Nature of Operations and Recent Events Except as expressly stated or the context otherwise requires, the terms we, us, our, ICD, and the Company refer to Independence Contract Drilling, Inc. and its subsidiary. We provide land-based contract drilling services for oil and natural gas producers targeting unconventional resource plays in the United States. We own and operate a premium fleet comprised of modern, technologically advanced drilling rigs that are specifically engineered and designed to optimize the development of our customers most technically demanding oil and gas properties. Our rig fleet includes 29 AC powered (AC) rigs and three 1500-HP ultra-modern SCR rigs. During the second quarter of 2019, we elected to cease marketing these three SCR rigs in order to convert them to meet our AC pad-optimal specifications. These rigs have been removed from our marketed fleet until their conversions are complete. We ordered long lead-time items required to complete the conversions in the fourth quarter of 2018, and the first conversion is scheduled for completion during the fourth quarter of 2019. We do not intend to complete the remaining two conversions until market conditions improve. In addition, we own two idle rigs, including one non-walking 1500-HP AC rig and one 1500-HP SCR, which will not be marketed or reactivated until converted to AC pad-optimal status prior to entering our fleet. These two rigs will not be scheduled for conversion until market conditions improve. We currently focus our operations on unconventional resource plays located in geographic regions that we can efficiently support from our Houston, Texas and Midland, Texas facilities in order to maximize economies of scale. Currently, our rigs are operating in the Permian Basin, the Haynesville Shale and the Eagle Ford Shale; however, our rigs have previously operated in the Mid-Continent and Eaglebine regions as well. Our business depends on the level of exploration and production activity by oil and natural gas companies operating in the United States, and in particular, the regions where we actively market our contract drilling services. The oil and natural gas exploration and production industry is historically cyclical and characterized by significant changes in the levels of exploration and development activities. Oil and natural gas prices and market expectations of potential changes in those prices significantly affect the levels of those activities. Worldwide political, regulatory, economic and military events, as well as natural disasters have contributed to oil and natural gas price volatility historically, and are likely to continue to do so in the future. Any prolonged reduction in the overall level of exploration and development activities in the United States and the regions where we market our contract drilling services, whether resulting from changes in oil and natural gas prices or otherwise, could materially and adversely affect our business. Oil and Natural Gas Prices and Drilling Activity Oil prices declined from a high of $107.95 per barrel in the second quarter of 2014, to a low of $26.19 per barrel in the first quarter of 2016 (West Texas Intermediate - Cushing, Oklahoma (WTI) spot price as reported by the United States Energy Information Administration (the EIA). Similarly, natural gas prices (as measured at Henry Hub) declined from an average of $4.37 per MMBtu in 2014 to $2.52 per MMBtu in 2016. As a result, our industry experienced an exceptional downturn, with the U.S. land rig count falling from a high of 1,930 rigs in 2014 to a low of 404 rigs in 2016. In addition to overall rig count decline, pricing for our contract drilling services also substantially declined during this period of time. Although crude oil prices experienced a mild recovery in 2017 and 2018, reaching a high of $77.41 per barrel in the second quarter of 2018, the U.S. land rig count never recovered to its 2014 highs, only reaching 1,083 rigs the week ended December 28, 2018, and declining to 860 rigs working the week ended September 27, 2019. Similarly, although pricing for our drilling services improved during this period, pricing never reached the rates experienced in 2014. During the fourth quarter of 2018, oil prices began to decline, reaching a low of $44.48 . Although oil prices have recovered to the $50.00 to $60.00 range as of the end of the third quarter 2019, most of our exploration and production ("E&amp;P") customers have decreased planned capital expenditure budgets with the goal of operating within their cash flows. These changes have resulted in softening demand for contract drilling services. Although we believe market conditions for our services have stabilized, we believe this stabilization is predicated on oil prices remaining above a $50 per barrel or higher range. If oil prices were to fall below these levels for any sustainable period, demand and pricing for our contract drilling services could decline and have a material adverse affect on our operations and financial condition. Sidewinder Merger On July 18, 2018, ICD, Patriot Saratoga Merger Sub, LLC, a wholly owned subsidiary of ICD (Merger Sub), Sidewinder Drilling, LLC (Sidewinder) and MSD Credit Opportunity Master Fund, L.P., as Members Representative, entered into a definitive merger agreement (the Merger Agreement) pursuant to which Merger Sub merged with and into Sidewinder (the Merger), with Sidewinder surviving the Merger and becoming a wholly owned subsidiary of the ICD. The Merger transaction was completed on October 1, 2018. Pursuant to the terms of the Merger Agreement, Sidewinder Series A members received 36,752,657 shares of ICD common stock in exchange for 100% of the outstanding Series A Common Units of Sidewinder (the Series A Common Units). The Merger was accounted for using the acquisition method of accounting with ICD identified as the accounting acquirer.