Patterson-UTI, NexTier to join in merger of equals with $5.4B enterprise value

Patterson-UTI Energy (PTEN) and NexTier Oilfield Solutions (NEX) announced that they have entered into a definitive merger agreement to combine in an all-stock merger of equals transaction. The combined company, with an enterprise value of approximately $5.4B, will be “an industry leading drilling and completions services provider with operations in the most active major U.S. basins, and strong free cash flow to accelerate the return of capital to shareholders,” the companies stated. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned. Upon closing of the transaction, Patterson-UTI shareholders will own approximately 55% and NexTier shareholders will own approximately 45% of the combined company on a fully diluted basis. The merger is expected to be tax-free to shareholders of both companies. The transaction is expected to be accretive to earnings per share and free cash flow per share in 2024. “The transaction is expected to create significant efficiencies for the combined company’s well completions operations. The combined company expects to realize annual cost savings and operational synergies of approximately $200 million within 18 months following close through operations integration, supply chain management and reductions in sales, general and administrative expenses. One-time costs expected to be incurred to achieve the synergies are approximately $80 million. The combined company’s wellsite integration strategy is expected to create additional value through efficiency gains and cost reductions. This strategy can create as much as $7 million in adjusted EBITDA improvements and CapEx reduction annually on fully integrated completions fleets with a larger frac footprint,” the companies added. The combined company will operate under the name Patterson-UTI Energy, Inc. and trade under the ticker symbol PTEN. The Well Completions business will operate under the NexTier Completions brand. The combined company’s corporate headquarters will remain in Houston, Texas. The merger is expected to close in the fourth quarter of 2023, following Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions.