Patterson-UTI, NexTier merge to form $5.4 billion oilfield services company
June 15 (Reuters) – Patterson-UTI Energy ( PTEN.O ) and NexTier Oilfield Solutions ( NEX.N ) agreed on Thursday to merge in an all-stock deal to create a $5.4 billion oilfield services company.
The merger brings together Patterson-UTI’s significant onshore drilling operations and NexTier̵[ads1]7;s well completion operations.
Analysts said the combined unit’s 3.3 million hydraulic fracturing horsepower would make it the largest pressure pump by capacity in North America, slightly larger than Halliburton ( HAL.N ).
NexTier shareholders will receive 0.752 shares of Patterson-UTI common stock for each share of NexTier common stock they own. Patterson-UTI shares rose about 12%, while NexTier was up 6%.
Oilfield services firms have consolidated as they navigate operational and pricing challenges and cater to clients who have cut spending on new wells in favor of investor returns.
Prices for U.S. onshore drilling and completion services have fallen nearly 5% since the start of the year through the second quarter of 2023, according to Rystad Energy analysts.
Demand for oilfield services in the U.S. slowed due to lower drilling activity, driven primarily by lower natural gas prices at the start of the year, Patterson-UTI CEO Andy Hendricks told Reuters. He expects demand to pick up later this year and into next year.
Evercore analysts said larger North American oilfield services will be more efficient at delivering large-scale integrated wellsite solutions to a more consolidated exploration and production (E&P) customer base.
After the deal closes, expected in the fourth quarter of 2023, Patterson-UTI shareholders will own about 55% and NexTier shareholders will own the remainder of the combined company.
Hendricks will serve as president and CEO of the combined firm.
The deal is expected to be accretive to earnings per share and free cash flow per share in 2024 and generate annual savings of approximately $200 million within 18 months of closing.
The merger will probably also lead to some streamlining.
“It’s too early to say anything about potential layoffs because we may ramp up activity as we close the deal,” Hendricks said.
Reporting by Mrinalika Roy and Arunima Kumar in Bengaluru; Editing by Shilpi Majumdar
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