Energy Recovery signs 15-year license deal with Schlumberger

Energy Recovery Inc. (NASDAQ: ERII), which supplies pressure energy technology for industrial fluid flows, has signed a 15-year deal with Schlumberger Technology Corp., which provides geoscience, engineering, drilling, and data management software products and computing services for the exploration and production industry.

The agreement provides exclusive rights to Energy Recovery’s VorTeq hydraulic pumping system, the first hydraulic fracturing manifold (“missile”) built to isolate hydraulic fracturing pumps from abrasive proppants that cause pump failure. 

The VorTeq system is a hydraulic pumping system that replaces the missiles traditionally used in hydraulic fracturing. In current operations, the missile routes water, proppants (sand or ceramics) and chemicals downhole at treating pressures up to 15,000 psi. However, the proppants cause frequent failures in the high-pressure hydraulic fracturing pumps. With VorTeq, high-pressure hydraulic fracturing pumps will process clean or proppant-free water and transfer the hydraulic energy to the hydraulic fracturing fluid within the VorTeq missile.

Under the terms of the agreement, Schlumberger will pay a $75 million exclusivity fee immediately. Schlumberger will also pay two separate $25 million milestone payments (for a total of $50 million) subject to the company satisfying certain key performance indicators expected to occur in 2016. The agreement also includes continuing annual royalties for the duration of the license agreement, subject to the company satisfying certain key performance indicators. 

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