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Patterson-UTI (PTEN) Inks Acquisition Deal With Pioneer Energy

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Patterson-UTI Energy, Inc. PTEN has agreed to buy Pioneer Energy Services Corp. for $295 million, which comprises the debt load of Pioneer to be cleared by the acquirer.

The purchase price includes the issuing of up to 26,275,000 shares of Patterson-UTI common stock as well as a cash payment of $30 million. The deal is scheduled to be concluded in the fourth quarter of 2021, contingent on regulatory clearances, usual closing conditions, and Pioneer shareholders’ approval.

Last year, San Antonio-based Pioneer came out of a pandemic-forced bankruptcy with a much stronger and viable capital structure than its earlier highly leveraged balance sheet.

Rationale Behind the Deal

With the buyout of Pioneer, Patterson-UTI will possess 166 super-spec rigs in the United States with nearly 50 % being outfitted with alternative power sources to minimize emissions. In addition, this takeover expands Patterson-UTI’s geographic reach into foreign markets with the addition of eight rigs in Colombia where Pioneer has served for the past 14 years with a well-recognized operations staff and set-up.

“As a leading provider of contract drilling services in the United States, we are proud to announce this transaction,” said Andy Hendricks, Patterson-UTI's CEO. He went on to say that the company will benefit from Pioneer's high-quality fleet of 17 drilling rigs in the country, 16 of which are super-spec. Furthermore, several of these rigs can run on cleaner-burning natural gas instead of diesel, a technology that is becoming increasingly essential to operators in terms of lowering the carbon footprint.

Apart from its contract drilling operations in the United States and Colombia, Pioneer has a well-managed and high-quality well service rig business with 123 service rigs in the Gulf Coast area. This business, according to Patterson-UTI, will be best suited as part of a bigger well service rig business or as a specialized independent firm.

Brief on the Company

Founded in 1978, Houston, TX-based Patterson-UTI is an oilfield services company.  It came into existence in its current form following a merger between Patterson Energy, Inc. and UTI Energy Corporation. It is one of the largest onshore contract drillers in the United States and has a large fleet of pressure pumping equipment.

Zacks Rank & Key Picks

Patterson-UTI has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Matador Resources Company MTDR, Baker Hughes Company BKR and Oasis Petroleum Inc. OAS, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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PattersonUTI Energy, Inc. (PTEN) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
Oasis Petroleum Inc. (OAS) : Free Stock Analysis Report
 
Matador Resources Company (MTDR) : Free Stock Analysis Report
 
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