(Bloomberg) -- Patterson-UTI Energy Inc. agreed to acquire smaller rival Pioneer Energy Services Corp. in a move that could lead to further consolidation among oversupplied contractors in the oilfield.

The stock-and-cash deal is valued at about about $295 million, which includes the retirement of all of Pioneer’s debt, Houston-based Patterson-UTI said Tuesday in a statement. The addition of Pioneer, which emerged from bankruptcy protection last year, adds rigs to America’s second-biggest drilling fleet and helps Patterson expand outside the U.S. into Colombia.

”In a structurally smaller North American market with a customer base that has also consolidated, we applaud this type of consolidating, complementary transaction,” Evercore ISI analysts including Jason Bandel wrote Tuesday in a note to clients.

While deals among U.S. shale producers have rebounded this year amid a recovery in crude prices, the oilfield services sector had remained relatively quiet since Liberty Oilfield Services Inc. bought the fracking business from Schlumberger last year in a deal valued at about $450 million at the time.

Pressure pumping, which blasts water, sand and chemicals underground to release trapped hydrocarbons, may be the services market most likely to see deals because of its large number of competitors and a growing divide between the companies with more sophisticated gear and those without, according to JPMorgan Chase & Co.

“Several conference participants mentioned industry consolidation as a likely feature of the coming cycle,” analysts from the bank including Arun Jayaram wrote June 25 in a note to investors. Executives from Patterson-UTI Energy said at a JPMorgan conference that consolidation among service providers would help to remove a glut of excess gear since drilling and fracking work likely won’t reach peak levels seen in the last boom, according to the note.

The mantra among shale’s major explorers is to keep output relatively flat this year and send profits back to shareholders. That has led the world’s biggest oilfield services providers to pivot away from North America for better growth overseas lately.

(Updates with comment from analyst in third paragraph)

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