Patterson-UTI Energy and NexTier Oilfield Solutions announced today an agreement to merge the US service companies in an all-stock deal.
The transaction will create the second-largest oilfield services company in North America, which will retain the name of Patterson-UTI Energy, with an enterprise value of nearly $5.4 billion.
Andy Hendricks, current CEO of Patterson-UTI, will serve as the new company’s CEO which will be headquartered in Houston where both companies are currently based.
While speaking with investors about the deal, he said, “This merger will create a comprehensive drilling and completions franchise with a leadership position in contract drilling, pressure pumping, and directional drilling.”
Patterson-UTI brings 172 onshore drilling rigs into the new company which makes the most dynamic aspect of the deal around the combination of the two firm’s fracturing fleets.
The combined company will boast 45 active pressure pumping fleets, 33 coming from NexTier and 12 from Patterson-UTI’s subsidiary Universal Pressure Pumping.
Almost two-thirds of this newly combined fleet will be dual-fuel, or capable of running on both diesel and natural gas. Additionally, Patterson-UTI operates almost 80 rigs that can either be powered by natural gas generators or hybrid-battery systems.
NexTier is the result of a 2019 merger between Houston-based service companies C&J Energy Services and Keane Group. The NexTier name will now live on as the combined company’s well completions brand.
Robert Drummond, CEO of NexTier, will become the vice chair of the board. He said the chance to expand the company’s market position is what drove it to merge in 2019 and to merge again this week with Patterson-UTI.
“NexTier has an extensive track record of participating in successful value creating [mergers and acquisitions] that have allowed us and our counterparties to expand our capabilities, accelerate innovation, better serve customers, and drive value for shareholders,” he said.
The two firm’s combined first-quarter revenue of $6.9 billion places the new company on a pro forma basis behind only Halliburton in terms of the highest-revenue-earning service companies in North America. The new company’s plan includes the elimination of overlapping positions and overhead costs which it expects will result in $200 million in annual savings.
Terms of the deal include NexTier shareholders receiving 0.752 shares of Patterson-UTI common stock for every share of NexTier stock they hold. Upon close, the new company will be 55% owned by Patterson-UTI shareholders with NexTier shareholders holding the remaining shares.
Both companies expect the merger will meet approvals and close by the end of this year.
