2010-07-07-2010-07-06-2010-10-04

Bought pressure-pumping and electric wireline businesses, bringing total horsepower to 419,500.

Patterson-UTI Energy (Nasdaq: PTEN) has closed its purchase of the pressure-pumping and electric wireline businesses of Key Energy Services Inc., Houston, for approximately $256.7 million in cash, expanding its pressure-pumping presence in the Barnett shale, Eagle Ford shale and Permian Basin and bringing its associated horsepower to 419,500.

Patterson paid $237.7 million in cash and Key retained working capital associated with the businesses, subject to certain post-closing adjustments.

The acquired pressure-pumping equipment consists of 214,400 horsepower, including 184,400 of fracturing horsepower and 30,000 horsepower used in cementing, acidizing and nitrogen stimulation. Approximately 80% of the fracturing horsepower is comprised of state-of-the-art quintuplex pumps that are ideally suited for shale frac work. Approximately 50,000 horsepower of equipment is currently on order and expected to be delivered during the next nine months.

Patterson-UTI's pressure-pumping subsidiaries now have equipment with approximately 431,000 horsepower, including 340,000 fracturing horsepower and 91,000 horsepower used in cementing, acidizing and nitrogen stimulation. Pressure-pumping services are provided throughout Texas and the Appalachian region and other areas. A substantial amount of the services are provided in the Barnett, Eagle Ford and Marcellus shales as well as the Permian Basin.

The acquired wireline business includes 26 wireline units that operate in the same areas as the acquired pressure-pumping assets, including the Bakken and Marcellus shales.

Key retains its remaining production services businesses, including its coiled tubing operations.

Key's pressure pumping and electric wireline businesses contributed roughly $50.9 million and $123 million of revenues and $2.5 million operating income and $72.9 million operating loss as of March 31, 2010, and December 31, 2009, respectively. The operating loss for Dec. 31 includes $64.1 million of an impairment charge recorded in third-quarter 2009. Excluding this impairment charge, the operating loss contributed by these businesses in 2009 was $8.8 million.

Patterson-UTI chief executive Douglas Wall says, "Demand for pressure pumping services remains high and we are confident that this acquisition will further our ability to provide a high-level of customer service quality. We welcome the high caliber employees of these businesses into the Patterson-UTI family."

Mark S. Siegel, Patterson-UTI's chairman, adds, "We are pleased to complete this acquisition that significantly expands one of our core businesses. This acquisition was funded with a combination of cash on hand and a draw under our $400 million revolving line of credit."

Key chairman, president and CEO Dick Alario says, "In evaluating the growth and consolidation opportunities in our core well-intervention services business and international expansion efforts, we determined that the capital in our pressure pumping and electric wireline businesses could be more effectively deployed in many of the other areas of potential opportunity before us today…We intend to continue to evaluate growth opportunities, both organic and via acquisition, in our core businesses to enhance shareholder value."

Tudor, Pickering, Holt & Co. Securities was advisor to Key.