UPDATE 1-Grey Wolf, Basic Energy agree to merge

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PHILADELPHIA, April 21 (Reuters) - Natural gas drilling services provider Grey Wolf Inc GW.A said on Monday that it would acquire oil and gas well-services company Basic Energy Services Inc (BAS.N).

The two companies plan to merge into a new entity that would be majority owned by Grey Wolf shareholders. It would combine Grey Wolf's land-drilling rig fleet with Basic Energy's land-based well servicing equipment.

Under the deal, Grey Wolf investors will exchange each of their shares for $1.82 in cash and 0.25 share of the new company. Each Basic Energy share will be exchanged for $6.70 in cash and 0.9195 share of the new company.

The merged company, to be called Grey Wolf Inc, would have 7,500 employees, 395 well-servicing and 130 drilling rigs, as well as other oilfield service assets. Grey Wolf shareholders will own 54 percent and Basic Energy shareholders, 46 percent.

Grey Wolf Chairman, President and Chief Executive Thomas Richards will be chairman of the merged company.

The combined company will have greater financial flexibility and be able to return about $600 million in cash to shareholders and invest for future growth, Grey Wolf and Basic Energy said.

They said the new company would establish incorporation in Delaware and trade on the New York Stock Exchange under the symbol "GW." (Reporting by Jessica Hall; Editing by Lisa Von Ahn) (For more M&A news and our DealZone blog, go to here)