Patterson-UTI (PTEN) and NexTier Form New Oilfield Company
Patterson-UTI Energy, Inc. PTEN and NexTier Oilfield Solutions Inc. recently announced that they have completed their merger to create a leading provider of drilling and completions services in the United States. This merger is a significant event in the oil and gas industry, as it is expected to have several benefits for both companies and the industry as a whole.
Benefits of the Merger
The combined company will have a fleet of 172 drilling rigs and 3.3 million hydraulic fracturing horsepower. It will also have a strong presence in the Permian Basin, the Marcellus Shale and the Eagle Ford Shale. This will give the company greater bargaining power with customers and suppliers, and allow it to offer a wider range of services.
The merger is expected to be accretive to both earnings and free cash flow in 2024. The combined company expects to realize annual cost savings and operational synergies of approximately $200 million within 18 months following the merger’s closing.
The alliance will also create a more diversified company with a broader range of offerings, which will allow it to better serve its customers and meet their needs.
For example, Patterson-UTI is known for its drilling rigs, while NexTier is known for its hydraulic fracturing services. By combining their businesses, the new company will be able to offer a more comprehensive suite of services to its customers.
Impact of the Merger
The combined company will continue to be known as Patterson-UTI Energy, Inc., trade on the stock market under the ticker PTEN and have its corporate headquarters in Houston, TX.
The oil and gas industry is facing several challenges, including the decline in oil prices and increasing environmental regulations. The merger of Patterson-UTI and NexTier will help the combined company to better compete in this challenging environment.
The company will also be able to provide its customers with lower prices and more innovative services. This will help drive demand for oil and gas, which will eventually benefit the entire industry.
The merger is also expected to create jobs. The combined company will need to hire additional employees to staff its expanded operations. This will create jobs in the oil and gas industry as well as in the broader economy.
Conclusion
The merger of Patterson-UTI Energy and NexTier Oilfield Solutions is a significant event in the oil and gas industry. It is a sign of the consolidation that is taking place in the industry as companies look to improve their efficiency and profitability. The merger is also a positive development for the United States, as it will create a more competitive drilling and completions market. It will be interesting to see how the combined company performs in the years to come.
Zacks Rank and Key Picks
Currently, PTEN carries a Zacks Rank #4 (Sell).
Some better-ranked stocks for investors interested in the energy sector are CVR Energy CVI, sporting a Zacks Rank #1 (Strong Buy), and Evolution Petroleum EPM and Archrock AROC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy (CVI) is valued at around $3.50 billion. In the past year, its shares have risen 5.3%.
CVI currently pays a dividend of $2 per share, or 5.75% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Evolution Petroleum is worth approximately $295.76 million. EPM currently pays a dividend of 48 cents per share, or 5.40% on an annual basis.
The company currently has a forward P/E ratio of 8.23. In comparison, its industry has an average forward P/E of 17.70, which means EPM is trading at a discount to the group.
Archrock is valued at around $2.03 billion. It delivered an average earnings surprise of 15.08% for the last four quarters and its current dividend yield is 4.79%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
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Patterson-UTI Energy, Inc. (PTEN) : Free Stock Analysis Report
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