Geosplit LLC, a developer of Quantum PLT technology for upstream oil and gas industry, Rusnano Sistema SICAR Venture Investment Fund, jointly established by AFK Sistema and RUSNANO, and the UCP Investment Group signed an investment agreement for USD 5 million. The leading investor of the round is UCP Investment Group; the co-investor is Rusnano Sistema Sicar, which already invested into the company within series A funding in December 2017.
Series B investment was raised to implement the further development strategy of the company with intensive expansion into international markets and digital transformation of oil&gas fields through the use of quantum marker monitoring data as main objectives. The company will also continue to further develop its technology platform to launch new products based on quantum markers and to expand the technology application range.
Following Series A, Geosplit significantly increased both the client base and the volume of ongoing projects for long-term marker diagnostics in Russian oil fields, and expanded the scope of the technology - gas markers were developed for gas fields monitoring. In 2018, the company's revenue reached the level of USD 2.5 million, and in 2019 the company plans to increase the revenue to USD 6.2 million.
In 2018 Geosplit began its first international activities by signing a long-term USD 2 million contract for well diagnostics at Changqing oil field in China, which is currently developed by the state-owned company CNPC. In 2019 the company signed several other partnership agreements with major oil services companies in China including for monitoring gas wells at Linfen gas field in Shaanxi province. Prior to closing Series-B round the company developed strategic export program that includes over 20 countries with pilot projects currently planned in several regions worldwide in collaboration with large oil&gas companies.
Data obtained through quantum marker diagnostics will bring even more value together with new digital solutions currently developed by Geosplit. These data help customers to optimize field development using machine-learning algorithms, adapt hydrodynamic models, and implement oil production digitalization projects. This direction will be relevant both in the Russian and foreign markets.
The company Advance Capital acted as an investment consultant for the transaction, Skolkovo Legal specialists provided legal support.
Alexander Katashov, CEO of Geosplit:
“Investments within Series B are an important milestone for the company, confirming both the successful results of the team's work after the first funding round and the investors’ confidence in our strategy for further development. Considering the main objectives for the upcoming period, we plan to increase the value of well marker diagnostics technology implementation through the development of new products (such as gas markers) and digital solutions for field developers, expanding the company’s scope in line with the exports program. In 2017, we entered the Russian market, and by the end of the year, we were already monitoring 20 wells with Quantum PLT. By the end of 2018, the number of projects exceeded 50 wells. Currently we have doubled the sales of our products and services and confidently entered the international market. Round B funding will give us new opportunities for further dynamic technology and product portfolio development, including digital solutions, as well as expanding the sales system and customer base around the world. ”
Mikhail Trofimov, partner of UCP Investment Group:
“Geosplit technologies can significantly increase the output of oil and gas companies and reduce production costs. We see great potential in applying the technology and highly appreciate our cooperation with the Geosplit team”.
Alexey Katkov, Managing Partner, AFK Sistema, Member of the Investment Committee of the Rusnano Sistema Sicar Fund:
“In 2017, the Rusnano Sistema Sicar fund was the first external investor in Geosplit. Over the past two years, the company has significantly expanded its product line. Currently the Geosplit marker well monitoring technology can be applied both at oil and gas wells. The unique production logging data (in fact, big data), which Geosplit obtains in the online mode, will facilitate building effective models of digital fields in the nearest future. The project has been supported by the second major external investor UCP, which will allow Geosplit to become a significant service provider in the oil and gas market.”
Sergey Vakhterov, Senior Managing Director for Investment Activities, RUSNANO Management Company, member of the investment committee of the Rusnano Sistema Sicar fund:
“The new funding round will enable Geosplit to increase investments in promoting well marker diagnostics technology into international markets, which by experts estimations will reach$ 1.6 billion by 2023. The Russian market, however, covers only 15% of the world market. The company’s strategy involves access to the countries of the Middle East, Africa and Asia-Pacific. The demand for technology is currently confirmed by the active interest of the largest market players, such as CNPC, Saudi Aramco, etc."
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. 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 CEO and managing partner of UCP.
Rusnano Sistema SICAR is a venture investment fund amounting to 100 million USD. It was jointly established by Sistema JSF and RUSNANO in August 2016 in Luxembourg for 7 years with the possibility of extension and attraction of co-investors. The investment focus of the fund is the technology sector. The average investment rate is 3-10 million USD for one company in the growth stage or late venture stage with an operating product.