Patterson-UTI Energy said on Wednesday that it is acquiring privately owned Ulterra Drilling Technologies in a cash-and-stock deal.
According to the Houston-based land driller, consideration for the acquisition of Ulterra from affiliates of Blackstone Energy Partners includes $370 million and 34.9 million shares of its common stock.
Ulterra designs, manufactures, sells, and rents polycrystalline diamond compact (PDC) drill bits. Founded in 2005, the Fort Worth, Texas-based company supports customers in more than 30 countries, with sales, manufacturing, and repair facilities throughout the Americas, Asia, and Middle East. The company also is the leading provider of PDC bits in North America, with operations in the most active basins across the US and Canada.
This transaction comes three weeks after Patterson-UTI agreed to a significant $5.4 billion merger with NexTier Oilfield Solutions. Two years ago, in July 2021, the company scooped up Pioneer Energy Services, a land-based drilling and well services contractor, in a stock-and-cash deal valued at $295 million.
“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,” said Andy Hendricks, chief executive of Patterson-UTI.
“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,” he added.
Patterson-UTI’s chief operating officer, Mike Holcomb, said, “Ulterra's growing Middle East presence will broaden our geographic footprint and provide strong relationships with key customers in this international market,” adding that the company's “data-centric approach to manufacturing, operations, and marketing has been key to their success in the PDC drill bit business.”
He noted that Ulterra’s proprietary BitHub data platform complements Patterson-UTI’s PTEN+ data platform.
“When you consider the combination of data systems from Patterson-UTI, NexTier, and Ulterra, we believe we will have the most comprehensive data for drilling and completions across the United States," he said.
For the full year 2023, Patterson-UTI said it expects Ulterra to generate between $160 million and $180 million of earnings before interest, taxes, depreciation, and amortization, Holcomb said.
John Clunan, president and chief executive of Ulterra, said that he was “excited to join Patterson-UTI,” and that he was looking forward to all of the technical collaboration possibilities going forward together.
“We are excited about the potential to add our leading drill bit technologies to Patterson-UTI's portfolio of drilling rigs, directional drilling services, controls automation, and well placement technologies to better support our customers' efforts to drill better wells,” Clunan said.
The transaction — funded from cash in hand and a revolving line of credit — is expected to close in the third quarter of 2023. The Ulterra business will continue to operate under the name Ulterra, and its headquarters will remain in Fort Worth, Texas.
