HOUSTON and OKLAHOMA CITY, Dec. 12,
2016 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC.
(NASDAQ: PTEN) ("Patterson-UTI") and SEVENTY SEVEN ENERGY
INC. (OTCPK:SVNT) ("Seventy Seven Energy") today jointly
announced that the two companies have entered into a definitive
merger agreement pursuant to which Patterson-UTI will acquire
Seventy Seven Energy in an all-stock transaction.
Patterson-UTI and Seventy Seven Energy are both leaders in
building and operating high-spec rigs, and the transaction will
further solidify Patterson-UTI as a leader in the U.S. land
drilling market with 201 high-spec rigs. Additionally,
following the closing of the transaction, Patterson-UTI will have
one of the largest and most modern pressure pumping fleets in the
industry, with more than 1.5 million hydraulic fracturing
horsepower both available and strategically-located in some of the
most prolific oil and gas regions in the U.S. The transaction
is subject to customary regulatory approvals, stockholder approval
of both companies and other customary closing conditions, and is
expected to close late in the first quarter of 2017.
Patterson-UTI expects to achieve synergies in excess of
$50 million and believes, excluding
transaction costs, this merger will be accretive to cash flow per
share.
The terms of the merger agreement were unanimously approved by
the boards of directors of both companies. Additionally,
Patterson-UTI has entered into a voting agreement with three
shareholders of Seventy Seven Energy including BlueMountain Capital
Management, Axar Capital Management and Mudrick Capital Management,
who collectively represent more than 50% of the outstanding shares
of common stock of Seventy Seven Energy.
Under the terms of the transaction, Patterson-UTI will acquire
all of the issued and outstanding shares of common stock of Seventy
Seven Energy, in exchange for approximately 49.6 million shares of
common stock of Patterson-UTI. The aggregate number of shares
of Patterson-UTI common stock is subject to downward adjustment if
certain in-the-money Seventy Seven Energy warrants are forfeited or
exercised on a net-share basis. The transaction values
Seventy Seven Energy at approximately $1.76
billion, assuming the issuance of 49.6 million shares of
Patterson-UTI common stock at today's closing price of $28.67, plus approximately $336 million of Seventy Seven Energy's debt net
of cash and warrant proceeds. All of Seventy Seven Energy's
debt is expected to be repaid at the closing of the
transaction. Based on the number of shares of Seventy Seven
Energy common stock expected to be outstanding or deemed
outstanding as of the closing date, and assuming that the
in-the-money Seventy Seven Energy warrants are exercised for cash,
the exchange ratio would be approximately 1.7725 shares of
Patterson-UTI common stock for each share of Seventy Seven Energy
common stock, and shareholders of Seventy Seven Energy would own
approximately 25% of the combined company.
Patterson-UTI has the financial resources to repay Seventy Seven
Energy's indebtedness through a combination of cash on hand,
borrowing under its $500 million
revolving credit facility, which is currently undrawn, and through
the use of a senior unsecured bridge financing commitment in the
amount of $150 million that
Patterson-UTI has arranged in connection with this
transaction. While Patterson-UTI has the financial resources
to repay Seventy Seven Energy's indebtedness, Patterson-UTI also
expects to issue additional equity in connection with closing the
transaction in order to maintain Patterson-UTI's historically
conservative capital structure.
Patterson-UTI is a leading provider of contract drilling and
pressure pumping services in North America. With a
high-quality fleet of 161 APEX® rigs, Patterson-UTI
Drilling Company has a broad geographic footprint and is a leader
in walking rig technology for pad drilling applications.
Patterson-UTI's pressure pumping subsidiaries have more than one
million fracturing horsepower in Texas and the Appalachian region of the
northeast United States, where
their footprint allows for a reputation of strong regional
knowledge and efficient operations.
Seventy Seven Energy provides contract drilling, pressure
pumping, and oilfield rentals in many of the most active oil and
natural gas plays onshore in the United States. Seventy Seven
Energy owns a fleet of 40 high-spec drilling rigs, approximately
93% of which are pad capable, including 28 fit-for purpose
PeakeRigs™. The remainder of Seventy Seven Energy's rig fleet
consists of 51 SCR rigs.
Additionally, Seventy Seven Energy owns approximately 500,000
horsepower of modern, efficient fracturing equipment located in the
Anadarko Basin and Eagle Ford
Shale. This merger will also add a new product line to
Patterson-UTI through Seventy Seven Energy's oilfield rentals
business. The Seventy Seven Energy oilfield rentals business
has a modern, well maintained fleet of premium rental tools, and
provides specialized services for land-based oil and natural gas
drilling, completion and workover activities.
Mark S. Siegel, Chairman of
Patterson-UTI, commented "We have always held Seventy Seven Energy
in high regard due to their commitment to quality service in the
field, their high-quality assets and facilities, and the talent
they have throughout their organization. As Seventy Seven
Energy emerged from its recent financial restructuring, we saw an
opportunity to engage a partner that is a great strategic fit for
Patterson-UTI."
Andy Hendricks, Patterson-UTI's
Chief Executive Officer, stated "We are very excited to be joining
forces with Seventy Seven Energy. Their contributions will
allow us to further capitalize on the shifting industry
fundamentals in the U.S. oil and gas market, where customers are
increasingly-focused on efficiency and high-quality
execution. This merger provides both strong personnel and
high quality equipment that are complementary to our existing
service offerings."
"The merger combines two strategically aligned companies into
one company that will be financially well-positioned and a leader
in U.S. land," said Jerry
Winchester, Seventy Seven Energy's Chief Executive Officer.
"Given the changes our company and industry have been through the
past two years, this merger is the right decision for our
shareholders, employees and the oil field services industry as a
whole. This transaction will establish a company with tremendous
scale, a diversified customer base and premier assets located in
the most active basins in the U.S. In closing, Patterson-UTI
shares our commitment to service quality and safety, and we are
excited to align ourselves with them in the coming months."
Conference Call Information
Patterson-UTI will host a conference call to discuss the
transaction on December 13, 2016 at
10:00 a.m. Central Time. The
dial-in information for participants is (844) 498-0567 (Domestic)
and (443) 961-0820 (International). The passcode for both
numbers is 38495611. The webcast and accompanying slides can
be accessed through the Investor Relations section at
www.patenergy.com. A replay of the conference call will be on
the Company's website for one week.
Advisors and Financing Source
Piper Jaffray & Co., through
its Simmons & Company International division and Vinson &
Elkins LLP acted as advisors to Patterson-UTI, while Morgan Stanley
& Co. LLC acted as financial advisor and Wachtell, Lipton,
Rosen & Katz acted as legal counsel to Seventy Seven
Energy. Canyon Capital Advisors LLC, on behalf of its funds
and managed accounts, has provided a senior unsecured bridge
financing commitment to Patterson-UTI.
About Patterson-UTI
Patterson-UTI Energy, Inc. subsidiaries provide onshore contract
drilling and pressure pumping services to exploration and
production companies in North
America, and drilling rig pipe handling technology
worldwide. Patterson-UTI Drilling Company LLC and its
subsidiaries operate land-based drilling rigs in oil and natural
gas producing regions of the continental United States and western Canada.
Universal Pressure Pumping, Inc. and Universal Well Services, Inc.
provide pressure pumping services primarily in Texas and the Appalachian region.
Warrior Rig Technologies Limited provides pipe handling components
and related technology to drilling contractors around the
world.
Location information about the Company's drilling rigs and their
individual inventories is available through the Company's website
at www.patenergy.com.
About Seventy Seven Energy
Headquartered in Oklahoma City,
Seventy Seven Energy provides a wide range of wellsite services and
equipment to U.S. land-based exploration and production customers.
Seventy Seven Energy's services include drilling, hydraulic
fracturing and oilfield rentals and its operations are
geographically diversified across many of the most active oil and
natural gas plays in the onshore U.S., including the Anadarko and Permian basins and the Eagle
Ford, Haynesville, Marcellus, Niobrara and Utica shales.
Important Information for Investors and
Stockholders
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. The proposed transaction will be submitted to
the stockholders of each of Patterson-UTI Energy, Inc.
("Patterson-UTI") and Seventy Seven Energy Inc. ("Seventy Seven
Energy") for their consideration. Patterson-UTI will prepare and
file a Registration Statement on Form S-4 that will include a
prospectus and proxy statement jointly prepared by Patterson-UTI
and Seventy Seven Energy. Seventy Seven Energy and
Patterson-UTI may also file other documents with the Securities and
Exchange Commission (the "SEC") regarding the proposed transaction.
INVESTORS AND SECURITY HOLDERS OF Patterson-UTI ARE URGED TO READ
THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS
THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security
holders may obtain free copies of the proxy statement/prospectus
and other documents containing important information about Seventy
Seven Energy and Patterson-UTI once such documents are filed with
the SEC through the website maintained by the SEC at www.sec.gov.
Copies of the documents filed with the SEC by Patterson-UTI will be
available free of charge on Patterson-UTI's website at
www.patenergy.com under the tab "Investors" and then through the
link titled "SEC Filings" or by contacting Patterson-UTI's Investor
Relations Department by email at investrelations@patenergy.com, or
by phone at (281) 765-7100. Copies of the documents filed
with the SEC by Seventy Seven Energy will be available free of
charge on Seventy Seven Energy's website at www.77nrg.com under the
tab "Investors" and then through the link titled "SEC Filings" or
by contacting Seventy Seven Energy's Investor Relations Department
by email at IR@77nrg.com or by phone at (405) 608-7730.
Participants in the Solicitation
Patterson-UTI, Seventy Seven Energy and certain of their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders
of Patterson-UTI in connection with the proposed transaction.
Information about the directors and executive officers of
Patterson-UTI is set forth in the Proxy Statement on Schedule 14A
for Patterson-UTI's 2015 annual meeting of shareholders, which was
filed with the SEC on April 15, 2016.
Information about the directors and executive officers of Seventy
Seven Energy is set forth in the 2015 Annual Report on Form 10-K/A
for Seventy Seven Energy, which was filed with the SEC on
April 29, 2016. These documents
can be obtained free of charge from the sources indicated above.
Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements which are
protected as forward-looking statements under the Private
Securities Litigation Reform Act of 1995 that are not limited to
historical facts, but reflect Patterson-UTI's and Seventy Seven
Energy's current beliefs, expectations or intentions regarding
future events. Words such as "may," "will," "could,"
"should," "expect," "plan," "project," "intend," "anticipate,"
"believe," "estimate," "predict," "potential," "pursuant,"
"target," "continue," and similar expressions are intended to
identify such forward-looking statements. The statements in
this press release that are not historical statements, including
statements regarding the expected timetable for completing the
proposed transaction, benefits and synergies of the proposed
transaction, costs and other anticipated financial impacts of the
proposed transaction; the combined company's plans, objectives,
future opportunities for the combined company and services, future
financial performance and operating results and any other
statements regarding Patterson-UTI's and Seventy Seven Energy's
future expectations, beliefs, plans, objectives, financial
conditions, assumptions or future events or performance that are
not historical facts, are forward-looking statements within the
meaning of the federal securities laws. These statements are
subject to numerous risks and uncertainties, many of which are
beyond Patterson-UTI's or Seventy Seven Energy's control, which
could cause actual results to differ materially from the results
expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: failure to obtain
the required votes of Patterson-UTI's or Seventy Seven Energy 's
shareholders; the timing to consummate the proposed transaction;
satisfaction of the conditions to closing of the proposed
transaction may not be satisfied or that the closing of the
proposed transaction otherwise does not occur; the risk that a
regulatory approval that may be required for the proposed
transaction is not obtained or is obtained subject to conditions
that are not anticipated; the diversion of management time on
transaction-related issues; the ultimate timing, outcome and
results of integrating the operations of Patterson-UTI and Seventy
Seven Energy; the effects of the business combination of
Patterson-UTI and Seventy Seven Energy, including the combined
company's future financial condition, results of operations,
strategy and plans; potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the proposed transaction; expected synergies and
other benefits from the proposed transaction and the ability of
Patterson-UTI to realize such synergies and other benefits;
expectations regarding regulatory approval of the transaction;
results of litigation, settlements and investigations; actions by
third parties, including governmental agencies; volatility in
customer spending and in oil and natural gas prices, which could
adversely affect demand for Patterson-UTI's and Seventy Seven
Energy's services and their associated effect on rates,
utilization, margins and planned capital expenditures; global
economic conditions; excess availability of land drilling rigs and
pressure pumping equipment, including as a result of low commodity
prices, reactivation or construction; liabilities from operations;
decline in, and ability to realize, backlog; equipment
specialization and new technologies; adverse industry conditions;
adverse credit and equity market conditions; difficulty in building
and deploying new equipment; difficulty in integrating
acquisitions; shortages, delays in delivery and interruptions of
supply of equipment, supplies and materials; weather; loss of, or
reduction in business with, key customers; legal proceedings;
ability to effectively identify and enter new markets; governmental
regulation; and ability to retain management and field
personnel.
Additional information concerning factors that could cause
actual results to differ materially from those in the
forward-looking statements is contained from time to time in
Patterson-UTI's and Seventy Seven Energy's SEC filings.
Patterson-UTI's filings may be obtained by contacting Patterson-UTI
or the SEC or through Patterson-UTI's web site at
http://www.patenergy.com or through the SEC's Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at
http://www.sec.gov. Seventy Seven Energy's filings may be
obtained by contacting Seventy Seven Energy or the SEC or through
Seventy Seven Energy's web site at www.77nrg.com or through the
SEC's Electronic Data Gathering and Analysis Retrieval System
(EDGAR) at http://www.sec.gov. Patterson-UTI and Seventy Seven
Energy undertake no obligation to publicly update or revise any
forward-looking statement.
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SOURCE PATTERSON-UTI ENERGY, INC.