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Oil company may have lost $70 million to embezzlement

SNYDER, Texas — Oil and gas drilling operator Patterson-UTI Energy Inc. said it suspected a former officer may have embezzled $70 million over five years, news that sent the company's shares sharply lower on Friday.

Patterson-UTI said late Thursday that it plans to hire legal counsel and forensic accountants to investigate "unauthorized payments" the company made for assets that were never delivered.

The company said it is too early to tell how the inquiry will affect previous financial results.

Nervous investors drove the company's shares down $2.83, or 8.6 percent, to close at $30 in heavy trading Friday on the Nasdaq Stock Market. Volume surged to 18 million shares from a daily average of about 2.6 million. The stock traded at a year low of $17.15 in early January, then climbed to a 52-week high of $36.79 on Sept. 30.

The announcement of possible embezzlement came less than a week after the company announced the departure of its chief financial officer. The company said Jonathan D. Nelson had resigned for personal reasons.

The company did not immediately return a call Friday for further comment. In a statement late Thursday, the company said the audit committee of its board began an investigation "as a result of information received by senior management" on Wednesday.

Patterson-UTI reported profit of $108.7 million on sales of $1 billion last year. For the first nine months of this year, it said it earned $247.5 million on revenue of $1.21 billion.

The company provides contract drilling services to oil and natural gas operators in Texas, New Mexico, Oklahoma and other states and in western Canada. It also has exploration and production operations in Texas and New Mexico.

The company was formed in 2001 by Patterson Energy's acquisition of UTI Energy. It operates about 400 drilling rigs, the second-largest land-based fleet in North America, and has about 6,800 employees.