Patterson-UTI Energy and NexTier Oilfield Solutions Announce Merger to Create a Leading Drilling and Completions Services Provider
Patterson-UTI Energy and NexTier Oilfield Solutions have announced a merger in an all-stock transaction, creating an industry leader in drilling and completions services with a total enterprise value of approximately $5.4 billion. The merger is expected to enhance the value creation potential in drilling and completions services and maximize returns for shareholders. The combined company will have operations in major U.S. basins and is expected to generate approximately $200 million in annual cost savings and operational synergies within 18 months following the close of the transaction. NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned. Upon closing, Patterson-UTI shareholders will own approximately 55% and NexTier shareholders will own approximately 45% of the combined company. The merger is expected to be tax-free for shareholders of both companies. Andy Hendricks will serve as the CEO, Curtis Huff as the Chair of the Board, and Robert Drummond as the Vice Chair of the Board of the combined company.
A Strategic Move for Enhanced Value Creation
This merger represents a strategic move for both companies to create a comprehensive U.S. oilfield services franchise that will enhance drilling and completions value creation potential. The combined company will have a strong balance sheet and improved free cash flow generation, which will facilitate long-term value delivery to shareholders. The merger is also expected to be accretive to earnings per share and free cash flow per share in 2024.
Strengthening Operational Capabilities
The merger will result in a combined company with leading drilling and well completions businesses, having a best-in-class operational and technology portfolio. It will have 172 super-spec drilling rigs, 45 active spreads, and 3.3 million hydraulic fracturing horsepower. The integrated approach of NexTier will provide additional market capacity of Power Solutions, wireline, last mile logistics, proppant handling, and cementing services.
Commitment to Sustainability
The combined company will have a sustainability leadership position in lowering carbon emissions at the wellsite, with over 50% of the drilling and completions fleet capable of being powered by natural gas. This reflects a shared commitment to sustainably focused operations, which is increasingly important in the modern energy sector.
Thought-Provoking Questions
1. What Does This Merger Mean for the Oilfield Services Industry?
The merger of Patterson-UTI Energy and NexTier Oilfield Solutions could potentially reshape the landscape of the oilfield services industry. With a combined enterprise value of $5.4 billion, the new entity will have significant market presence. How will this consolidation impact competition, innovation, and service offerings in the industry?
2. How Will the Merger Impact Shareholders and Investors?
The merger is expected to generate significant cost savings and operational synergies, which could translate into higher returns for shareholders. However, mergers can also be fraught with challenges such as integration issues and cultural clashes. What should shareholders and investors look out for in the short and long term?
3. What Role Will Sustainability Play in the Combined Company’s Strategy?
With a commitment to lowering carbon emissions and a significant portion of the fleet capable of being powered by natural gas, sustainability appears to be a key focus for the combined company. How might this focus on sustainability influence the company’s strategy, operations, and competitive advantage in an industry that is under increasing scrutiny for its environmental impact?
So what does this mean for oilfield jobs ?
It means that they are back to hiring for all open positions thruoghout the U.S. Have a look at some open positions.
