On 20 October 2015, Energy Recovery Inc. (ERI) announced an exclusive agreement with Schlumberger Technology Corp for use of ERI’s VorTeq high pressure hydraulic fracking pump. Schlumberger will pay ERI US$75 million upfront, followed by a combined US$50 million in milestone payments in 2016. Schlumberger will also pay annual royalties for the 15-year contract duration, dependent on the deployment of VorTeq systems. ERI launched the VorTeq pumping system in December 2014 and completed a six-month testing period of the new pump with Liberty Oilfield Services.
The deal comes amid substantial oil price declines– West Texas Intermediate (WTI) oil prices reached US$46 per barrel at the beginning of November 2015, down from a 2014 high of over US$107 per barrel. This downturn has been a catalyst for significant industry consolidation. Notably, Schlumberger announced in August 2015 its purchase of Cameron for US$15 billion.
- Low oil prices drive focus on increased operational efficiencies
- ERIs water diversification strategy takes hold
- Pure-play position sparks need for expansion