Patterson-UTI Energy, Inc. (NASDAQ:PTEN) disclosed that its subsidiary, Patterson-UTI International Holdings, Inc., inked a non-binding term sheet with ADNOC Drilling.
As per the deal, Patterson-UTI expects to hold a minority equity interest in Turnwell Industries LLC OPC, which was recently formed by ADNOC Drilling.
Patterson-UTI projects that Schlumberger Middle East SA will also hold a minority equity interest in Turnwell, which won a $1.7 billion contract to drill and complete 144 unconventional wells for ADNOC in UAE. Schlumberger Middle East SA is a subsidiary of Schlumberger N.V. (NYSE:SLB).
In exchange for the minority equity interest, Patterson-UTI plans to offer drilling, completion, and other oilfield service expertise to Turnwell and a limited cash contribution to fund the portion of working capital.
Andy Hendricks, Patterson-UTI's Chief Executive Officer, said, "We are pleased that ADNOC Drilling recognizes Patterson-UTI as a premier drilling and completions company and technology leader, and we look forward to reaching an agreement to bring our expertise to the initial phase of this groundbreaking project."
"I am excited about this potential opportunity to allow Patterson-UTI to grow our presence in the Middle East in a capital efficient manner, as we do not expect to initially contribute any capital equipment. We also do not expect this opportunity to change our previously announced capital expenditure budget or impact our expectation to return at least $400 million to shareholders in 2024 through dividends and share repurchases."
This month, the company reported an average of 116 drilling rigs operating in the United States for April 2024.
Investors can gain exposure to the stock via Invesco S&P SmallCap Energy ETF (NASDAQ:PSCE) and VanEck Oil Services ETF (NYSE:OIH).
Price Action: PTEN shares closed lower by 2.42% at $10.89 on Friday.
Photo via Shutterstock