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Patterson-UTI (PTEN) Closes Buyout Deal With Pioneer Energy

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Patterson-UTI Energy, Inc. (PTEN - Free Report) recently completed the purchase of Pioneer Energy Services Corp. for $278 million, which comprised the debt load of Pioneer to be cleared by the acquirer.

The purchase price includes the issuing of up to 26.3 million shares of Patterson-UTI common stock as well as a cash payment of $30 million, based on Patterson-UTI's closing price of $9.44 on Oct 1. The deal concluded after fulfilling 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 possesses 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 the company’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 operational staff and a strong set-up.

As a leading provider of contract drilling services in the United States, Patterson-UTI is proud to announce this transaction. Through this deal, the Houston, TX-based company will benefit from Pioneer's high-quality fleet of 17 drilling rigs in the country, 16 of which are super-spec. Several of these rigs can run on cleaner-burning natural gas instead of diesel, a technology that is becoming increasingly essential for 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. Per management, this business will run better as a constituent of a broader well-service rig business or as an independent operation.

Zacks Rank & Other Key Picks

Patterson-UTI has a Zacks Rank #2 (Buy), currently. Other top-ranked players in the energy space include Continental Resources, Inc. (CLR - Free Report) , Whiting Petroleum Corporation (WLL - Free Report) and Magnolia Oil & Gas Corp (MGY - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters, missing the same on one occasion.

Whiting Petroleum’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters.

Magnolia’s earnings beat the Zacks Consensus Estimate in all the last four quarters.