Patterson-UTI Energy, NexTier Oilfield Solutions announce $5.4bn all-stock merger

Patterson-UTI Energy and NexTier Oilfield Solutions have unveiled plans to combine in an all-stock merger of equals transaction, forming an industry leading drilling and completions services provider with a total enterprise value of $5.4 billion.

With operations spanning the most active major US basins, the merged entity is expected to generate robust free cash flow, enabling an accelerated return of capital to shareholders.

Patterson-UTI Energy provides oilfield services and products, including contract drilling, pressure pumping, and directional drilling services, to oil and natural gas exploration and production companies in the United States and other select countries.

NexTier Oilfield Solutions, based in Houston, Texas, is a prominent US land oilfield service company, providing a diverse set of well completion and production services across active and demanding basins.

According to the unanimously approved agreement, NexTier Oilfield Solutions shareholders will receive 0.752 shares of Patterson-UTI Energy common stock for each share of NexTier Oilfield Solutions common stock owned.

Following the transaction’s closure, Patterson-UTI Energy shareholders will hold approximately 55% of the combined company on a fully diluted basis, while NexTier Oilfield Solutions shareholders will hold roughly 45%. The merger is anticipated to be tax-free for shareholders of both companies.

Andy Hendricks — Patterson-UTI Energy CEO said: “This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation. As one company, we will have a significantly expanded, comprehensive portfolio of oilfield services offerings across the most active producing basins in the United States, along with operations in Latin America.

“With our combined strong balance sheet, ample liquidity and greater free cash flow, we will be well positioned to continue to invest in technology, innovation and people, while delivering strong cash returns to shareholders.”

The merged entity will offer a best-in-class operational and technology portfolio, backed by data analytics to optimize well performance. The company will lead in the US contract drilling business with 172 super-spec drilling rigs and directional drilling business.

In well completions, the combined company will have a deployed capacity of 45 active spreads and 3.3 million hydraulic fracturing horsepower, with nearly two-thirds of deployed fleets being dual fuel capable. NexTier Oilfield Solutions’ integrated approach will offer additional market capacity of power solutions, wireline, last mile logistics, proppant handling, and cementing services.

Financially, the merged company, on an annualized combined basis as of Q1 2023, generated approximately $6.9 billion of revenue and $1.9 billion in adjusted EBITDA, with improved free cash flow. The merger’s greater size and scale are expected to increase share float and liquidity, making the company an attractive investment opportunity.

Oilfield service providers Patterson-UTI Energy and NexTier to merge in $5.4bn deal. Photo courtesy of Terry McGraw from Pixabay.

Robert Drummond — NexTier Oilfield Solutions President and CEO said: “Our agreement to merge with Patterson-UTI brings together two complementary organizations to create a premier North American drilling and completions company. We believe offering a comprehensive suite of solutions on one integrated platform will position the combined company as the partner of choice for a greater number of customers across geographies and throughout the full well life cycle.

“We’re confident that together, we will be able to drive efficiencies across the portfolio and unlock more value for shareholders and customers than either organization could achieve on its own.”

The transaction, subject to shareholder approval from both Patterson-UTI Energy and NexTier Oilfield Solutions, as well as regulatory approvals, is expected to conclude in the fourth quarter of 2023.