Patterson-UTI Energy-NexTier Oilfield Make It Official, Announce Merger Of Equals

Patterson-UTI Energy Inc PTEN and NexTier Oilfield Solutions Inc NEX inked an all-stock merger deal of equals, forming a combined company with an enterprise value of approximately $5.4 billion.

As per the terms, NEX shareholders will receive 0.7520 shares of PTEN stock for each NEX share held. 

The company expects the merger to close in Q4 2023 upon receiving regulatory approvals and customary closing conditions.

Post-deal closure, PTEN will own around 55%, and NEX will hold 45% of the combined company. 

The tax-free merger is expected to be accretive to EPS and FCF per share in 2024. 

The combined company targets generating high FCF conversion and distributing at least 50% of FCF to shareholders. 

Within 18 months of deal closure, the company projects to garner annual cost savings and operational synergies of around $200 million.

The merged company is anticipated to incur one-time expenses of about $80 million to achieve the synergies.

The combined company's wellsite integration strategy is expected to deliver cost savings, with projected $7 million in adjusted EBITDA improvements and CapEx reduction annually on fully integrated completions fleets with a larger frac footprint.

"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," said Andy Hendricks, CEO of Patterson-UTI.

The combined company will operate as Patterson-UTI Energy, Inc., trade as PTEN ticker, and be run by Andy Hendricks as President and CEO.

As of March 31, 2023, PTEN's cash and equivalents stood at $157.2 million.

As of March 31, 2023, NEX's total available liquidity was $630.5 million, including cash and equivalents of $218.5 million.

Price Action: NEX shares are trading higher by 0.90% at $8.92, while PTEN shares are trading higher by 3.3% at $11.50 premarket on the last check Thursday.