Patterson-UTI Energy Inc. said on July 5 it has entered into a definitive agreement to acquire Ulterra Drilling Technologies LP, a global provider of specialized drill bit solutions, for roughly $780 million.
Under the terms of the transaction, Patterson-UTI will acquire Ulterra Drilling Technologies LP from affiliates of Blackstone Energy Partners on a debt-free basis for aggregate consideration of $370 million of cash and 34.9 million shares of Patterson-UTI common stock.
Patterson-UTI said it will pay the cash portion of the Ulterra consideration using cash on hand and Patterson-UTI's revolving line of credit. In connection with the transaction, Blackstone has entered into a voting agreement with NexTier, in which Blackstone will vote the shares of Patterson-UTI issued in the transaction and held by the stockholder at the time of the Patterson-UTI special meeting in a manner to facilitate the consummation of the merger between Patterson-UTI and NexTier
Mike Holcomb, Patterson-UTI's COO, said for full year 2023, Ulterra is expected to generate between $160 million and $180 million of EBITDA. “We also expect to begin generating revenue synergies within the first year," he said.
Founded in 2005 and headquartered in Fort Worth, Texas, privately-owned Ulterra designs, manufactures, sells and rents PDC drill bits. With a global footprint, Ulterra supports customers in over 30 countries with sales, manufacturing, and repair facilities throughout North and South America, the Middle East, and Asia. In North America, Ulterra is a leading provider of PDC drill bits, with operations across the most active basins in the United States and Canada.
The transaction, which is expected to close in third-quarter 2023, is subject to customary closing conditions and receipt of required regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act.
The Ulterra business will continue to operate under the name Ulterra, and its headquarters will remain in Fort Worth, Texas.
Andy Hendricks, CEO of Patterson-UTI, said that both Patterson-UTI and Ulterra share “a culture of innovation and a focus on superior service quality, building deep and highly collaborative relationships with customers.”
“Ulterra's industry leading position in the North American PDC drill bit market will expand our operational and technology portfolio and strengthen our position as a leading drilling and completions company,” he said. “The addition of Ulterra to our drilling offering and our recent announcement to merge with NexTier Oilfield Solutions advances our strategy to enhance our positions in both drilling and completions, areas where Patterson-UTI has a strong 45-year history of operations and innovation.”
Holcomb said that Ulterra's growing Middle East presence will broaden the company’s geographic footprint and provide strong relationships with key customers in this international market.
“Additionally, Ulterra's data-centric approach to manufacturing, operations, and marketing has been key to their success in the PDC drill bit business,” he said. “Their proprietary BitHub data platform is complementary to our PTEN+ data platform and will further expand our comprehensive data analytics capabilities from the drill bit to the well completion. When you consider the combination of data systems from Patterson-UTI, NexTier and Ulterra, we believe we will have the most comprehensive set of data for drilling and completions across the United States, which through our analytics capabilities can allow us to better support our customers' objectives to improve well productivity."
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