PATTERSON UTI ENERGY INC (PTEN)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management Overview — We are a Houston, Texas-based leading provider of drilling and completion services to oil and natural gas exploration and production companies in the United States and other select countries, including contract drilling services, integrated well completion services and directional drilling services in the United States, and specialized drill bit solutions in North America, the Middle East and many other regions around the world. We operate under three reportable business segments: (i) drilling services, (ii) completion services and (iii) drilling products.

Drilling Services

Our contract drilling business operates primarily in the continental United States, and from time to time, we pursue contract drilling opportunities in other select markets. We also provide a comprehensive suite of directional drilling services in most major producing onshore oil and natural gas basins in the United States and we provide services that aim to improve the statistical accuracy of wellbore placement for directional and horizontal wells. We also provide electrical controls and automation to the energy, marine and mining industries in North America and other select markets.

As of June 30, 2026, we had 148 marketed land-based drilling rigs based in the following regions:

(1)In January 2026, we signed a multi-year agreement to lease two rigs to DLS Archer Ltd. S.A. to support Archer’s operations in Argentina’s Vaca Muerta formation.

We have addressed our customers’ needs for drilling horizontal wells in shale and other unconventional resource plays by improving the capabilities of our drilling fleet. The U.S. land rig industry has in recent years referred to certain high specification rigs as “super-spec” rigs, which we consider to be at least a 1,500 horsepower, AC-powered rig that has at least a 750,000-pound hookload, a 7,500-psi circulating system, and is pad-capable. Due to evolving customer preferences, we refer to certain premium rigs as “Tier-1, super spec” rigs, which we consider as being a super-spec rig that also has a third mud pump and raised drawworks that allows for more clearance underneath the rig floor. As of June 30, 2026, our rig fleet included 137 marketed Tier-1, super-spec rigs.

Completion Services

Our well completion services business consists of services for hydraulic fracturing, wireline and pumping, completion support and cementing. It also includes our power solutions natural gas fueling business and our proppant last mile logistics and storage business. Our completion services business operates in many of the most active basins in the continental United States including the Permian, the Marcellus Shale/Utica, the Eagle Ford, Mid-Continental, Haynesville and the Bakken/Rockies.

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

We are also advancing our Vertex™ fully automated, closed-loop completions process, a component of our proprietary digital completions management platform, eos™, which offers our customers the opportunity for greater operational efficiency, lower costs and improved performance, while laying the foundation for integrating AI-driven reservoir technologies.

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Drilling Products

We serve the energy and mining markets by manufacturing and distributing drill bits and downhole tools throughout North America and internationally in over 30 countries. Our drilling equipment is used in oil and natural gas exploration and production and in geothermal and mining operations. We have manufacturing and repair facilities located in Fort Worth, Texas, Leduc, Alberta and Saudi Arabia and repair facilities located in Argentina, Colombia and Oman.

Recent Developments in Market Conditions and Outlook — Our revenues, profitability and cash flows are highly dependent upon capital expenditures of exploration and production companies (“E&Ps”), which are largely driven by capital budgets set to achieve respective production targets in relation to current and expected future prices for oil and natural gas, as well as broader macroeconomic conditions. Commodity prices have historically been volatile and are affected by global supply and demand dynamics, geopolitical conditions and other factors, but were relatively range-bound in recent years. The current demand for equipment and services remains impacted by macro conditions that are outside of our control, including commodity prices, geopolitical environment, changes to international tariffs and trade policies, inflationary pressures, global economic conditions, as well as customer consolidation and focus by E&Ps and service companies on capital returns.

During 2025, global economic conditions weakened in part due to uncertainty related to trade policies and tariffs implemented or proposed by the United States and other governments. At the same time, oil markets were affected by evolving supply dynamics, including changes in production policies by OPEC+ countries and increasing non-OPEC supply. These factors contributed to periods of downward pressure on crude oil prices and increased uncertainty in global energy markets.

During the first half of 2026, energy markets experienced increased volatility driven by geopolitical developments in the Middle East, including the conflict with Iran and ongoing disruptions to global oil supply and key transportation routes. These events contributed to fluctuations in commodity prices, customer spending expectations and overall market sentiment. In addition, global energy markets continue to be influenced by OPEC+ production decisions, changes in worldwide supply and demand balances and broader macroeconomic conditions. While the full effects are yet to be determined, we believe these dynamics contributed to increased activity in the second quarter of 2026, particularly North America, and could support continued increases in activity in the second half of 2026, as operators reassess capital allocation and activity levels commensurate with commodity prices and long-term supply chain dependability.

Oil prices averaged $95.65 per barrel in the second quarter of 2026, as compared to $72.74 per barrel in the first quarter of 2026, and closed at $84.25 per barrel on July 27, 2026. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $2.95 per MMBtu in the second quarter of 2026 as compared to an average of $4.71 per MMBtu in the first quarter of 2026, and closed at $2.63 per MMBtu on July 27, 2026.

Our drilling activity in the United States remained relatively stable in the second quarter of 2026, with an average active rig count in the United States of 92 rigs, consistent with the first quarter of 2026 and supported in part by term contracts. Activity strengthened as the quarter progressed, and we exited the quarter with 96 rigs operating, reflecting a higher level of activity than the quarterly average. Term contracts help support our operating rig count. We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of June 30, 2026 was approximately $365 million. Approximately 15% of our total contract drilling backlog in the United States at June 30, 2026 is reasonably expected to remain at June 30, 2027. See Note 2 of Notes to unaudited condensed consolidated financial statements for additional information on backlog.

In our drilling services segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter. We expect our average U.S. rig count to be approximately 100 in the third quarter, and we expect to exit the quarter higher than the quarterly average.

In our completion services segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter, supported by near-full utilization across our active frac equipment and additional pricing improvement compared to the second quarter.

In our drilling products segment for the third quarter of 2026, we expect adjusted gross profit to be higher than the second quarter, driven by higher drilling activity in the United States and the seasonal recovery from spring breakup in Canada.

Recent Developments in Business and Financial Matters — During the second quarter of 2026, management approved a plan to exit our Colombian contract drilling operations, which resulted in incremental operating expenses totaling $21.0 million within the Drilling Services segment. Changes in Colombia’s political environment, coupled with continued reductions in activity forecasts and challenging market conditions in the region, have reduced the attractiveness of additional investment. The exit activity is expected to be substantially completed over the next year.

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On May 19, 2026, we completed an offering of $500 million in aggregate principal amount of 6.05% senior notes due 2036 (the “2036 Notes”). The net proceeds before offering expenses from the offering of the 2036 Notes were approximately $496 million, which we used to fully redeem our outstanding 2028 Notes and for general corporate purposes.

On June 4, 2026, we completed our redemption of all the approximately $483 million aggregate principal amount of the outstanding 2028 Notes. The 2028 Notes were redeemed at a redemption price of 100% of the principal amount of the 2028 Notes outstanding, plus accrued and unpaid interest to the redemption date. The total amount of the redemption was approximately $483 million, which was funded using a portion of the net proceeds from our 2036 Notes offering. We recognized a non-cash loss on extinguishment of debt of $0.9 million, primarily related to the write-off of unamortized debt issuance cost associated with the 2028 Notes, which is included in “Interest expense, net of amount capitalized” in the consolidated statement of operations.

For the three months ended June 30, 2026 and March 31, 2026 and for the six months ended June 30, 2026 and June 30, 2025, our operating revenues consisted of the following (dollars in thousands):

Results of Operations

The following tables summarize results of operations by business segment for the three months ended June 30, 2026 and March 31, 2026:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management Overview — We are a Houston, Texas-based leading provider of drilling and completion services to oil and natural gas exploration and production companies in the United States and other select countries, including contract drilling services, integrated well completion services and directional drilling services in the United States, and specialized drill bit solutions in the United States, Middle East and many other regions around the world. We operate under three reportable business segments: (i) drilling services, (ii) completion services, and (iii) drilling products.

Drilling Services

Our contract drilling business operates in the continental United States and internationally in Colombia and Ecuador and, from time to time, we pursue contract drilling opportunities in other select markets. We also provide a comprehensive suite of directional drilling services in most major producing onshore oil and natural gas basins in the United States, and we provide services that improve the statistical accuracy of wellbore placement for directional and horizontal wells. We also provide electrical controls and automation to the energy, marine and mining industries, in North America and other select markets.

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We have addressed our customers’ needs for drilling horizontal wells in shale and other unconventional resource plays by improving the capabilities of our drilling fleet. The U.S. land rig industry has in recent years referred to certain high specification rigs as “super-spec” rigs, which we consider to be at least a 1,500 horsepower, AC-powered rig that has at least a 750,000-pound hookload, a 7,500-psi circulating system, and is pad-capable. Due to evolving customer preferences, we refer to certain premium rigs as “Tier-1, super spec” rigs, which we consider as being a super-spec rig that also has a third mud pump and raised drawworks that allows for more clearance underneath the rig floor. As of December 31, 2025, our rig fleet included 137 Tier-1, super-spec rigs marketed.

Completion Services

Our well completion services business consists of services for hydraulic fracturing, wireline and pumping, completion support, and cementing. It also includes our power solutions natural gas fueling business and our proppant last mile logistics and storage business. Our completion services business operates in several of the most active basins in the continental United States including the Permian, the Marcellus Shale/Utica, the Eagle Ford, Mid-Continental, Haynesville, and the Bakken/Rockies.

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

We are also advancing our Vertex™ fully automated, closed-loop completions process, a component of our proprietary digital completions management platform, eos™, which offers our customers the opportunity for greater operational efficiency, lower costs, and improved performance, while laying the foundation for integrating AI-driven reservoir technologies.

Drilling Products

We serve the energy and mining markets by manufacturing and distributing drill bits and downhole tools throughout North America and internationally in over 30 countries. Our drilling equipment is used in oil and natural gas exploration and production and in geothermal and mining operations. We have manufacturing and repair facilities located in Fort Worth, Texas, Leduc, Alberta and Saudi Arabia and repair facilities located in Argentina, Colombia and Oman.

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

Oil prices averaged $59.62 per barrel in the fourth quarter of 2025 and closed at $61.60 per barrel on February 2, 2026. Natural gas prices (based on the Henry Hub Spot Market Price) averaged $3.73 per MMBtu in the fourth quarter of 2025 and closed at $4.40 per MMBtu on February 2, 2026.

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Quarterly average oil prices and our quarterly average number of rigs operating in the United States for 2023, 2024 and 2025 are as follows:

(1)The average oil price represents the average monthly WTI spot price as reported by the United States Energy Information Administration.

(2)A rig is considered to be operating if it is earning revenue pursuant to a contract on a given day.

In our drilling services segment, our average active rig count in the United States for the fourth quarter of 2025 was 93 rigs. This was a decrease from our average active rig count for the third quarter of 2025 of 95 rigs. Our active rig count in the United States at December 31, 2025 of 93 rigs was less than the rig count of 105 rigs at December 31, 2024, reflecting the industry-wide activity declines due, in part, to expectations regarding future crude oil prices, increased drilling efficiencies and market consolidation. We expect our rig count in the United States will be in the low-to-mid 90s in the first quarter of 2026. Term contracts help support our operating rig count. Based on contracts in place in the United States as of February 4, 2026, we expect an average of 49 rigs operating under term contracts during the first quarter of 2026 and an average of 27 rigs operating under term contracts during 2026.

We maintain a backlog of commitments for contract drilling services under term contracts, which we define as contracts with a duration of six months or more. Our contract drilling backlog in the United States as of December 31, 2025 and 2024 was approximately $291 million and $426 million, respectively. Approximately 9% of our total contract drilling backlog in the United States at December 31, 2025 is reasonably expected to remain after 2026. See Note 3 of Notes to consolidated financial statements in Item 8 of this Report and “Item 1A. Risk Factors – Our current backlog of contract drilling revenue may decline and may not ultimately be realized, as fixed-term contracts may in certain instances be terminated without an early termination payment.”

In our completion services segment, activity and pricing for the fourth quarter of 2025 were steady compared to the previous quarter. We expect activity to decline slightly in the first quarter due to impacts from first quarter winter weather.

In our drilling products segment, U.S. and Canadian activity remains strong. International revenue was down slightly in the fourth quarter of 2025 compared to the third quarter of 2025 due to lower-than-expected sales in the Middle East, although we delivered revenue growth in several key markets, including Latin America and Asia-Pacific. We expect slightly lower U.S. revenue in the first quarter in this segment due to lower activity, which we expect will be offset by an increase in activity and revenue from our International business.

Cash capital expenditures for 2025 totaled $589 million. This was a decrease from the $678 million of cash capital expenditures in 2024 due to a decrease in business activity in 2025. Additionally, we received proceeds from sale of assets or idle equipment and insurance recoveries of $44.1 million and $25.8 million in 2025 and 2024, respectively. Based on our current outlook for activity, we expect our capital expenditures for 2026 to be approximately $500 million on a gross basis and less than $500 million, net of asset sales.

Recent Developments in Financial Matters — On January 31, 2025, we entered into the Second Amended and Restated Credit Agreement with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, and the other parties thereto (the “Credit Agreement”). The Credit Agreement amended and restated our Amended and Restated Credit Agreement dated as of March 27, 2018 (as amended, restated, supplemented or otherwise modified at December 31, 2024, the “Prior Credit Agreement”). The commitments under the Credit Agreement are $500 million, and the loans and commitments under the Credit Agreement mature on January 31, 2030.

The Credit Agreement provides for a committed senior unsecured credit facility that permits aggregate revolving credit borrowings of up to $500 million, with a letter of credit sub-facility of $100 million and a swing line sub-facility that, at any time outstanding, is

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limited to the lesser of $50 million and the amount of the swing line provider’s unused commitment. Subject to customary conditions, we may request that the lenders’ aggregate commitments be increased by up to $200 million, not to exceed total commitments of $700 million. For a description of the Credit Agreement, see “Liquidity and Capital Resources” included in Part II, Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report.

As of December 31, 2025, we had no borrowings outstanding under our Credit Agreement. We had $5.0 million in letters of credit outstanding under the Credit Agreement at December 31, 2025 and, as a result, had available borrowing capacity of approximately $495 million under the Credit Agreement at that date.

Impact on our Business from Oil and Natural Gas Prices and Other Factors — Our revenues, profitability and cash flows are highly dependent upon prevailing prices for oil and natural gas, expectations about future prices, and our customers’ ability to access, and willingness to deploy, capital to fund their operating a

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