The company Geosplit, a developer of marker production logging technology for 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 5 million USD. The leading investor of the round was UCP investment group; the co-investor is the Rusnano Sistema SICAR fund, which earlier, in December 2017, invested the company within Round A.
Round B funds were invested (cash in) in the company to implement the further development strategy, the main directions of which will be expansion into international markets, implementation of field development digitalization projects based on marker monitoring data, as well as further technology platform development and the launch of new products based on quantum markers Geosplit on the market.
Following Round 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 150 million rubles, and in 2019 the company plans to increase the revenue to 400 million rubles.
In 2018, Geosplit concluded a $ 2 million long-term contract for well diagnostics at the Daqing oil field in China, which is currently developed by the state-owned company CNPC. In 2019, the company concluded a new Chinese contract for exploration of the Linfen gas field in Shaanxi province. In addition to the Chinese direction, pilot projects are planned in other regions worldwide on the projects of large oil companies. The exports program includes over 20 countries.
One of the promising directions of Geosplit is the development of new digital solutions to gain additional value using marker diagnostics data. These data help customers to optimize field development using machine-learning algorithms, to 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 Round B are an important milestone for the company, confirming both the successful results of the team's work after Round A and the investors’ confidence in our strategy for further development. Considering the main objectives for the upcoming period, we are planning 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 launched marker monitoring at 20 wells. By the end of 2018, the number of projects has grown to 50 wells. This year, we doubled the sales of our products and services and entered the international market. Round B will give us new opportunities for further dynamic technology and product line 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 marker well monitoring technology Geosplit can be used both for 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. Joining the project of the second major external investor UCP will allow Geosplit to become a significant service player 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 round will enable Geosplit to increase investments in promoting well marker diagnostics technology on the international market, which is estimated by experts at about $ 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.