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Geosteering technologies attract more than $ 2 million of investment

08.12.2016

GTL Company (Geosteering technologies) — a Russian developer of industrial IoT technologies for the oil and gas industry, a portfolio company of the Phystech Ventures and North Energy Ventures funds, created with the participation of RVC, raised $ 2 million of investment. Round B was headed by the AYR fund operating in the field of private equity; the transaction involved private investors, including investment group from the oil and gas sector, as well as current GTI investors — Phystech Ventures and North Energy Ventures funds, created with the participation of RVC.

GTI (Geosteering technologies) is developing software for "intelligent drilling" of wells and provides remote support drilling services based on it. Using sensors on a drilling string, the GTI program in real time reads information from the borehole, supplies it to the drilling service centre, where the information is processed, analysed and some new data is given for further control over the drilling path. This Russian company successfully competes with the so-called "big four" — the world's largest suppliers of technology for a comprehensive formation evaluation, well construction and management of hydrocarbon production. The customers of GTI include Gazprom Neft, Rosneft, Slavneft, Bashneft, Lukoil and other oil, gas, and oilfield service players.

The company has sold more than 90 software product licenses to 10+ oil and oil service companies. With its participation, more than 1,000 horizontal wells have been drilled.

GTI is the fourth graduate of the GenerationS accelerator, invested by the funds established with the participation of RVC. On the aggregate, the GenerationS graduates have attracted 1.13 billion rubles. Fifty-four per cent of the total amount of transactions have been made with the participation of venture capital, 25% — with the participation of business angel capital, 21% - with the involvement of strategic partners from corporations.

The company product is professional software for Geonaft geo-steering, which enables to reduce the costs of oil and gas companies up to 10 times, which ranges from several hundred thousand to several million dollars at drilling one single well.

The attracted monetary funds will be used to complete the developments of new software solutions — Geomechanics and petrophysical interpretation. Each of them offers new markets, comparable in size to the market of geosteering, which is estimated by experts at more than $ 1 billion. In the short-term, GTI also plans its aggressive geographic expansion into the US and the Middle East.

Geosteering support is already an industrial standard at the construction of horizontal wells in the United States, Canada, projects in the North Sea, and is becoming a standard in Russia. Due to developments of GTI, the drilling speed is increased up to 2 times, the future productivity of wells increases by 2-3 times, and its profitability — by 3-5 times.

Sergey Stishenko, Founder of GTI:
"Today, no manufacturer in the world offers a single platform to support drilling. In order to solve all problems, oil and oil service companies have to buy software from different suppliers. Recent GTI developments are aimed at solving such a problem. In December, we will present the first Russian product to the market in the field of geomechanics, and in early 2017, we will release the first complete platform in the world for "intelligent drilling", which will increase the speed of construction of wells, which will dramatically reduce drilling risks and improve the economic efficiency of development of oil and gas. Our medium-term plans include the development of several new products, including robotic solutions for the drill string."

Sergey Yartsev, investment manager of AYR:
"The trend of recent years in the energy-tech is a serious shift of venture interest from the classic clean-tech to the development of energy efficiency technologies for conventional energy, in particular, to the energy-tech for the oil industry. In this context, GTI is an attractive investment promising market player. Oil and gas companies see the benefits of horizontal wells, the profitability of which is 3-4 times higher than the vertical ones. The difference on an average well may amount to $ 5.5 million for one year! For this reason, both the world and the Russian volume of horizontal drilling is increasing despite the trend in the oil prices and a general drop in drilling. In the United States and the Middle East, a share of horizontal wells is around 80% of the total well stock, meanwhile, in Russia, this figure has reached 30% and continues to grow. At the same time, the construction of horizontal wells is much more expensive, and oil companies are actively using technology for improving drilling efficiency. Geosteering is used at most horizontal wells in the world; meanwhile, in Russia, all horizontal wells are drilled using such technologies as the costs of them is ten times lower than the value-added results. Each meter of horizontal wellbore drilled outside the reservoir with hydrocarbons, recovers up to 3,000 tons of hydrocarbons ($ 0.9mln) from the development during the life of the well; however, the loss in the case of trajectory mistake can cost up to $ 100 million."



Information

About Phystech Ventures
Phystech Ventures was founded by Peter Lukyanov and Olga Maslihova in 2013. The company invests in Russia, the US and Southeast Asia, in teams, developing unique technologies in the field of IT (the Internet of things, information security, information technology in finance and education) and energy (sources and energy storage devices, network technology, oil and gas, and new materials). Assets under the company management amounted to $ 50 million. Currently, the portfolio of Phystech Ventures includes 12 technology companies, among which six Russian companies. Among investors of the funds under the management of Phystech Ventures — Serguei Beloussov (Parallels, Acronis), Alexander Ruchiev (GC Morton), Ratmir Timashev (Veeam, AelitaSoftware) and more than 10 other successful Russian entrepreneurs and venture capital investors.

About North Energy Ventures
North Energy Ventures — a venture capital fund with a focus on technology companies in the field of energy, oil and gas, and new material. The Fund was founded in 2013, among the partners of the fund — Dan Colbert, Ivan Protopopov, and others, who collectively have more than 60 successful venture capital investments under their belt in Russia, Europe and North America, such as NGEN Partners fund, Wermuth AM, Fore, etc.

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