Transaction Highlights
Oil States International, Inc. (NYSE:OIS) announced today that it
has entered into a definitive agreement to
acquire GEODynamics, Inc., a provider of oil and gas
perforation systems and downhole tools in support of completion,
intervention, wireline and well abandonment operations. GEODynamics
is being acquired from funds managed by Lime Rock Partners, members
of its management team and other investors.
Oil States anticipates that GEODynamics’ product
innovation and collaborative relationships with E&P operators
will further augment its research and development efforts and lead
to enhancements in its consumable product offerings in the growing
markets for technology-backed products used in complex well
completions. Furthermore, Oil States believes GEODynamics is
a market leading, technically differentiated specialty completion
solutions provider with strong brand recognition. GEODynamics
provides a robust growth pipeline with initiatives to expand their
existing product offerings and geographic footprint.
Total transaction consideration of $525 million
consists of a combination of $300 million of cash at closing
(expected to be funded by borrowings under Oil States’ amended
revolving credit facility, with permanent financing options to be
considered in 2018), the issuance of 8.66 million shares of Oil
States common stock (valued at $200 million, based on a twenty day
volume weighted average price) and a $25 million unsecured
promissory note payable to the sellers, bearing interest at 2.5%
per annum with a maturity date eighteen (18) months after the
closing of the transaction. The acquisition is on a cash-free,
debt-free basis with approximately $24 million of GEODynamics’ debt
being repaid by the sellers at closing with proceeds from the
transaction.
Oil States expects the acquired products and
technology to benefit from Oil States’ global footprint and
presence, history of operating excellence and strong balance sheet,
thereby enhancing the growth potential of the combined businesses.
Additionally, over time, Oil States expects to realize the benefits
of increased cost efficiencies by providing a broader set of
product offerings through its combined global infrastructure while
optimizing supply chain operations.
The transaction is subject to regulatory
approvals and other customary closing conditions. It is anticipated
that the closing of the transaction will occur during the first
quarter of 2018.
Cindy B. Taylor, Oil States’ President and Chief
Executive Officer, commented, “GEODynamics is a unique acquisition
opportunity for Oil States. It offers meaningful growth potential
that combines technology with downhole consumable completion
solutions that are ideal for the current operating environment
which is characterized 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. GEODynamics has a
well-recognized brand with a highly driven and innovative
management and engineering team. We look forward to adding their
products to our existing offerings as we welcome their employees to
Oil States.”
David S. Wesson, Chief Executive Officer and
founder of GEODynamics, stated, “We are very excited to be part of
Oil States and the growth opportunities Oil States provides with
its people, technology, global footprint and access to
capital. Our product development efforts offer an
incredible pipeline of new products and technology that together
with Oil States will make a positive impact on our industry by
helping operators complete more profitable wells.”
Oil States’ senior secured revolving credit
facility (the revolving credit facility) was amended to, among
other things, expressly permit the GEODynamics acquisition.
Further, the total leverage covenant, which is based upon the ratio
of total funded debt to trailing twelve months EBITDA (as defined
in the revolving credit facility), has been temporarily increased
from 3.25x to 3.75x for the quarters ending March 31, 2018 and June
30, 2018, and will then reset back to the original 3.25x total
leverage ratio beginning in the quarter ending September 30, 2018.
In connection with this amendment, total commitments available
under the facility will reduce from $600 million to $425 million
and the ability to draw on an incremental accordion facility has
been removed. Based on the anticipated leverage ratio measured upon
closing of the acquisition, the amounts outstanding under the
revolving credit facility will bear interest at LIBOR plus a margin
of 3.0%, or at a base rate of 2.0% plus a margin of 3.0%. The
maturity date for the revolving credit facility of May 28, 2019 is
unchanged. Oil States plans to consider permanent financing options
following the closing of the transaction.
Conference Call InformationOil States will host
a conference call to discuss the acquisition on Wednesday,
December 13, 2017 at 7:00 a.m. Central Time (8:00
a.m. Eastern Time). The call is being webcast and the webcast and
presentation slides can be accessed from the Company’s website at
www.ir.oilstatesintl.com. Participants may also join the conference
call by dialing (800) 446-1671 in the United States or by dialing
+1 847 413 3362 internationally and using the passcode 46150586. A
replay of the conference call will be available within one and a
half hours after the completion of the call by dialing (888)
843-7419 in the United States or by dialing +1 630 652 3042
internationally and entering the passcode 46150586, and will be
available for at least 30 days from the date of the call.
About Oil StatesOil States International, Inc.
is a global oilfield products and services company serving the
drilling, completions, subsea, production and infrastructure
sectors of the oil and gas industry. The Company’s manufactured
products include highly engineered capital equipment as well as
products consumed in the drilling, well construction and production
of oil and gas. The Company is also a leading provider of
completion services to the industry. Oil States is headquartered in
Houston, Texas with manufacturing and service facilities
strategically located across the globe. Oil States is publicly
traded on the New York Stock Exchange under the symbol “OIS”.
For more information on the Company, please visit Oil States
International’s website at www.oilstatesintl.com.
About GEODynamics, Inc.GEODynamics creates and delivers downhole
solutions that enable enhanced well economics, performance and
lifespan. The company is a leading researcher, developer and
manufacturer of engineered solutions to connect the wellbore with
the formation in oil and gas well completions. GEODynamics’
solution-oriented product lines span the life of a well from
advanced perforating systems (including patented CONNEX® reactive
perforating technologies, FracIQ™ Limited Entry Perforating System,
and SandIQ™ Optimized Perforating for Diversion) to an innovative
line of unconventional well completion tools (including the
patented SmartStart Plus™ Time Delay Test & Frac Valve,
FracTrap™ Composite FracPlug System, and the FracDock™ family of
patented bigbore frac solutions) and well abandonment tools
(including Legacy™ plugs and cement retainers, setting equipment,
and jet cutters). GEODynamics has headquarters, engineering, sales,
laboratory and manufacturing facilities located in Millsap, Texas;
technical sales and services in Aberdeen, Scotland and nine U.S.
distribution centers. For more information about GEODynamics,
visit www.perf.com.
Forward Looking StatementsThe foregoing contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements are those that do not state
historical facts and are, therefore, inherently subject to risks
and uncertainties. The forward-looking statements included therein
are based on then current expectations and entail various risks and
uncertainties that could cause actual results to differ materially
from those forward-looking statements. Such risks and uncertainties
include, among other things, risks and uncertainties relating to
Oil States’ ability to successfully complete the acquisition on a
timely basis, including receipt of required regulatory approvals
and satisfaction of other conditions; if the acquisition is
completed, the ability to retain GEODynamics’ customers and
employees, the ability to successfully integrate GEODynamics’
operations, product lines, technology and employees into Oil
States’ operations, and the ability to achieve the expected
synergies as well as accretion in earnings; risks associated with
the general nature of the energy service industry; and other
factors discussed in the "Business" and "Risk Factors" sections of
the Form 10-K for the year ended December 31, 2016 filed by Oil
States with the Securities and Exchange Commission on February 17,
2017.
Company Contact:
Lloyd A. HajdikOil States International, Inc.Executive Vice
President, Chief Financial Officer and Treasurer 713-652-0582
Patricia GilOil States International,
Inc.Director, Investor Relations713-470-4860
SOURCE: Oil States International, Inc.
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