Bonuses Cut For Patterson UTI Execs After Fatal Rig Fire

Patterson-UTI CEO Andy Hendricks got a $2.25 million bonus for 2017.

It would have been higher, but all of the bonuses for top executives at the company were reduced because of a deadly fire at a Patterson-UTI oil and gas rig in Oklahoma in January. Five men died. Three were Patterson-UTI Energy Inc. employees.

The company's six top executives asked the board of directors' compensation committee to waive any payout for the safety portion of their bonus calculation, according to a proxy filing last month with the Securities and Exchange Commission. According to the document, the Houston-based company had revised its system for determining executive compensation for 2017. The safety component was one of the changes.

The "key performance indicator" for safety judges the executives on "maintenance of Patterson-UTI's leadership position in operating and safety standards."

It's not clear how much higher Hendricks' bonus would have been without the fatal fire. The maximum bonus Hendricks could have received was $2.5 million, according to the filing, $250,000 more than he got.

There were two other key performance indicators that earned him $250,000 and $187,500, respectively, on top of a base $1,750,000 for financial performance.

The bonus is on top of his $854,000 salary. His total compensation, including stock awards, was listed as $14,253,839.

The explosion and rig fire occurred Jan. 22 near Quinton, Okla., a rural community about 100 miles southeast of Tulsa.

The explosion happened while the crew was removing pipe from the hole. The rig burned for eight hours. The workers' bodies were found in the rig's control room. The rig was owned by Patterson-UTI Drilling Co. LLC, a subsidiary of Patterson-UTI Energy.

It was the deadliest oil field accident since at least 2010, when 11 men were killed in the BP PLC explosion in the Gulf of Mexico. The damaged BP well was permanently plugged.

Patterson-UTI has a troubled safety record. Since 2008, when a U.S. Senate committee called the Houston company "one of the worst violators of workplace safety laws," at least 12 of its workers have been killed on the job.

The company has said it was improving safety before the accident, investing millions of dollars in training and protective equipment. A statement released to news outlets after the explosion said the company sought "to instill a company-wide culture where safety is the top priority of each employee."

About a month after the Quinton explosion, another Patterson worker was seriously injured by falling pipe at another well in Oklahoma.

State officials confirmed last week that the operator of the well, Red Mountain Energy LLC, is "fracking," or hydraulically fracturing, the well in order to bring it into production. Patterson-UTI did not perform the remaining drilling.

The U.S. Chemical Safety and Hazard Investigation Board (CSB) is also investigating the explosion. The Occupational Safety and Health Administration is investigating Red Mountain and Patterson-UTI. Families of the victims have also filed several lawsuits.

Source: ENERGYWIRE