US drilling rig operator Patterson-UTI to buy Seventy Seven Energy for $1.76 bn
13 December 2016
US land-based operator of drilling rigs Patterson-UTI Energy yesterday struck a deal to buy its smaller rival Seventy Seven Energy Inc for $1.76 billion in stock, including debt.
Under the terms of the deal, Seventy Seven shareholders will receive 1.7725 shares of Patterson-UTI for each share held.
Patterson-UTI will issue about 49.6 million common shares for the deal, and will pay off Seventy Seven's debt of $336 million through a combination of cash on hand and its own credit.
Patterson-UTI has entered into a voting agreement with three shareholders of Seventy Seven Energy including BlueMountain Capital Management, Axar Capital Management and Mudrick Capital Management, who collectively represent more than 50 per cent of the company.
Patterson-UTI said that post closing, it expects to achieve $50 million in synergies.
Houston-based Patterson-UTI provides onshore contract drilling and pressure pumping services to exploration and production companies in the US and Canada.
It also operates land-based drilling rigs in oil and natural gas producing regions of the continental US and western Canada and provides pressure pumping services primarily in Texas and the Appalachian region.
Post closing of the deal, Patterson-UTI will have one of the largest and most modern pressure pumping fleets in the industry, with more than 1.5 million hydraulic fracturing horsepower both available and strategically-located in some of the most prolific oil and gas regions in the US.
Seventy Seven Energy, which owns a fleet of 40 high-spec drilling rigs, provides contract drilling, pressure pumping, and oilfield rentals in many of the most active oil and natural gas plays onshore in the US.
Mark Siegel, chairman of Patterson-UTI, 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 organization."