Oil States International has entered an agreement to acquire oil and gas perforation systems and downhole tools provider GEODynamics, in a deal valued at $525m.
Through the acquisition, Oil States expects to leverage GEODynamics’ product innovation and collaborative relationships with E&P operators to strengthen its research and development efforts.
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Under the deal, Oil States will make a cash payment of $300m at closing, and issue 8.66 million shares of common stock, valued at $200m, and a $25 million unsecured promissory note to the sellers.
Oil States International president and CEO Cindy Taylor said: “It offers meaningful growth potential that combines technology with downhole consumable completion solutions that are ideal for the current operating environment, which is characterised by longer lateral lengths, increased frac stages and a growing number of perforation clusters which help enhance well productivity.
“Their products are complementary to our short-cycle elastomer products and completion services offerings, which will afford us additional revenue opportunities and allow us to service an expanded customer base.”
The transaction is expected to result in enhancements of Oil States’ consumable product offerings used in complex well completions.
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By GlobalDataFurthermore, GEODynamics is expected to provide growth potential with initiatives to expand their existing product offerings and geographic footprint.
The acquired products and technology is expected to benefit from Oil States’ global footprint, thereby enhancing the growth potential of the combined businesses.
In addition, the acquisition is anticipated to allow the company to reap the benefits of increased cost efficiencies by broadening product offerings through its combined global infrastructure while optimising supply chain operations.
Conditional upon regulatory approvals and other customary closing conditions, the transaction is slated for closure during the first quarter of next year.
