GEOSPLIT and Rusnano Sistema SICAR reached an investment agreement

Moscow, December 21, 2017. – GEOSPLIT, the resident of the Skolkovo Foundation and the Venture Investment Fund “Rusnano Sistema SICAR” jointly established by AFK Sistema and RUSNANO, entered into the investment agreement. The first tranche in the amount of one and a half million US dollars will be directed to further development of production logging technology without well intervention. The technology know-how consists in the use of special markers-reporters® created from quantum dots and corporate software using machine learning for the automated interpretation of well fluid sample analysis data. The fundamental difference between the new technology and conventional logging methods is the ability to continuously monitor the the well inflow intervals for a long period of time, reducing the costs and increasing the safety of production.

In recent years, the world has seen an increase in oil and gas production from horizontal wells stimulated by multi-stage fracturing. One of the most important tasks of field development are reliable data on well production.

The marker-reporters® created from quantum dots (linear size 2-6 nm) are induced to polymer coating of ceramic fracturing proppant. Each stage of the fracturing has some proppant with a unique marker code. Polymer coating reacts with formation fluid and releases markers during several years. To perform production logging all you need to do is to take samples at the wellhead. Next step is to identify concentration of markers of each code. These data are later correlated with the software and used to identify production of each interest interval.

GEOSPLIT uses the oilfield services business model, providing a full package of sample analysis services after the fracturing during minimum one year. The package includes production and supply of marked proppant to the field, supervising at fracturing operation, sampling, delivery, and study of the formation fluid samples, interpretation of the results and recommendations to the customer to improve the efficiency of well completion and development of the field. GEOSPLIT method enables wide application of the technology and allows to receive the statistical data to optimize the multistage fracturing design, the efficient length of the horizontal sections, etc.

Alexander Katashov, CEO of GEOSPLIT:

«GEOSPLIT technology is the efficient supplement to traditional production logging methods in horizontal wells after multistage hydraulic fracturing, and in some cases, it can completely replace them. The wide use of tracers enables to bring the well management to a qualitatively new level and to reduce the costs of down-hole operations. At the same time, the positive economic effect of the technology application is estimated at tens of million rubles per well. To date, we have carried out Quantum PLT in 20 horizontal wells, and in 2018 we plan to increase the scale of business at least twice and launch an export program. Also, thanks to the investment deal with the Rusnano Sistema SICAR Foundation, we will be able to develop the technology more actively. Thus we can increase the value for our customers and enter the new market segments both in Russia and abroad.»

Sergey Vakhterov, Managing Director for Investment Activities of MC "RUSNANO":

«Currently only a very small part of the horizontal wells fund is studied in Russia. The experts note the potential for the growth of the marker well studies market up to 35% of the total market by 2026. GEOSPLIT can occupy a dominant position in the market due to the technological advantage over its Russian competitors and at the expense of the cost advantage over the foreign competitors».

Sergey Dergach, General Manager of Sistema-Consult, the investment adviser of Rusnano Sistema SICAR:

«The scale of the tracer technologies market has a great potential - the average annual growth rate of this market is forecasted at 33% in 2017-2026. At the same time, according to experts, the share of tracer methods in the production logging market can reach 6% by 2026 from the current level of 1%. We highly appreciate the professionalism of the GEOSPLIT team, which offers one of the most technologically and economically attractive solutions on the Russian market. The product of GEOSPLIT is currently being tested by many Russian oil companies, after completion of the testing it is likely to become the standard technology for production logging in Russia».

The investment consultant GEOSPLIT in the transaction was the company Skolkovo Ventures, which oversees the entire block of venture investments within the Skolkovo Foundation. The legal support was provided by the Center for Transactions of TCC Skolkovo.