Patterson-UTI (PTEN) to Buy Ulterra, Strengthen Portfolio
U.S. oilield service firm Patterson-UTI Energy PTEN has agreed to buy Ulterra Drilling Technologies, a global leader in specialized drill bit solutions. This strategic acquisition aims to enhance Patterson-UTI's operational capabilities, expand its technology portfolio, and solidify its position as a leading drilling and completions company.
Under the agreement, Patterson-UTI will snap up Ulterra Drilling Technologies for a consideration of $370 million in cash and 34.9 million shares of the PTEN common stock. Ulterra, founded in 2005 and headquartered in Fort Worth, TX, is a renowned provider of PDC (polycrystalline diamond compact) drill bits globally. With operations across active basins in North America, Ulterra has established itself as a leader in the North American PDC drill bit market. The pending transaction, subject to customary closing conditions and regulatory approvals, is expected to be finalized in the third quarter of 2023.
PTEN in the Spotlight
The Ulterra deal comes just weeks after Patterson-UTI announced a definitive agreement to combine with another energy equipment provider NexTier Oilfield Solutions NEX in an all-stock deal totaling $1.9 billion.
The “merger of equals” deal has been unanimously approved by both companies’ boards, though it is still subject to clearance by their shareholders and the regulators. The transaction is expected to close by the end of this year. The current stockholders of Patterson-UTI Energy will own approximately 55% of the combined company, with NEX shareholders owning the rest. The combined company will operate under the Patterson-UTI Energy name and trade under the ‘PTEN’ ticker, while its well completions brand will be called NexTier.
Benefits/Synergies of the Ulterra deal
The acquisition of Ulterra will expand Patterson-UTI's operational and technology portfolio, strengthening its market presence in drilling and completions. The addition of Ulterra's leading position in the PDC drill bit market will enhance Patterson-UTI's capabilities, further advancing its 45-year history of operations and innovation.
Moreover, Ulterra's growing presence in the Middle East will provide Patterson-UTI with a broader geographic reach and stronger customer relationships in the international market. Ulterra's data-centric approach to manufacturing, operations, and marketing has been instrumental in its success.
The company's proprietary BitHub data platform, which complements Patterson-UTI's PTEN+ data platform, will enhance its comprehensive data analytics capabilities from drill bit to well completion. This combination of data systems from Patterson-UTI, NexTier, and Ulterra is expected to create the most comprehensive set of data for drilling and completions in the United States, allowing better support for customers' objectives to improve well productivity.
Zacks Rank & Stock Picks
Patterson-UTI carries a Zacks Rank #3 (Hold) at present. Meanwhile, investors interested in the energy space might look at operators like Profire Energy PFIE and Baker Hughes BKR, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Profire Energy: The 2023 Zacks Consensus Estimate for Profire Energy indicates 125% year-over-year earnings per share growth. PFIE has a trailing four-quarter earnings surprise of 11.1%, on average.
Profire Energy is valued at around $58.2 million. PFIE has seen its shares drop 12.1% in a year.
Baker Hughes: The 2023 Zacks Consensus Estimate for Baker Hughes indicates 68.5% year-over-year earnings per share growth. BKR beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two.
Baker Hughes is valued at around $32 billion. BKR has seen its shares gain 8.6% in a year.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Patterson-UTI Energy, Inc. (PTEN) : Free Stock Analysis Report
Baker Hughes Company (BKR) : Free Stock Analysis Report
Profire Energy, Inc. (PFIE) : Free Stock Analysis Report
NexTier Oilfield Solutions Inc. (NEX) : Free Stock Analysis Report
