Patterson-UTI Energy and NexTier Oilfield Solutions to Combine in Merger of Equals, Creating Industry Leading Drilling and Completions Services Provider
Comprehensive
Combined
Drives Improved Free Cash Flow Generation and Strong Balance Sheet to Deliver Long Term Value to Shareholders, Including Continued Commitment to Shareholder Return Program
Expected to be Accretive to Earnings per Share and Free Cash Flow per Share in 2024
Expected to Generate Approximately
Curtis Huff to Serve as Chair of the Board; Robert Drummond to Serve as Vice Chair of the Board; Andy Hendricks to Serve as CEO
Companies to Host Conference Call Today at 7:30 a.m. CT (8:30 a.m. ET)
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock owned. Upon closing of the transaction, Patterson-UTI shareholders will own approximately
Andy Hendricks, Chief Executive Officer of Patterson-UTI, commented, "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
Mr. Hendricks continued, "NexTier shares our culture of safety, deep customer relationships and operational and financial outperformance. Together, we will better serve our employees, shareholders, customers, suppliers and the communities in which we operate. We look forward to working with the NexTier team to successfully bring our two companies together."
Robert Drummond, President and Chief Executive Officer of NexTier, said, "Our agreement to merge with Patterson-UTI brings together two complementary organizations to create a premier North American drilling and completions company. We believe offering a comprehensive suite of solutions on one integrated platform will position the combined company as the partner of choice for a greater number of customers across geographies and throughout the full well life cycle. We're confident that together, we will be able to drive efficiencies across the portfolio and unlock more value for shareholders and customers than either organization could achieve on its own."
Mr. Drummond added, "NexTier and Patterson-UTI each have proven track records of integrating businesses, and we're confident that combining through a merger of equals will enable us to leverage the strengths of both highly talented workforces and create exciting career opportunities for employees as we become a larger, more diversified platform."
- Leading Drilling and Well Completions Businesses: The combined company will have a best-in-class operational and technology portfolio, along with data analytics to maximize well performance. Specifically, the merger will create:
- Leading
U.S. Contract Drilling business with 172 super-spec drilling rigs and Directional Drilling business. - Leading
U.S. Well Completions business with deployed capacity of 45 active spreads and 3.3 million hydraulic fracturing horsepower, with nearly two-thirds of deployed fleets being dual fuel capable. NexTier's integrated approach will provide additional market capacity of Power Solutions, wireline, last mile logistics, proppant handling and cementing services. - Strong Revenue and Cash Generation: On an annualized combined basis as of the first quarter of 2023, the combined company generated approximately
of revenue,$6.9 billion in adjusted EBITDA and improved free cash flow generation. The combined company will be an attractive investment opportunity with greater size and scale facilitating increase share float and liquidity.$1.9 billion
- Accretive to Earnings per Share and Free Cash Flow per Share: The transaction is expected to be accretive to earnings per share and free cash flow per share in 2024.
- Strong Financial Position and Balance Sheet: The combined company would have Net Debt to combined trailing twelve month Adjusted EBITDA of 0.5x as of March 31, 2023. With increased scale and a strong balance sheet, the transaction is expected to lower cost of capital and enable the combined company to continue to selectively invest in value accretive opportunities.
- Well Positioned to Return Capital to Shareholders: The combined company intends to target high free cash flow conversion, remain good stewards of capital and continue the practices of both companies of distributing at least
50% of free cash flow to shareholders. As shareholders of the combined company, NexTier shareholders will benefit from Patterson-UTI's dividend and the combined company will continue to return capital through dividends and share repurchases.
- Delivers Significant Cost Saving and Operational Synergy Opportunity: The transaction is expected to create significant efficiencies for the combined company's well completions operations. The combined company expects to realize annual cost savings and operational synergies of approximately
within 18 months following close through operations integration, supply chain management and reductions in sales, general and administrative expenses. One-time costs expected to be incurred to achieve the synergies are approximately$200 million .$80 million
- Significant Value Creation Potential through the Expansion of Wellsite Integration Strategies: The combined company's wellsite integration strategy is expected to create additional value through efficiency gains and cost reductions. This strategy can create as much as
in adjusted EBITDA improvements and CapEx reduction annually on fully integrated completions fleets with a larger frac footprint.$7 million
- Shared Commitment to Sustainably Focused Operations: 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.
The combined company will be led by a proven management team that reflects the strengths and capabilities of both organizations. Upon close, Andy Hendricks, President and Chief Executive Officer of Patterson-UTI, will serve as President and Chief Executive Officer of the combined company and Robert Drummond, President and Chief Executive Officer of NexTier, will become Vice Chair of the combined company's Board. Curtis Huff, Patterson-UTI's current Chair of the Board, will serve as Chair of the combined company's Board. Following close, the combined company's Board will comprise 11 directors, six of whom will be from the Patterson-UTI Board, including Mr. Hendricks, and five of whom will be from the NexTier Board.
The combined company will operate under the name Patterson-UTI Energy, Inc. and trade under the ticker symbol PTEN. The Well Completions business will operate under the NexTier Completions brand. The combined company's corporate headquarters will remain in
The merger is expected to close in the fourth quarter of 2023, following Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions.
Patterson-UTI and NexTier will hold a joint conference call today, June 15, 2023, at 7:30 a.m. CT/8:30 a.m. ET to discuss the combination. An investor presentation regarding the transaction can also be found at www.patenergy.com and www.nextier.com.
Interested parties may listen to the conference call via a live webcast accessible at the Investor Relations section of Patterson-UTI's website at patenergy.com/investors and at the Investor Relations page of NexTier's website at investors.nextierofs.com. The conference call may also be accessed by dialing (800) 274-8461 in the
A playback of the call will also be available through June 22, 2023, on both companies' websites, or by dialing (888) 274-8336 in the
Goldman Sachs & Co. LLC is serving as financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal advisor to Patterson-UTI.
Moelis & Company LLC is serving as financial advisor and Kirkland & Ellis LLP is serving as legal advisor to NexTier.
Patterson-UTI is a leading provider of oilfield services and products to oil and natural gas exploration and production companies in
Headquartered in
This press release contains forward-looking statements which are protected as forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Patterson-UTI's and NexTier's current beliefs, expectations or intentions regarding future events. Words such as "anticipate," "believe," "budgeted," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "potential," "project," "pursue," "should," "strategy," "target," or "will," and similar expressions are intended to identify such forward-looking statements. The statements in this press release that are not historical statements, including statements regarding Patterson-UTI's and NexTier's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond Patterson-UTI's and NexTier's control, which could cause actual results to differ materially from the results expressed or implied by the statements. The statements include, without limitation, projections as to the anticipated benefits of the proposed transaction, the impact of the proposed transaction on Patterson-UTI's and NexTier's business and future financial and operating results, the amount and timing of synergies from the proposed transaction, the combined company's projected revenues, adjusted EBITDA and cash flow, accretion, business and employee opportunities, capital return policy, and the closing date for the proposed transaction, are based on management's estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond Patterson-UTI's and NexTier's control. These factors and risks include, but are not limited to, adverse oil and natural gas industry conditions; global economic conditions, including inflationary pressures and risks of economic downturns or recessions in
Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in Patterson-UTI's or NexTier's SEC filings, both of which are available through the Securities and Exchange Commission's (the "SEC") Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov, or with respect to Patterson-UTI's SEC filings, Patterson-UTI's website at http://www.patenergy.com, or with respect to NexTier's SEC filings, NexTier's website at https://nextierofs.com. Patterson-UTI and NexTier undertake no obligation to publicly update or revise any forward-looking statement.
In connection with the proposed transaction, Patterson-UTI intends to file with the SEC a registration statement on Form S-4 that will include a joint proxy statement of Patterson-UTI and NexTier that also constitutes a prospectus of Patterson-UTI. Each of Patterson-UTI and NexTier also plan to file other relevant documents with the SEC regarding the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the
Patterson-UTI, NexTier and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Patterson-UTI is set forth in its proxy statement for its 2023 annual meeting of shareholders, which was filed with the SEC on April 11, 2023, and Patterson-UTI's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 13, 2023. Information about the directors and executive officers of NexTier is set forth in its proxy statement for its 2023 annual meeting of shareholders, which was filed with the SEC on April 28, 2023, and NexTier's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 16, 2023. Other information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from Patterson-UTI or NexTier using the sources indicated above.
This document is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Subject to certain exceptions to be approved by the relevant regulators or certain facts to be ascertained, the public offer will not be made directly or indirectly, in or into any jurisdiction where to do so would constitute a violation of the laws of such jurisdiction, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce, or any facility of a national securities exchange, of any such jurisdiction.
Contact: Mike Drickamer | |
Patterson-UTI Vice President, Investor Relations | Michael Sabella |
(281) 765-7170 | NexTier Vice President, Investor |
Relations and Business Development | |
(346) 242-0519 | |
Media for Transaction: | |
Joele Frank, Wilkinson Brimmer Katcher | |
212-355-4449 |
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SOURCE Patterson-UTI Energy, Inc.