Exhibit 99.3

Case 1:17-cv-02342    Document 1    Filed 03/31/17    Page 1 of 16

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT NEW YORK

Plaintiff Garud Sudarsan (“Plaintiff”), by his undersigned attorneys, alleges upon personal knowledge with respect to himself, and upon information and belief based upon, inter alia, the investigation of counsel as to all other allegations herein, as follows:

NATURE OF THE ACTION

1. This action is brought as a class action by Plaintiff on behalf of himself and the other holders of the Series A, B and C warrants of Seventy Seven Energy Inc. (“Seventy Seven Energy,” “SSE” or the “Company”) against the Company for breach of contract and against Patterson-UTI Energy, Inc. (“Patterson-UTI”) and Pyramid Merger Sub, Inc. (“Pyramid Merger”) (collectively the “Defendants”), for tortious interference with contract, in connection with the proposed merger between Seventy Seven Energy and Patterson-UTI which, if effected as previously announced, will force Plaintiff and class members to exercise the warrants years before their respective expiration dates or suffer elimination of the warrants without payment or other consideration to their current holders.

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2. On December 12, 2016, Seventy Seven Energy announced that it had entered into an Agreement and Plan of Merger (“Agreement”), pursuant to which Patterson-UTI will acquire Seventy Seven Energy in exchange for newly issued shares of Patterson-UTI common stock (the “Proposed Transaction”). Pursuant to the terms of the Agreement, Seventy Seven Energy will engage in a Reorganization with Patterson and SSE and current SSE shareholders will receive shares of Patterson-UTI common stock based upon an agreed upon exchange ratio (the “Exchange Ratio”). The Exchange Ratio will be 1.7725 if all outstanding Series A warrants of SSE are exercised for cash, no other warrants are exercised, no other shares of SSE are issued prior to closing and certain other assumptions occur.

3. The warrant owners are not being offered any consideration for exchange of their warrants. They are being forced to exercise the warrants or lose them. The Agreement requires the warrants to be exercised or they will “expire” upon closing of the Proposed Transaction.

4. The special meeting of Seventy Seven Energy shareholders to vote on the Proposed Transaction is forthcoming. If the vote is held and the transaction is approved Series A, B and C warrants will be cancelled without any consideration offered to Plaintiff or class members. The warrants have enormous embedded value. The expiration and cancellation of the warrants constitutes a violation of the Warrant Agreement, a copy of which is annexed hereto as Exhibit A. Defendant Patterson-UTI tortiously interfered with the Warrant Agreement by requiring forced exercise or expiration of unexercised warrants at the closing of the Proposed Transaction.

5. For these reasons, and as set forth in detail herein, Plaintiff asserts these claims against Seventy Seven Energy and Patterson-UTI. Plaintiff seeks to enjoin SSE from cancelling the warrants (or allowing them to expire) and seeks a mandatory injunction requiring SSE and its successor, Patterson-UTI, to continue the warrants and make the contractual adjustments to their strike price and number thereof in accordance with the terms of the Warrant Agreement.

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6. The Warrant Agreement allows only one circumstance for acceleration of the contractual expiration date: a “non-affiliate combination.” This transaction cannot be considered a “non-affiliate combination” because the surviving company of the merger is SSE. Moreover, even if the transaction had been structured properly as a “non-affiliate combination” it would still not eliminate the warrants. The Warrant Agreement precludes accelerated exercise or expiration of the warrants in the event of a “reorganization.” Therefore, since the Agreement, signed by Defendants, expressly states that the transaction between SSE and Patterson-UTI is a “reorganization,” the Agreement terms which force exercise or expiration violate the terms of the Warrant Agreement.

JURISDICTION AND VENUE

7. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. 1332(d)(2), with the matter in controversy being worth over 5 million dollars and members of the Class being citizens of states other than New York, and pursuant to the provisions of the Warrant Agreement dated as of August 1, 2016.

8. Personal jurisdiction exists over the Company because as part of the Warrant Agreement it has consented to jurisdiction here and jurisdiction exists over co-defendants pursuant to diversity jurisdiction principles. The Warrant Agreement provides:

Section 7.15 Applicable Law; Jurisdiction. The validity, interpretation and performance of this Warrant Agreement and of the Global Warrant Certificates shall be governed in accordance with the Laws of the State of New York, without giving effect to the principles of conflicts of Laws thereof. The parties hereto irrevocably consent to the exclusive jurisdiction of the courts of the State of New York and any federal court located in such state in connection with any action, suit or proceeding arising out of or relating to this Warrant Agreement.

9. Venue is proper in this District because SSE has consented to this venue and other parties conduct business in this District.

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PARTIES

10. Plaintiff is a citizen of Canada and, at all relevant times, has been a warrant holder of Series B and C warrants of Seventy Seven Energy.

11. Defendant Seventy Seven Energy is a Delaware corporation with its principal executive offices in Oklahoma City, Oklahoma. The Company operates as a diversified oilfield services company. The Company provides a wide range of well-site services and equipment to its United States land-based exploration and production customers operating in unconventional resource plays. Seventy Seven Energy offers upstream services, including drilling, pressure pumping, and oilfield rental tools.

12. Defendant Patterson-UTI Energy, Inc. is a Delaware corporation engaged in the business of servicing the oil exploration and drilling business.

13. Defendant Pyramid Merger Sub, Inc. is a Delaware corporation and a wholly owned subsidiary of Patterson-UTI.

14. As a result of the transactions described in the Agreement, SSE will be the surviving corporation of the Merger thus precluding the occurrence of a “non-affiliate combination.”

CLASS ACTION ALLEGATIONS

15. Plaintiff brings this class action pursuant to Fed. R. Civ. P. 23 on behalf of himself and the other warrant holders of Seventy Seven Energy (the “Class”). Excluded from the Class are Defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any Defendant.

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16. This action is properly maintainable as a class action because:

a. The Class is so numerous that joinder of all members is impracticable. As of January 23, 2017, there are tens of thousands of warrants of each series outstanding held by thousands of individuals and entities scattered throughout the country. The actual number will be ascertained through discovery;

b. There are questions of law and fact that are common to the Class that predominate over any questions affecting only individual members, including the following:

c. The measure of damages;

d. Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature, and will fairly and adequately protect the interests of the Class;

e. Plaintiff’s claims are typical of the claims of the other members of the Class and Plaintiff does not have any interests adverse to the Class;

f. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for the party opposing the Class;

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g. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole;

h. Questions of law and fact common to Class members predominate over individual questions; and

i. A class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

SUBSTANTIVE ALLEGATIONS

17. On or about August 1, 2016, SSE issued Series A, B and C warrants as part of SSE’s prepackaged May 2016 Chapter 11 proceeding. The Chapter 11 involved a reorganization centered around a deleveraging of SSE’s balance sheet via conversion of approximately $1.1 billion of bond debt into new common equity.

18. As part of the 2016 bankruptcy reorganization, the holders of the old common shares were given the warrants which are the subject of this suit. Thereafter, warrants traded on open market exchanges.

19. Although the warrants have different issuance sizes, exercise prices and dates of termination, all warrants are governed by the Warrant Agreement dated as of August 1, 2016.

20. The Series A warrants have an exercise price of $23.82 per warrant and terminate, at the latest, August 1, 2021.

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21. The Series B warrants have an exercise price of $69.08 per warrant and terminate, at the latest, on August 1, 2021.

22. The Series C warrants have an exercise price of $86.93 per warrant and terminate, at the latest, on August 1, 2023.

23. The Warrant Agreement is the document that governs the rights and obligations of the Company and warrant holders and provides for the conversion of the Series A, B and C warrants into new warrants upon a “reorganization.”¹ The Warrant Agreement defines a reorganization as follows:

Section 5.07 Adjustment upon Reorganization Event²

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24. Seventy Seven Energy is a diversified oilfield services company that provides a range of wellsite services and equipment to land-based exploration and production customers in the United States. The Company operates in three segments: Drilling, Hydraulic Fracturing, and Oilfield Rentals. The Drilling segment offers land drilling and drilling-related services. The Hydraulic Fracturing segment provides hydraulic fracturing and other well stimulation services. The Oilfield Rentals segment offers rental tools for land-based oil and natural gas drilling, completion, and workover activities. As of December 31, 2015, Seventy Seven Energy owned 91 drilling rigs and 11 hydraulic fracturing fleets. The Company was formerly known as Chesapeake Oilfield Operating, L.L.C. and changed its name to Seventy Seven Energy Inc. in June 2014. The Company was founded in 2011 and is headquartered in Oklahoma City, Oklahoma.

25. Patterson-UTI and its subsidiaries provide onshore contract drilling and pressure pumping services to exploration and production companies in North America, and drilling rig pipe handling technology worldwide. Patterson-UTI Drilling Company LLC and its subsidiaries operate land-based drilling rigs in oil and natural gas producing regions of the continental United States and western Canada.

26. On December 12, 2016, Defendants jointly announced that the two companies entered into a “definitive merger agreement” pursuant to which Patterson-UTI will acquire Seventy Seven Energy in an all-stock transaction. Patterson-UTI and Seventy Seven Energy are both leaders in building and operating high-spec rigs, and the transaction is expected to further solidify Patterson-UTI as a leader in the U.S. land drilling market with 201 high-spec rigs.

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Additionally, following the closing of the transaction, Patterson-UTI will have one of the largest and most modern pressure pumping fleets in the industry, with more than 1.5 million hydraulic fracturing horsepower both available and strategically-located in some of the most prolific oil and gas regions in the U.S.

27. The terms of the “merger” agreement describe a reorganization transaction which is not the type that would allow the Company to terminate the Merger warrants under applicable provisions of The Warrant Agreement including ¶ 5.06 or ¶ 5.07.

28. As demonstrated below, the transaction, while publicly referred to as a merger, is actually a “reorganization” (as has been admitted by the parties thereto) and, thus, ¶ 5.07 of the Warrant Agreement does not allow the Company to force the exercise or cancellation of the A, B and C warrants thereof.

29. The Agreement admits this transaction is a reorganization:

RECITALS

WHEREAS, Parent, Merger Sub, and the Company intend to effect a Merger of Merger Sub with and into the Company (the “Merger”) in accordance with this Agreement and the Delaware General Corporation Law (“DGCL”). Upon consummation of the Merger, Merger Sub will cease to exist and the Company will become a wholly owned subsidiary of Parent;

WHEREAS, for U.S. federal income tax purposes, (a) it is intended that the Merger qualify as a “reorganization” within the meaning of Section 358(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and (b) this Agreement is intended to be and is hereby adopted as a “plan of reorganization” for the Merger within the meaning of Treasury Regulations §§ 1.368-3(a).

Emphasis supplied.

1.1 Merger of Merger Sub Into the Company. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company and the separate existence of Merger Sub shall cease. Following the Effective Time, the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

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30. Under the terms of the Proposed Transaction, SSE shareholder will receive approximately 1.7725 shares of Patterson-UTI stock for each of their SSE shares. SSE will be the “Surviving Corporation” of the Merger described in the Agreement. The Proposed Transaction values Seventy Seven Energy at approximately $1.76 billion, assuming the issuance of 49.6 million shares of Patterson-UTI common stock at the Termination announcement date’s closing price of $28.67, plus approximately $336 million of Seventy Seven Energy’s debt net of cash and warrant proceeds. Patterson-UTI has represented that all of Seventy Seven Energy’s debt is expected to be repaid at the closing of the transaction and that shareholders of Seventy Seven Energy would own approximately 25% of Patterson-UTI.

31. The Exchange Ratio will be equal to 49,559,000 shares of Patterson-UTI common stock, divided by the total number of shares of SSE common stock outstanding or deemed outstanding immediately prior to the effective time (which includes (i) shares of SSE common stock outstanding as a result of the exercise of warrants to acquire SSE common stock, (ii) shares of SSE common stock deemed outstanding as a result of the vesting of SSE restricted stock unit awards that existed prior to the execution of the merger agreement, (iii) any shares of SSE common stock subject to perfected appraisal rights, (iv) shares of SSE common stock that underlie restricted stock unit awards that SSE issues on or after the execution of the merger agreement, and (v) 50% of any shares of SSE common stock that have been tendered to SSE on or after August 1, 2016 for the purposes of satisfying tax withholding obligations upon the vesting of SSE restricted stock unit awards); provided, that in the event that any Series A warrants to acquire SSE common stock are forfeited or net settled, such 49,559,000 shares of Patterson-UTI common stock will be reduced by a number equal to (i) the aggregate exercise price for the warrants that are forfeited or net settled, divided by (ii) the volume weighted

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average price of a share of Patterson-UTI common stock for the ten consecutive trading days immediately preceding the third business day prior to the closing of the merger. In no event will Patterson-UTI issue more than 49,559,000 shares of its common stock as merger consideration.

EXPIRATION AND REQUIRES ADJUSTMENT

OF THE WARRANTS UNDER THE CIRCUMSTANCES HERE

32. As previously alleged, the Proposed Transaction at issue herein requires that the warrants be adjusted.

33. The Warrant Agreement provides:

Section 5.02 Adjustments to Number of Warrants. Concurrently with any adjustment to any Exercise Price under Section 5.01, the Number of Warrants will be adjusted such that the Number of Warrants in effect immediately following the effectiveness of such adjustment will be equal to the Number of Warrants in effect immediately prior to such adjustment, multiplied by a fraction, (i) the numerator of which is the applicable Exercise Price in effect immediately prior to such adjustment and (ii) the denominator of which is the applicable Exercise Price in effect immediately following such adjustment.

34. Similarly, the Warrant Agreement requires adjustment of the Exercise Price upon the circumstances here.

35. Moreover, the adjusted warrants must be issued by the “surviving company”, i.e. SSE, or by Patterson-UTI under the terms of the Merger Agreement:

Section 5.06 Successor upon Consolidation. Merger and Sale of Assets.

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CAUSE OF ACTION I

BREACH OF CONTRACT

36. Plaintiff incorporates each and every allegation set forth above as if fully set forth herein.

37. The Warrant Agreement is a binding contract between Seventy Seven Energy and Plaintiff and the members of the Class.

38. Seventy Seven Energy breached the Warrant Agreement by entering into the Agreement.

39. The relevant provision of the Agreement which forces warrant holders to exercise prematurely or face a forced expiration of the warrants is as follows:

2.3 Treatment of Company Warrants: Treatment of Company Equity Awards.

40. Defendants’ consummation of the Agreement will violate the warrant owners’ contractual rights. The violations damaged the warrant owners.

41. Seventy Seven Energy breached their contractual obligations by failing to honor the provisions set forth above and have benefited improperly from their breaches of contract.

42. Seventy Seven Energy’s failure to perform their contractual obligations under the Warrant Agreement have and will continue to cause financial and other damage to all warrant holders.

43. Plaintiff and the members of the Class have performed all conditions precedent to enable them to recover the relief sought herein, or such conditions have been excused, waived, suspended or discharged.

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CAUSE OF ACTION II

TORTIOUS INTERFERENCE WITH CONTRACT

44. Plaintiff repeats and realleges the preceding paragraphs as if fully set forth herein.

45. Defendants Patterson-UTI and Pyramid Merger knew of the contractual obligations under the Warrant Agreement to the warrant holders.

46. These Defendants intentionally interfered with the Warrant Agreement by negotiating, formulating and consummating the Agreement which eliminated the warrants.

47. The Defendants’ interference caused Seventy Seven Energy to breach the Warrant Agreement.

48. Plaintiff and the other members of the Class were damaged by Defendants’ interference.

49. Patterson-UTI and Pyramid Merger acted in bad faith, intentionally, maliciously and with willful disregard to the Plaintiffs’ and other Class Members’ rights.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for judgment and relief as follows:

A. Declaring that this action is properly maintainable as a Class Action and certifying Plaintiff as Class Representative and his counsel as Class Counsel;

B. Enjoining Defendants and all persons acting in concert with them from cancelling the warrants;

C. Directing the Defendants to account to Plaintiff and the Class for all damages sustained as a result of their wrongdoing and to compensate them accordingly;

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D. Awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and expert fees and expenses;

E. Granting such other and further relief as this Court may deem just and proper.

JURY DEMAND

Plaintiff demands a trial by jury on all issues so triable.

Dated: March 31, 2017

SQUITIERI & FEARON, LLP
By:
Olimpio Lee Squitieri
32 East 57th Street
New York, New York 10022
Telephone: (212) 421-6492
Facsimile:  (212) 421-6553
-and-
Daniel R. Lapinski
WILENTZ, GOLDMAN & SPITZER, P.A.
90 Woodbridge Center Drive, Suite 900
Woodbridge, New Jersey 07095
Telephone: (732) 636-8000
Facsimile: (732) 726-6686
Attorneys for Plaintiff and the Putative Class

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