Patterson-UTI Energy (NASDAQ:PTEN) and NexTier Oilfield Solutions (NYSE:NEX) have entered into a merger agreement to combine in an all-stock merger of equals, the companies announced early Thursday.
Under the terms of the $5.4B deal, NexTier shareholders will receive 0.7520 shares of Patterson-UTI common stock for each share of NexTier common stock. Upon closing, Patterson-UTI shareholders will own 55% and NexTier shareholders will own 45% of the combined company.
The transaction will create an "industry leading drilling and completions services provider with operations in the most active major U.S. basins" and is expected to be accretive to earnings per share and free cash flow per share in 2024. It is also expected to be tax-free to shareholders of both companies.
"This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation," said Andy Hendricks, CEO of Patterson-UTI, while Robert Drummond of NexTier added: "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."
The combined company will operate under the Patterson-UTI Energy brand, with Andy Hendricks serving as CEO and president, and Robert Drummond as vice chair of the new Board.
The deal is currently projected to close in Q4 2023, and is still subject to regulatory approvals, satisfaction of other customary closing conditions, as well as shareholder approval from both sides.