Patterson-UTI Energy, Inc. [NASDAQ: PTEN] disclosed on Tuesday that it has inked an agreement to purchase Pioneer Energy Services Corp. for nearly $295 million, which constitutes the withdrawal of all the debt of Pioneer Energy Services. The payment for this buying involves the grant of more than 26,275,000 shares of Patterson-UTI common stock plus payment of $30 million of cash.
Furthermore, this deal is beneficial for Patterson-UTI Energy as it will increase the geographic footprint of Patterson-UTI’s with the supplement of eight pad-capable rigs in Colombia. This acquisition will also increase the Patterson-UTI’s current fleet of 150 super-spec drilling rigs in the US as it will add 16 super-spec drilling rigs.
Additionally, other strategic rationales behind this deal include the increased focus of PTEN to cut emissions as it will utilize additional rigs with the ability to use natural gas as a primary fuel source. This acquisition will also give the finishing touch to the current customer base of Patterson-UTI. It will also allow Patterson-UTI to speed up its super-spec rig count growth into a market with enhancing demand. Last but not the least, this acquisition will also anticipate being profitable for cash flow per share and adjusted EBITDA per share and create annual synergies of more than $15 million.
As per the arrangement, Patterson-UTI will buy Pioneer Energy Services for an aggregate payment of up to 26,275,000 shares of Patterson-UTI common stock and $30 million of cash. The deal prices Pioneer Energy Services on a cash and debt-free basis at nearly $295 million, under the assumption that the issuance of 26,275,000 shares of Patterson-UTI common stock at the execution price of $10.14 on July 2, 2021, plus $30 million of cash.
The board of directors of both the firms has mutually agreed to the deal. Moreover, Patterson-UTI has inked an arrangement with owners who cooperatively embody nearly 88% of the prominent voting power of Pioneer Energy Services to vote in support of the deal. The deal is anticipated to execute in the fourth quarter of 2021, dependent on regulatory permissions, conventional closing requirements, and the authorization of Pioneer Energy Services’ stockholders.