Oilfield services provider Patterson-UTI Energy has agreed to merge with NexTier Oilfield Solutions in an all-stock merger of equals transaction, to create a premier North American drilling and completions company with a total enterprise value of $5.4bn.

Under the terms of the deal, shareholders of NexTier will receive 0.7520 shares of Patterson-UTI common stock for each share held in the company.

Upon completion of the transaction, Patterson-UTI shareholders will hold around a 55% stake in the combined company while NexTier shareholders will hold an interest of approximately 45% on a fully diluted basis.

The combined company, which will operate under the name Patterson-UTI Energy, will have operations in the most active major basins in the US.

It will have 172 super-spec drilling rigs and a wells completion business with deployed capacity of 45 active spreads and 3.3 million hydraulic fracturing horsepower.

Patterson-UTI CEO Andy Hendricks said: “This merger unites two top-tier and technology-driven drilling and well completions businesses, creating a leading platform at the forefront of innovation. As one company, we will have a significantly expanded, comprehensive portfolio of oilfield services offerings across the most active producing basins in the United States, along with operations in Latin America.

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“With our combined strong balance sheet, ample liquidity and greater free cash flow, we will be well positioned to continue to invest in technology, innovation and people, while delivering strong cash returns to shareholders.”

The transaction is subject to Patterson-UTI and NexTier shareholder approval, regulatory approvals and satisfaction of other customary closing conditions. The merger is planned to close in the fourth quarter of 2023.