Zinger Key Points
- Ulterra provides a foothold in key international drill bit markets, including the Middle East and Latin America, the analyst says.
- PTEN expects to close the Ulterra transaction in the third quarter of 2023.
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Patterson-UTI Energy, Inc. PTEN plans to acquire Ulterra Drilling Technologies in a deal valued at around $800 million.
The deal comes less than a month after the $5.4-billion merger with Nextier Oilfield Solutions Inc NEX.
According to RBC Capital Markets, the company’s free cash flow metrics have improved after it announced these two “sizeable” M&A deals.
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The Patterson-UTI Energy Analyst: Keith Mackey upgraded the rating for Patterson-UTI Energy from Sector Perform to Outperform, while keeping the price target unchanged at $19.
The Patterson-UTI Energy Thesis: The 2024 free cash flow estimates have been raised after the announcement of the Nextier Oilfield Solutions transaction, “despite our reduced rig and frac count forecast,” Mackey said in the upgrade note.
“PTEN continues to expect to return 50% of FCF to shareholders,” he added.
“Ulterra provides a foothold in key International drill bit markets, including the Middle East and Latin America,” the analyst wrote.
“PTEN expects to close the Ulterra transaction in 3Q23 and the NEX transaction by YE23,” he added.
PTEN Price Action: Shares of Patterson-UTI Energy had risen by 1.96% to $13.26 at the time of publishing Monday.
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