Oil States International entered into an agreement to acquire GEODynamics, a provider of oil and gas perforation systems and downhole tools in support of completion, intervention, wireline and well abandonment operations.

GEODynamics will be 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.

The $525 million transaction consideration will consist of a combination of $300 million of cash at closing (funded by borrowings under Oil States’ amended revolving credit facility), the issuance of 8.66 million shares of Oil States common stock (valued at $200 million) and a $25 million unsecured promissory note payable to the sellers, bearing interest at 2.5% per annum with a maturity date 18 months after the transaction close. 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.

According to a related 8-K filing, Wells Fargo served as administrative agent for the amendment which, among other things, reduced the revolving loan commitments from $600 million to $425 million.

Cindy B. Taylor, Oil States’ president and CEO, said, “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.”