July 6, 2010 / 12:12 PM / 9 years ago

UPDATE 2-Patterson-UTI to buy Key's shale drilling assets

* Patterson-UTI to buy assets for $237.7 mln

* Assets include pressure pumping, wireline business

* Enters into new $250 mln credit agreement (Recasts; adds share price, NEW YORK to dateline)

NEW YORK, July 6 (Reuters) - Patterson-UTI Energy Inc (PTEN.O) will buy Key Energy Services Inc’s (KEG.N) pressure pumping and electric wireline operations for $237.7 million, expanding its business in the fast-growing shale gas fields.

Energy producers, including Exxon Mobil (XOM.N), have been flocking to shale gas fields, which provide better financial returns than most other types of wells and are expected to provide supplies for decades.

The acquisition, which is expected to close in September, will double Patterson-UTI’s pressure pumping capacity, and expand its operations to the Barnett Shale, Eagle Ford Shale and Permian Basin region.

Patterson’s first-quarter revenue from pressure pumping was about $54 million, or 20 percent of its total revenue in the period.

Key’s pressure pumping and wireline businesses contributed $50.9 million and $123.0 million of revenue, respectively, in the first quarter of 2010.

About 80 percent of Key’s pressure pumping operations are suited for hydraulic fracturing, the process used to crack rock formations in shale fields to extract the natural gas.

Patterson said it has also entered into an additional $250 million credit agreement to fund the deal.

However, the company added it was evaluating long-term financing opportunities and may not borrow under this new facility.

Patterson-UTI’s shares fell 7.5 percent to $13.91 on Nasdaq, while Key Energy shares rose 4.1 percent, or 38 cents, to $9.51 on the New York Stock Exchange. (Reporting by Matt Daily in New York, Additional reporting by Antonita Madonna Devotta in Bangalore; Editing by Maureen Bavdek)

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