UCP Investment Group and Rusnano Sistema SICAR Fund to Invest $5 mln in Geosplit

02 October 2019

The company Geosplit (a developer of marker-based diagnostics technology for the oil and gas industry), Rusnano Sistema SICAR Venture Investment Fund (jointly established by JSFC Sistema and RUSNANO) and UCP Investment Group signed an investment agreement for USD 5 million, as part of the Series B funding round. The lead investor in this round was UCP with the Rusnano Sistema SICAR fund as the co-investor, which earlier, in December 2017, had invested in the company during the Series A funding round.

Series B funds were invested (cash in) in Geosplit to implement its future development strategy of expanding into international markets; realizing projects aimed at digitalization of field development using logging data obtained with marker-based technologies; developing the technology platform further, and launching new products based on Geosplit quantum marker-reporters on the market.

Following the Series A funding round, Geosplit has significantly increased both its client base and the volume of ongoing projects focused on sustained use of marker-based diagnostics in Russian oil fields, and has expanded the scope of the technology—gas markers were developed for studying gas fields. In 2018, the company’s revenue reached 150 million roubles, and in 2019, it plans to increase its earnings to RUB 400 mln.

In 2018, Geosplit concluded a $2 mln long-term contract on conducting well diagnostics at the Daqing oil field in China, which is currently being managed by the state-owned company CNPC. In 2019, the company signed a new contract with China to explore the Linfen gas field in the Shanxi province. In addition to collaboration with the PRC, pilot projects are being planned for facilities of large oil companies in other regions of the world. The exports program includes over 20 countries.

One promising direction for Geosplit is the development of new digital solutions to derive additional value from diagnostics data obtained with marker-reporters. This data helps customers with optimization of field development using machine-learning algorithms, adaptation of hydrodynamic models, and implementation of oil production digitalization projects. This particular direction will be in demand both in the Russian and foreign markets.

Alexander Katashov, CEO of Geosplit: “Receiving Series B funding round investments is an important milestone for the company, confirming both the successful results of teamwork after Series A, and the investors’ confidence in our strategy for future development. Our main objectives for the upcoming period include our plan to increase the value of the marker-based well diagnostics technology by developing new products (such as gas markers) and digital solutions for field developers, and to increase the company’s global presence in line with the exports program. In 2017, we entered the Russian market, and by the end of the year, we launched marker monitoring projects at 20 wells. By the end of 2018, the number of projects had grown to 50 wells. This year, we have doubled the sales of our products and services and entered foreign markets. The Series B funding round will give us new opportunities to actively develop our technologies and product line, including digital solutions, and to expand our sales and customer base around the world.”

Mikhail Trofimov, partner of UCP Investment Group: “Geosplit technologies enable oil and gas companies to significantly increase their output and reduce production costs. We see great potential for the application of this technology and highly appreciate our cooperation with the Geosplit team.”

Alexey Katkov, Managing Partner of JSFC Sistema and member of Investment Committee at Rusnano Sistema SICAR fund: “In 2017, the Rusnano Sistema SICAR fund became the first external investor in Geosplit. Over the past two years, the company has significantly expanded its product range. Currently, Geosplit’s marker-based well diagnostics technology can be used both for oil and gas wells. The unique well inflow profiles (in fact, big data) that Geosplit obtains on an ongoing basis will facilitate the creation of effective models of digital fields in the nearest future. The involvement of the second major external investor UCP in the project will allow Geosplit to become a significant service player in the oil and gas market.”

Sergey Vakhterov, Managing Director of RUSNANO Management Company and member of Investment Committee of Rusnano Sistema SICAR fund: “The new round will enable Geosplit to increase its investments in the promotion of its marker-based well diagnostics technology on the international market, which is estimated to be worth approximately $1.6 bln by 2023 by experts. The Russian market, however, accounts for only 15% of the global market. The company’s strategy entails entering the markets of nations in the Middle East, Africa and Asia-Pacific. Currently, there is demand for the technology as confirmed by active interest in it by the largest market players, such as CNPC, Saudi Aramco, etc.”

Additional information

Reference

Rusnano Sistema SICAR is a private equity fund with $100 million under management established by Sistema and RUSNANO in August 2016. The fund was set up for a seven-year investment period that may be extended, and is open to outside investors. The fund's investment focus is the technology sector. The average single investment size is $3-20 million for growth-stage companies or late venture stage companies with working products. At the end of 2017, the fund had invested $16 million, including in Apis Cor, a developer and manufacturer of unique 3D printers for the construction industry, GEOSPLIT, a developer of an innovative system for the monitoring of oil-producing well inflow profiles, as well as other companies.

The fund’s website: www.rss-fund.com

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Geosplit is a hi-tech full-cycle oil services company, which develops technical markers to assess conditions inside oil and gas wells for the oil industry. It is a resident of the Skolkovo Foundation. 

The innovative GEOSPLIT® technology can diagnose and monitor horizontal well inflow profiles. The technology is based on quantum reporter markers®, and makes use of machine learning algorithms to automate the interpretation of well fluid analysis results.

The company’s main activities include: commercial research projects involving testing well inflow profiles, as well as R&D.

For additional information, please visit www.geosplit.ru

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UCP Investment Group is an independent private investment group of companies specializing in investments in public securities and direct investments, operating mainly in the Russian financial market. The UCP portfolio includes investments in the oil and gas sector, real estate, consumer goods, Internet technologies, production of high-tech materials and the petrochemical industry. UCP Investment Group was founded in 2006. Ilya Scherbovich is the President and Managing Partner of UCP.