Patterson-UTI Energy to acquire Seventy Seven Energy

Patterson-UTI Energy has entered into a definitive agreement to acquire Seventy Seven Energy in an all-stock transaction.

A developer and operator of high-spec rigs, the deal is expected to strengthen the position of Patterson-UTI Energy in the US land drilling market.

Furthermore, after this transaction closes, Patterson-UTI will have one of the largest and modern pressure pumping fleets, comprising 1.5 million hydraulic fracturing horsepower located in the important oil and gas region within the country.

The transaction is subject to customary closing conditions and expected to close by the first quarter of 2017.

All terms of the agreement were approved unanimously by the board of directors of both the companies.

Patterson-UTI chairman Mark S. Siegel said: “We have always held Seventy Seven Energy in high regard due to their commitment to quality service in the field, their high-quality assets and facilities, and the talent they have throughout their organisation.

"As Seventy Seven Energy emerged from its recent financial restructuring, we saw an opportunity to engage a partner that is a great strategic fit for Patterson-UTI.”

Under the agreement, Patterson-UTI will purchase all issued and outstanding shares of common stock of Seventy Seven Energy against nearly 49.6 million shares of common stock of Patterson-UTI. 

The transaction will value Seventy Seven Energy to nearly $1.76bn, assuming the issuance of 49.6 million shares of Patterson-UTI common stock at a closing price of $28.67, in addition to approximately $336m of Seventy Seven Energy’s debt net of cash and warrant proceeds. 

All Seventy Seven Energy’s debt is expected to be reimbursed at the closing of the transaction. 

Patterson-UTI CEO Andy Hendricks said: “We are very excited to be joining forces with Seventy Seven Energy.

"Their contributions will allow us to further capitalise on the shifting industry fundamentals in the US oil and gas market, where customers are increasingly focused on efficiency and high-quality execution.

“This merger provides both strong personnel and high-quality equipment that are complementary to our existing service offerings.”

Seventy Seven Energy provides contract drilling, pressure pumping and oilfield rentals services to the active oil and natural gas plays located onshore in the US.

The company owns a fleet of 40 high-specification drilling rigs.