Comprehensive U.S. Oilfield Services Franchise
to Enhance Drilling and Completions Value Creation Potential and
Maximize Returns for Shareholders
Combined $5.4
Billion Total Enterprise Value
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
$200 Million of Annual Cost Savings
and Operational Synergies Within 18 Months Following Close
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)
HOUSTON, June 15,
2023 /PRNewswire/ -- Patterson-UTI Energy, Inc.
(NASDAQ: PTEN) ("Patterson-UTI") and NexTier Oilfield Solutions
Inc. (NYSE: NEX) ("NexTier") today announced that they have
entered into a definitive merger agreement to combine in an
all-stock merger of equals transaction. The combined company, with
an enterprise value of approximately $5.4
billion, will be an industry leading drilling and
completions services provider with operations in the most active
major U.S. basins, and strong free cash flow to accelerate the
return of capital to shareholders.
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
55% and NexTier shareholders will own approximately 45% of the
combined company on a fully diluted basis. The merger is expected
to be tax-free to shareholders of both companies.
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 the
United States, along with operations in Latin America. With our combined strong
balance sheet, ample liquidity and greater free cash flow, we will
be well positioned to continue to invest in technology, innovation
and people, while delivering strong cash returns to
shareholders."
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."
Compelling Strategic and Financial
Benefits
- 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 $6.9
billion of revenue, $1.9
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.
- 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 $200 million 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 $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 $7 million in
adjusted EBITDA improvements and CapEx reduction annually on fully
integrated completions fleets with a larger frac footprint.
- 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.
Leadership, Governance and
Headquarters
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
Houston, Texas.
Approvals and Closing
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.
Conference Call and Additional
Materials
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 U.S. or (203) 518-9814
internationally, Conference ID: 42406.
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 U.S. or (402)
220-2328 internationally. No passcode is required.
Advisors
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.
About Patterson-UTI Energy,
Inc.
Patterson-UTI is a leading provider of oilfield services and
products to oil and natural gas exploration and production
companies in the United States and
other select countries, including contract drilling, pressure
pumping and directional drilling services. For more information,
visit www.patenergy.com.
About NexTier Oilfield Solutions
Inc.
Headquartered in Houston,
Texas, NexTier is an industry-leading U.S. land oilfield
service company, with a diverse set of well completion and
production services across active and demanding basins. Our
integrated solutions approach delivers efficiency today, and our
ongoing commitment to innovation helps our customers better address
what is coming next. NexTier is differentiated through four points
of distinction, including safety performance, efficiency,
partnership and innovation. At NexTier, we believe in living
our core values from the basin to the boardroom, and helping
customers win by safely unlocking affordable, reliable and
plentiful sources of energy.
Cautionary Statement Regarding
Forward-Looking Statements
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 the United States
and elsewhere; volatility in customer spending and in oil and
natural gas prices that could adversely affect demand for
Patterson-UTI's and NexTier's services and their associated effect
on rates; excess availability of land drilling rigs, pressure
pumping and directional drilling equipment, including as a result
of reactivation, improvement or construction; competition and
demand for Patterson-UTI's and NexTier's services; the impact of
the ongoing conflict in Ukraine;
strength and financial resources of competitors; utilization,
margins and planned capital expenditures; liabilities from
operational risks for which Patterson-UTI or NexTier do not have
and receive full indemnification or insurance; operating hazards
attendant to the oil and natural gas business; failure by customers
to pay or satisfy their contractual obligations (particularly with
respect to fixed-term contracts); the ability to realize backlog;
specialization of methods, equipment and services and new
technologies, including the ability to develop and obtain
satisfactory returns from new technology; the ability to retain
management and field personnel; loss of key customers; shortages,
delays in delivery, and interruptions in supply, of equipment and
materials; cybersecurity events; synergies, costs and financial and
operating impacts of acquisitions; difficulty in building and
deploying new equipment; governmental regulation; climate
legislation, regulation and other related risks; environmental,
social and governance practices, including the perception thereof;
environmental risks and ability to satisfy future environmental
costs; technology-related disputes; legal proceedings and actions
by governmental or other regulatory agencies; the ability to
effectively identify and enter new markets; public health crises,
pandemics and epidemics; weather; operating costs; expansion and
development trends of the oil and natural gas industry; ability to
obtain insurance coverage on commercially reasonable terms;
financial flexibility; interest rate volatility; adverse credit and
equity market conditions; availability of capital and the ability
to repay indebtedness when due; our return of capital to
stockholders; stock price volatility; and compliance with covenants
under Patterson-UTI's and NexTier's debt agreements; and other risk
factors and additional information. In addition, material risks
that could cause actual results to differ from forward-looking
statements include: the inherent uncertainty associated with
financial or other projections; the prompt and effective
integration of Patterson-UTI's and NexTier's businesses and the
ability to achieve the anticipated synergies and value-creation
contemplated by the proposed transaction; the risk associated with
Patterson-UTI's and NexTier's ability to obtain the approval of the
proposed transaction by their shareholders required to consummate
the proposed transaction and the timing of the closing of the
proposed transaction, including the risk that the conditions to the
transaction are not satisfied on a timely basis or at all and the
failure of the transaction to close for any other reason; the risk
that a consent or authorization that may be required for the
proposed transaction is not obtained or is obtained subject to
conditions that are not anticipated; unanticipated difficulties or
expenditures relating to the transaction, the response of business
partners and retention as a result of the announcement and pendency
of the transaction; and the diversion of management time on
transaction-related issues.
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.
Important Additional Information
Regarding the Proposed Transaction Will Be Filed with the
SEC
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 U.S.
Securities Act of 1933, as amended. Any definitive joint proxy
statement/prospectus (if and when available) will be mailed to
shareholders of Patterson-UTI and NexTier. INVESTORS AND
STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, JOINT
PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT MAY BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION. Investors and shareholders will be
able to obtain free copies of these documents (if and when
available) and other documents containing important information
about Patterson-UTI and NexTier once such documents are filed with
the SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Patterson-UTI will be available free of charge on Patterson-UTI's
website at http://www.patenergy.com or by contacting
Patterson-UTI's Investor Relations Department by phone at (281)
765-7170. Copies of the documents filed with the SEC by NexTier
will be available free of charge on NexTier's website at
https://nextierofs.com or by contacting NexTier's Investor
Relations Department by phone at (346) 242-0519.
Participants in the
Solicitation
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.
No Offer or Solicitation
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
|
|
PTEN-NEXMedia@joelefrank.com
|
|
212-355-4449
|
|
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SOURCE Patterson-UTI Energy, Inc.