabilities settled


(424
)


(862
)Accretion expense


59



61Revision in estimated costs of plugging oil and natural gas wells


1,303



289Asset retirement obligation at end of year

$
3,047


$
1,593   7.
    Borrowings
    Under Line of Credit    8.
    Commitments,
    Contingencies and Other Matters  Commitments 
   F-13




---



##### Table of Contents



Contingencies
        Other Matters
  
    a bonus payment equal to the greater of the highest bonus paid
    after the Change in Control Agreement was entered into and the
    average of the two annual bonuses earned in the two fiscal years
    immediately preceding a change in control (such bonus payment
    prorated for the portion of the fiscal year preceding the
    termination date);
    a payment equal to 2.5 times (in the case of the Chairman of the
    Board and Chief Executive Officer), 2 times (in the case of the
    Senior Vice Presidents) or 1.5 times (in the case of the General
    Counsel) of the sum of (i) the highest annual salary in
    effect for such Key Employee and (ii) the average of the
    three annual bonuses earned by the Key Employee for the three
    fiscal years preceding the termination date; and
    continued coverage under the Companys welfare plans for up
    to three years (in the case of the Chairman of the Board and
    Chief Executive Officer) or two years (in the case of the Senior
    Vice Presidents and General Counsel).  gross-up gross-up
 F-14




---



##### Table of Contents



9.
    Stockholders
    Equity  Cash Dividends 
  Per Share


Total(In thousands)2006:Paid on March 30, 2006

$
0.04


$
6,906Paid on June 30, 2006


0.08



13,413Paid on September 29, 2006


0.08



13,024Paid on December 29, 2006


0.08



12,482Total cash dividends

$
0.28


$
45,8252007:Paid on March 30, 2007

$
0.08


$
12,527Paid on June 29, 2007


0.12



18,860Paid on September 28, 2007


0.12



18,690Paid on December 28, 2007


0.12



18,484Total cash dividends

$
0.44


$
68,5612008:Paid on March 28, 2008

$
0.12


$
18,493Paid on June 27, 2008


0.16



25,011Paid on September 29, 2008


0.16



24,803Paid on December 29, 2008


0.16



24,558Total cash dividends

$
0.60


$
92,865          F-15




---



##### Table of Contents



10.
    Stock-based
    Compensation  Share-Based Payment
    Shares





SharesAuthorized


Awards


AvailablePlan Name

for Grant


Outstanding


for GrantPatterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan, as
    amended (2005 Plan)


10,250,000



4,081,571



4,637,004Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term
    Incentive Plan, as amended (1997 Plan)






2,950,634



Amended and Restated Patterson-UTI Energy, Inc. 2001 Long-Term
    Incentive Plan (2001 Plan)






248,938



Amended and Restated Non-Employee Director Stock Option Plan of
    Patterson-UTI Energy, Inc. (Non-Employee Director
    Plan)






40,000



Amended and Restated Patterson-UTI Energy, Inc. 1996 Employee
    Stock Option Plan (1996 Plan)






51,400



Patterson-UTI Energy, Inc., 1993 Incentive Stock Plan, as
    amended (1993 Plan)






8,100



     
    The Compensation Committee of the Board of Directors administers
    the plan.
    All employees including officers and directors are eligible for
    awards.
    The Compensation Committee determines the vesting schedule for
    awards. Awards typically vest over 1 year for non-employee
    directors and 3 to 4 years for employees.
    The Compensation Committee sets the term of awards and no option
    term can exceed 10 years.
    All options granted under the plan are granted with an exercise
    price equal to or greater than the fair market value of the
    Companys common stock at the time the option is granted. F-16




---



##### Table of Contents




    The plan provides for awards of incentive stock options,
    non-incentive stock options, tandem and freestanding stock
    appreciation rights, restricted stock awards, other stock unit
    awards, performance share awards, performance unit awards and
    dividend equivalents. As of December 31, 2008, only
    non-incentive stock options, restricted stock awards and
    restricted stock units had been granted under the plan.            Stock Options 
  2008


2007


2006Volatility


37.04
%


36.37
%


33.18
%Expected term (in years)


4.17



4.00



4.00Dividend yield


2.27
%


1.97
%


1.09
%Risk-free interest rate


2.91
%


4.55
%


4.87
%     Weighted-AverageShares


Exercise PriceOutstanding at beginning of year


7,403,084


$
17.52Granted


834,500


$
25.99Exercised


(2,303,877
)

$
11.09Expired


(135
)

$
14.64Outstanding at end of year


5,933,572


$
21.20Exercisable at end of year


4,483,793


$
19.77    F-17




---



##### Table of Contents



2008


2007


2006Weighted-average grant-date fair value of stock options granted
    (per share)

$
7.20


$
7.09


$
8.62Grant-date fair value of stock options vested during the year
    (in thousands)

$
6,761


$
5,613


$
6,900Aggregate intrinsic value of stock options exercised (in
    thousands)

$
45,240


$
3,186


$
3,377     Aggregate intrinsic value

$
0Weighted-average remaining contractual term


8.85 yearsWeighted-average remaining expected term


2.95 yearsWeighted-average remaining vesting period


1.89 yearsUnrecognized compensation cost

$
8.9 million   Restricted Stock 
  
    Prior to January 1, 2006, forfeitures were recognized as
    they occurred;
    From January 1, 2006 forward, forfeitures are estimated in
    the determination of periodic compensation cost;
    Contra-equity deferred compensation was reversed against
    paid-in-capital
    at January 1, 2006; and
    Compensation expense is recognized as attributed to each period.      Weighted-AverageGrant DateShares


Fair ValueNon-vested restricted stock outstanding at beginning of year


1,490,150


$
26.22Granted


576,950


$
30.31Vested


(562,987
)

$
24.37Forfeited


(74,542
)

$
28.27Non-vested restricted stock outstanding at end of year


1,429,571


$
28.49     Aggregate intrinsic value

$
15.7 millionWeighted-average remaining vesting period


1.66 yearsUnrecognized compensation cost

$
18.3 million  F-18




---



##### Table of Contents



Restricted Stock Units 
    WeightedAverageGrant DateShares


Fair ValueNon-vested restricted stock units outstanding at January 1,
    2008





$
Granted


17,500


$
31.60Vested





$
Forfeited





$
Non-vested restricted stock units outstanding at
    December 31, 2008


17,500


$
31.60   Dividends on Equity Awards 
  
    Dividends are recognized as reductions of retained earnings for
    the portion of restricted stock awards expected to vest.
    Dividends are recognized as additional compensation cost for the
    portion of restricted stock awards that are not expected to vest
    or that ultimately do not vest.
    Dividend equivalents are recognized as additional compensation
    cost for restricted stock units.    11.
    Leases    12.
    Income
    Taxes  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
 F-19




---



##### Table of Contents



2008


2007


2006Federal income tax expense (benefit):Current

$
118,887


$
172,221


$
344,395Deferred


58,480



36,864



(5,851
)177,367



209,085



338,544State income tax expense:Current


6,697



16,456



21,371Deferred


7,116



983



1,39213,813



17,439



22,763Foreign income tax expense:Current


4,256



5,220



9,607Deferred


443



424



3534,699



5,644



9,960Total income tax expense (benefit):Current


129,840



193,897



375,373Deferred


66,039



38,271



(4,106
)Total income tax expense

$
195,879


$
232,168


$
371,267     2008


2007


2006Statutory tax rate


35.0
%


35.0
%


35.0
%State income taxes


1.7



1.4



1.4Permanent differences


(0.4
)


(1.6
)


(0.8
)Other, net


(0.2
)


(0.2
)


0.0Effective tax rate


36.1
%


34.6
%


35.6
%  F-20




---



##### Table of Contents



December 31,


Net


December 31,


Net


December 31,


Net


December 31,2008


Change


2007


Change


2006


Change


2005Deferred tax assets:Current:Federal net operating loss carryforwards

$



$
(374
)

$
374


$
(1,496
)

$
1,870


$



$
1,870Workers compensation allowance


25,984



(602
)


26,586



223



26,363



6,902



19,461Embezzlement costs


728



68



660



(13,634
)


14,294



14,294



Other


21,623



3,219



18,404



3,903



14,501



3,137



11,36448,335



2,311



46,024



(11,004
)


57,028



24,333



32,695Non-current:Federal net operating loss carryforwards














(374
)


374



(1,871
)


2,245AMT credit






(118
)


118







118







118Federal benefit of foreign deferred tax liabilities


9,416



443



8,973



424



8,549



353



8,196Federal benefit of state deferred tax liabilities


7,070



1,643



5,427



735



4,692



460



4,232Other


11,994



1,995



9,999



2,890



7,109



6,172



93728,480



3,963



24,517



3,675



20,842



5,114



15,728Total deferred tax assets


76,815



6,274



70,541



(7,329
)


77,870



29,447



48,423Deferred tax liabilities:Current:Other


(12,407
)


(1,753
)


(10,654
)


(2,492
)


(8,161
)


(1,848
)


(6,313
)Non-current:Property and equipment basis difference


(302,327
)


(70,362
)


(231,965
)


(28,466
)


(203,500
)


(23,775
)


(179,725
)Other


(3,870
)


8,172



(12,042
)


(6,741
)


(5,301
)


(110
)


(5,191
)(306,197
)


(62,190
)


(244,007
)


(35,207
)


(208,801
)


(23,885
)


(184,916
)Total deferred tax liabilities


(318,604
)


(63,943
)


(254,661
)


(37,699
)


(216,962
)


(25,733
)


(191,229
)Net deferred tax liability

$
(241,789
)

$
(57,669
)

$
(184,120
)

$
(45,028
)

$
(139,092
)

$
3,714


$
(142,806
)      F-21




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##### Table of Contents



13.
    Employee
    Benefits    14.
    Business
    Segments    Contract Drilling
  Pressure Pumping
  Drilling and Completion Fluids
  Oil and Natural Gas
 F-22




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##### Table of Contents



Years Ended December 31,2008


2007


2006Revenues:Contract drilling(a)

$
1,808,600


$
1,744,884


$
2,174,805Pressure pumping


217,494



202,812



145,671Drilling and completion fluids(b)


145,423



128,447



192,974Oil and natural gas


42,360



41,637



39,187Total segment revenues


2,213,877



2,117,780



2,552,637Elimination of intercompany revenues(a)(b)


(4,751
)


(3,586
)


(6,051
)Total revenues

$
2,209,126


$
2,114,194


$
2,546,586Income (loss) before income taxes:Contract drilling

$
531,025


$
558,792


$
991,449Pressure pumping


42,019



64,257



44,835Drilling and completion fluids


(4,558
)


6,528



28,759Oil and natural gas


13,711



10,998



8,660582,197



640,575



1,073,703Corporate and other


(34,596
)


(30,799
)


(27,639
)Embezzlement (costs) recoveries(c)






43,955



(3,081
)Net (loss) gain on asset disposals/retirements(d)


(6,071
)


16,545



(3,819
)Interest income


1,555



2,355



5,925Interest expense


(639
)


(2,187
)


(1,602
)Other


502



363



347Income before income taxes

$
542,948


$
670,807


$
1,043,834Identifiable assets:Contract drilling

$
2,255,421


$
2,132,910


$
1,849,923Pressure pumping


210,805



154,120



111,787Drilling and completion fluids


99,433



91,989



106,032Oil and natural gas


31,760



37,885



65,443Corporate and other(e)


115,398



48,295



59,318Total assets

$
2,712,817


$
2,465,199


$
2,192,503Depreciation, depletion and impairment:Contract drilling

$
229,311


$
213,812


$
168,607Pressure pumping


19,600



14,311



9,896Drilling and completion fluids


2,830



2,860



2,706Oil and natural gas


15,856



17,410



14,368Corporate and other


834



813



793Total depreciation, depletion and impairment

$
268,431


$
249,206


$
196,370Capital expenditures:Contract drilling

$
360,645


$
539,506


$
531,087Pressure pumping


61,289



47,582



41,262Drilling and completion fluids


3,467



3,082



4,222Oil and natural gas


22,981



17,516



21,198Corporate and other


511







150Total capital expenditures

$
448,893


$
607,686


$
597,919     (a)
    
    Includes contract drilling intercompany revenues of
    approximately $4.6 million, $3.2 million and
    $5.4 million for the years ended December 31, 2008,
    2007 and 2006, respectively. F-23




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##### Table of Contents



(b)
    
    Includes drilling and completion fluids intercompany revenues of
    approximately $177,000, $348,000 and $616,000 for the years
    ended December 31, 2008, 2007 and 2006, respectively.(c)
    
    The Companys former CFO has pleaded guilty to criminal
    charges and has been sentenced and is serving a term of
    imprisonment arising out of his embezzlement of funds from the
    Company prior to his termination in 2005. Embezzlement costs in
    2006 include professional fees and other costs incurred as a
    result of the embezzlement. The net embezzlement recovery in
    2007 includes the recognition of the recovery of assets seized
    by a court appointed receiver, net of related professional fees.(d)
    
    Gains or losses associated with the disposal or retirement of
    assets relate to decisions of the executive management group
    regarding corporate strategy. Accordingly, the related gains or
    losses have been separately presented and excluded from the
    results of specific segments.(e)
    
    Corporate and other assets primarily include cash on hand
    managed by the parent corporation and certain deferred Federal
    income tax assets.  15.
    Concentrations
    of Credit Risk      2008


2007Deposits in FDIC and SIPC-insured institutions under insurance
    limits

$
588


$
462Deposits in FDIC and SIPC-insured institutions over insurance
    limits


79,387



53,112Deposits in Foreign Banks


18,805



6,28298,780



59,856Less outstanding checks and other reconciling items


(17,557
)


(42,422
)Cash and cash equivalents

$
81,223


$
17,434       16.
    Related
    Party Transactions  Joint Operation of Oil and Natural Gas
    Properties
   F-24




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##### Table of Contents



17.
    Quarterly
    Financial Information (in thousands, except per share amounts)
    (unaudited)  1st Quarter


2nd Quarter


3rd Quarter


4th Quarter2007Operating revenues

$
547,101


$
522,558


$
524,002


$
520,533Operating income


179,725



215,136



144,100



131,315Net income


115,801



139,551



98,181



85,106Net income per common share:Basic

$
0.75


$
0.90


$
0.63


$
0.56Diluted

$
0.73


$
0.88


$
0.62


$
0.552008Operating revenues

$
504,554


$
526,283


$
608,532


$
569,757Operating income


119,874



126,419



165,282



129,955Net income


77,409



81,422



108,746



79,492Net income per common share:Basic

$
0.51


$
0.53


$
0.70


$
0.52Diluted

$
0.50


$
0.52


$
0.70


$
0.52  F-25




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##### Table of Contents



PATTERSON-UTI
    ENERGY, INC. AND SUBSIDIARIES
 SCHEDULE II  VALUATION AND QUALIFYING
    ACCOUNTS
  Charged toCosts andDescription

Beginning Balance


Expenses


Deductions(1)


Ending Balance(In thousands)Year Ended December 31, 2008Deducted from asset accounts:Allowance for doubtful accounts

$
10,014


$
4,350


$
5,034


$
9,330Year Ended December 31, 2007Deducted from asset accounts:Allowance for doubtful accounts

$
7,484


$
2,550


$
20


$
10,014Year Ended December 31, 2006Deducted from asset accounts:Allowance for doubtful accounts

$
2,199


$
5,400


$
115


$
7,484     (1)
    
    Uncollectible accounts written off net of recoveries. S-1




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##### Table of Contents



SIGNATURES
  Form 10-K
    By: /s/  Douglas
    J. Wall  President and Chief Executive Officer
    Form 10-K
  Signature

Title/s/  Mark
    S. SiegelMark
    S. Siegel

Chairman of the Board/s/  Douglas
    J. WallDouglas
    J. Wall(Principal Executive Officer)

President and Chief Executive Officer/s/  John
    E. Vollmer IIIJohn
    E. Vollmer III(Principal Financial Officer)

Senior Vice President  Corporate Development, Chief
    Financial Officer and Treasurer/s/  Gregory
    W. PipkinGregory
    W. Pipkin(Principal Accounting Officer)

Chief Accounting Officer and Assistant Secretary/s/  Kenneth
    N. BernsKenneth
    N. Berns

Senior Vice President and Director/s/  Charles
    O. BucknerCharles
    O. Buckner

Director/s/  Curtis
    W. HuffCurtis
    W. Huff

Director/s/  Terry
    H. HuntTerry
    H. Hunt

Director/s/  Kenneth
    R. PeakKenneth
    R. Peak

Director/s/  Cloyce
    A. TalbottCloyce
    A. Talbott

Director




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##### Table of Contents



EXHIBIT INDEX
  3
.1

Restated Certificate of Incorporation, as amended (filed
    August 9, 2004 as Exhibit 3.1 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).3
.2

Amendment to Restated Certificate of Incorporation, as amended
    (filed August 9, 2004 as Exhibit 3.2 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).3
.3

Second Amended and Restated Bylaws (filed August 6, 2007 as
    Exhibit 3.3 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2007 and
    incorporated herein by reference).4
.1

Rights Agreement dated January 2, 1997, between Patterson
    Energy, Inc. and Continental Stock Transfer &
    Trust Company (filed January 14, 1997 as
    Exhibit 2 to the Companys Registration Statement on
    Form 8-A
    and incorporated herein by reference).4
.2

Amendment to Rights Agreement dated as of October 23, 2001
    (filed October 31, 2001 as Exhibit 3.4 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2001 and
    incorporated herein by reference).4
.3

Restated Certificate of Incorporation, as amended (See
    Exhibits 3.1 and 3.2).4
.4

Registration Rights Agreement with Bear, Stearns and Co. Inc.,
    dated March 25, 1994, as assigned by REMY Capital Partners
    III, L.P. (filed March 19, 2002 as Exhibit 4.3 to the
    Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2001 and
    incorporated herein by reference).10
.1

For additional material contracts, see Exhibits 4.1, 4.2
    and 4.4.10
.2

Patterson-UTI Energy, Inc., 1993 Stock Incentive Plan, as
    amended (filed March 13, 1998 as Exhibit 10.1 to the
    Companys Registration Statement on
    Form S-8
    (File
    No. 333-47917)
    and incorporated herein by reference).*10
.3

Amended and Restated Patterson-UTI Energy, Inc. 2001 Long-Term
    Incentive Plan (filed November 27, 2002 as Exhibit 4.4
    to Post Effective Amendment No. 1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-60470)
    and incorporated herein by reference).*10
.4

Patterson-UTI Energy, Inc. Amended and Restated 1997 Long-Term
    Incentive Plan (filed July 28, 2003 as Exhibit 4.7 to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003 and
    incorporated herein by reference).*10
.5

Amendment to the Patterson-UTI Energy, Inc. Amended and Restated
    1997 Long-Term Incentive Plan (filed August 9, 2004 as
    Exhibit 10.7 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.6

Amended and Restated Patterson-UTI Energy, Inc. Non-Employee
    Director Stock Option Plan(filed July 28, 2003 as
    Exhibit 4.8 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2003 and
    incorporated herein by reference).*10
.7

Amended and Restated Patterson-UTI Energy, Inc. 1996 Employee
    Stock Option Plan (filed July 25, 2001 as Exhibit 4.4
    to Post-Effective Amendment No. 1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-60466)
    and incorporated herein by reference).*10
.8

Patterson-UTI Energy, Inc. 2005 Long-Term Incentive Plan,
    including Form of Executive Officer Restricted Stock Award
    Agreement, Form of Executive Officer Stock Option Agreement,
    Form of Non-Employee Director Restricted Stock Award Agreement
    and Form of Non-Employee Director Stock Option Agreement (filed
    June 21, 2005 as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K,
    and incorporated herein by reference).*10
.9

First Amendment to the Patterson-UTI Energy, Inc. 2005 Long-Term
    Incentive Plan (filed June 6, 2008 as Exhibit 10.1 to
    the Companys Current Report on
    Form 8-K
    and incorporated herein by reference).10
.10

Second Amendment to the Patterson-UTI Energy, Inc. 2005
    Long-Term Incentive Plan (filed June 6, 2008 as
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    and incorporated herein by reference).10
.11

Restricted Stock Award Agreement dated April 28, 2004
    between Patterson-UTI Energy, Inc. and Mark S. Siegel (filed
    August 9, 2004 as Exhibit 10.1 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.12

Restricted Stock Award Agreement dated April 28, 2004
    between Patterson-UTI Energy, Inc. and Cloyce A. Talbott (filed
    August 9, 2004 as Exhibit 10.2 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*




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##### Table of Contents



10
.13

Restricted Stock Award Agreement dated April 28, 2004
    between Patterson-UTI Energy, Inc. and Kenneth N. Berns (filed
    August 9, 2004 as Exhibit 10.4 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.14

Restricted Stock Award Agreement dated April 28, 2004
    between Patterson-UTI Energy, Inc. and John E. Vollmer III
    (filed August 9, 2004 as Exhibit 10.6 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2004 and
    incorporated herein by reference).*10
.15

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between
    Patterson-UTI Energy, Inc. and Mark S. Siegel (filed on
    February 4, 2004 as Exhibit 10.2 to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 2003 and incorporated
    herein by reference).*10
.16

Employment Agreement, dated as of September 1, 2007 between
    Patterson-UTI Energy, Inc. and Cloyce A. Talbott (filed on
    September 24, 2007 as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    and incorporated herein by reference).*10
.17

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between
    Patterson-UTI Energy, Inc. and Kenneth N. Berns (filed on
    February 4, 2004 as Exhibit 10.5 to the Companys
    Annual Report on
    Form 10-K
    for the year ended December 31, 2003 and incorporated
    herein by reference).*10
.18

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of January 29, 2004, by and between
    Patterson-UTI Energy, Inc. and John E. Vollmer III (filed
    on February 4, 2004 as Exhibit 10.7 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003 and incorporated
    herein by reference).*10
.19

Form of Letter Agreement regarding termination, effective as of
    January 29, 2004, entered into by Patterson-UTI Energy,
    Inc. with each of Mark S. Siegel, Kenneth N. Berns and John E.
    Vollmer III (filed on February 25, 2005 as
    Exhibit 10.23 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference).*10
.20

Form of Indemnification Agreement entered into by Patterson-UTI
    Energy, Inc. with each of Mark S. Siegel, Cloyce A. Talbott,
    Douglas J. Wall, Kenneth N. Berns, Curtis W. Huff, Terry H.
    Hunt, Kenneth R. Peak, Charles O. Buckner, John E. Vollmer III,
    William L. Moll, Jr. and Gregory W. Pipkin (filed April 28,
    2004 as Exhibit 10.11 to the Companys Annual Report
    on
    Form 10-K,
    as amended, for the year ended December 31, 2003 and
    incorporated herein by reference).*10
.21

Severance Agreement between Patterson-UTI Energy, Inc. and
    Douglas J. Wall, effective as of August 31, 2007 (filed
    September 4, 2007 as Exhibit 10.3 to the
    Companys Current Report on
    Form 8-K
    and incorporated herein by reference).*10
.22

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of August 31, 2007, by and between
    Patterson-UTI Energy, Inc. and Douglas J. Wall (filed
    September 4, 2007 as Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    and incorporated herein by reference).*10
.23

Patterson-UTI Energy, Inc. Change in Control Agreement,
    effective as of August 31, 2007, by and between
    Patterson-UTI Energy, Inc. and William L. Moll, Jr. (filed
    November 5, 2007 as Exhibit 10.7 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.24

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Mark S. Siegel, entered into
    November 1, 2007 (filed November 5, 2007 as
    Exhibit 10.8 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.25

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Douglas J. Wall, entered into
    November 1, 2007 (filed November 5, 2007 as
    Exhibit 10.9 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.26

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and John E. Vollmer, III,
    entered into November 1, 2007 (filed November 5, 2007
    as Exhibit 10.10 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.27

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and Kenneth N. Berns, entered into
    November 1, 2007 (filed November 5, 2007 as
    Exhibit 10.11 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*




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##### Table of Contents



10
.28

First Amendment to Change in Control Agreement Between
    Patterson-UTI Energy, Inc. and William L. Moll, Jr., entered
    into November 1, 2007 (filed November 5, 2007 as
    Exhibit 10.12 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference).*10
.29

Credit Agreement dated as of December 17, 2004 among
    Patterson-UTI Energy, Inc., as the Borrower, Bank of America,
    N.A., as administrative agent, L/C Issuer and a Lender and the
    other lenders and agents party thereto (filed on
    December 23, 2004 as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    and incorporated herein by reference).10
.30

Commitment Increase and Joinder Agreement, dated as of
    August 2, 2006, by and among Patterson-UTI Energy, Inc.,
    the guarantors party thereto, the lenders party thereto, and
    Bank of America, N.A. as Administrative Agent, L/C Issuer and
    Lender (filed August 21, 2006 as Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    and incorporated herein by reference).10
.31

Letter Agreement dated February 6, 2006 between
    Patterson-UTI Energy, Inc. and John E. Vollmer III (filed
    May 1, 2006 as Exhibit 10.25 to the Companys
    Annual Report on
    Form 10-K,
    as amended, and incorporated herein by reference).*14
.1

Patterson-UTI Energy, Inc. Code of Business Conduct and Ethics
    for Senior Financial Executives (filed on February 4, 2004
    as Exhibit 14.1 to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003 and incorporated
    herein by reference).21
.1

Subsidiaries of the Registrant.23
.1

Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934, as amended.31
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)
    of the Securities Exchange Act of 1934, as amended.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 USC Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     *
    
    Management Contract or Compensatory Plan identified as required
    by Item 15(a)(3) of
    Form 10-K.