We use share-based payments to compensate employees and non-employee directors. We grant incentive awards in the form of restricted stock units (a small portion of which are subject to the achievement of performance conditions) and performance unit awards (which are subject to the achievement of performance conditions). Certain of these incentive awards are share-settled, and certain of these incentive awards are cash-settled. See Note 12 in Notes to consolidated financial statements in Item 8 of our Annual Report for further description of the various types of stock-based compensation awards and the applicable award terms and accounting.

The Patterson-UTI Energy, Inc. 2021 Long-Term Incentive Plan (as amended from time to time, the “2021 Plan”) was originally approved by our stockholders on June 3, 2021. Subject to stockholder approval, our Board of Directors approved an amendment to the 2021 Plan to increase the number of shares available for issuance under the 2021 Plan by 28.9 million shares (the “Amendment”). On June 4, 2026, our stockholders approved the Amendment.


	Underlying Shares	Weighted Average Exercise Price Per Share
Outstanding at January 1, 2026	1,137,205	$	23.56


Exercised	—	$	—
Expired	(655,800)	$	18.54
Outstanding at June 30, 2026	481,405	$	30.40
Exercisable at June 30, 2026	481,405	$	30.40


	Time Based Shares	Performance Based Shares	Weighted Average Grant Date Fair Value Per Share
Non-vested restricted stock units outstanding at January 1, 2026	6,673,838	409,890	$	8.06
Granted	2,286,042	—	$	11.08
Performance based restricted stock units settled (1)	—	(331,675)	$	14.10
Vested	(2,896,287)	—	$	8.40
Forfeited	(270,126)	(4,316)	$	7.22
Non-vested restricted stock units outstanding at June 30, 2026	5,793,467	73,899	$	8.76

(1)Performance based restricted stock units reached the end of their performance period during the six months ended June 30, 2026, and no shares were issued to settle such performance based restricted stock units.

As of June 30, 2026, we had unrecognized compensation cost related to our unvested restricted stock units totaling $47.0 million. The weighted-average remaining vesting period for these unvested restricted stock units was 2.21 years as of June 30, 2026.

Restricted Stock Units (Liability Based) — A portion of the restricted stock unit awards granted in 2025 and 2026 are cash-settled. Cash-settled restricted stock unit activity from January 1, 2026 to June 30, 2026 follows:


			Time Based Shares
Non-vested cash-settled restricted stock units outstanding at January 1, 2026			628,175
Granted			331,816
Vested			(210,849)
Forfeited			—
Non-vested cash-settled restricted stock units outstanding at June 30, 2026			749,142

As of June 30, 2026, we had unrecognized compensation cost related to our unvested cash-settled restricted stock units totaling $7.5 million. The weighted-average remaining vesting period for these unvested cash-settled restricted stock units was 2.29 years as of June 30, 2026.

Performance Unit Awards — We have granted performance unit awards to certain employees (the “Performance Units”). The Performance Units generally vest over a three-year period based on the achievement of performance goals. Historically, Performance Units have been tied to total shareholder return (“TSR”) achievement as compared to the TSR of a designated peer group, and allow for a payout ranging between 0% and 200% of the target payout. With respect to the Performance Units granted in each of April 2026 and May 2025, (i) one-half are cash-settled and are otherwise structured similarly to the Performance Units granted in 2024 with vesting tied to our relative TSR and (ii) one-half are share-settled and tied to our relative free cash flow return as compared to the free cash flow return of a designated peer group (“FCF”).


	Performance Units Share-Settled (at target)	Weighted Average Grant Date Fair Value Per Share		Performance Units Cash-Settled (at target)
Non-vested Performance Units outstanding at January 1, 2026	2,214,700	$	10.49	743,800
Granted	414,600	$	12.22	414,600
Performance Units settled (1)	(595,800)	$	13.36	—
Forfeited	—	$	—	—
Non-vested Performance Units outstanding at June 30, 2026	2,033,500	$	10.00	1,158,400

(1) Share-settled Performance Units granted in 2023 reached the end of their performance period during the six months ended June 30, 2026, and no shares were issued to settle such Performance Units.

As of June 30, 2026, we had unrecognized compensation cost related to our unvested Performance Units totaling $26.4 million. The weighted-average remaining vesting period for these unvested Performance Units was 2.24 years as of June 30, 2026.

Stock-Based Compensation Expense — Expense associated with restricted stock units and Performance Unit awards is included in “Direct operating costs” and “General and administrative” in our unaudited condensed consolidated statements of operations. The following table presents stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Share-settled awards
Restricted stock units	$	5,560	$	7,512	$	7,488	$	17,398
Performance Units – TSR	1,124		1,568		2,674		3,971
Performance Units – FCF	1,841		498		2,775		498
Total share-settled awards	8,525		9,578		12,937		21,867

Cash-settled awards

Cash-settled restricted stock units	869		204		1,995		212
Cash-settled Performance Units	695		377		2,529		377
Total cash-settled awards	1,564		581		4,524		589
Stock-based compensation expense	$	10,089	$	10,159	$	17,461	$	22,456