Patterson-UTI and NexTier Will Form the Second-Largest Pressure Pumper in All-Stock Merger

Patterson-UTI announced a merger of equals with NexTier Oilfield Solutions through an all-stock transaction, creating a fully integrated drilling and completions oilfield services firm with an estimated $5.4 billion enterprise value. The combined entity will maintain the Patterson-UTI name and PTEN ticker following close, currently slated for the fourth quarter of this year. We're raising our fair value estimate to $17 from $15, as we expect the combination will foster more cost-efficient asset-light operations, lifting profitability and cash generation over time. We view the firms' legacy product lines as highly complementary, enabling Patterson to diversify its end-market exposure without straying too far from its core competencies—a pitfall suffered by peers in deals past. We maintain our no-moat rating, as the highly fragmented North American pressure pumping market remains prohibitive for any one firm to carve out a lasting competitive advantage.