Oil field services company Patterson-UTI Energy Inc. announced today it will acquire Pioneer Energy Services Corp. in a deal valued at approximately $295 million, which includes the retirement of all Pioneer Energy Services' debt.
In addition to paying $30 million in cash, Patterson-UTI also will issue up to 26.275 million shares of its common stock, which would be valued at nearly $266.43 million, based on the July 2 closing price of $10.14 per share of PTEN. The number of Patterson-UTI shares is subject to adjustment.
The deal is expected to close in the fourth quarter of 2021 and requires the approval of Pioneer Energy Services' stockholders. However, holders of approximately 88% of the outstanding voting power of Pioneer Energy Services have already agreed to vote in favor of the transaction.
Patterson-UTI expects the deal to create cost savings of more than $15 million annually.
"Pioneer's high-quality fleet of 17 drilling rigs in the United States, of which 16 are super-spec, will be a valuable addition to our business," said Andy Hendricks, Patterson-UTI's CEO. "Additionally, many of these rigs are capable of substituting cleaner-burning natural gas for diesel, a technology that is becoming increasingly important to operators for reduced emissions."
Following the closing of the deal, Patterson-UTI will own 166 super-spec rigs in the U.S., with almost half of the rigs equipped to use alternative power sources for reduced emissions, Hendricks said.
"Furthermore, this transaction expands our geographic footprint into the international markets with the addition of eight rigs in Colombia, where Pioneer has worked for 14 years with an experienced operations team and a well-established infrastructure," Hendricks said. "I want to recognize the Pioneer employees for their hard work in creating such an attractive company with great performance for their customers, and I look forward to welcoming the Pioneer employees to the Patterson-UTI family."
In addition to the U.S. and Colombian contract drilling businesses, Pioneer Energy Services also has a well servicing rig business consisting of 123 rigs with a strong position in the Gulf of Mexico. The company plans to divest that business after the deal closes.
"Patterson-UTI believes this business would be better served as part of a larger well service rig business or as a focused standalone business," the company said in a statement.
Gibson, Dunn & Crutcher LLP is serving as legal counsel to Patterson-UTI. Vinson & Elkins LLP is serving as legal counsel to Pioneer Energy Services. Simmons Energy, a division of Piper Sandler, and Tudor, Pickering, Holt & Co. are serving as financial advisers to Pioneer Energy Services.
