Energy Recovery Signs 15-Year License With Schlumberger to Provide Exclusive Rights to Its VorTeq(TM) Hydraulic Fracturing Technology

Deal Includes $125 Million in Upfront Payments Paid in Stages to Energy Recovery

SAN LEANDRO, Calif., Oct. 19, 2015 (GLOBE NEWSWIRE) -- Energy Recovery, Inc. (NASDAQ:ERII), the leader in pressure energy technology for industrial fluid flows, today announced a 15-year deal with Schlumberger Technology Corporation, the world's leading supplier of 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(TM) 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.

Energy Recovery's President and Chief Executive Officer Joel Gay stated, "We are thrilled to be working with Schlumberger, the world's largest oil field services company, and a leading supplier of technology associated with hydraulic fracturing solutions. We believe VorTeq is a paradigm shift for the hydraulic fracturing industry as it significantly reduces maintenance costs associated with pumping downtimes and provides considerable redundancy efficiencies." 

"We believe this technology offers Schlumberger the immediate benefit of reducing wear and tear on its pumps, as well as reducing downtime. In the medium-term, we believe it provides Schlumberger additional savings associated with eliminating redundant equipment onsite," said Gay. "For a company in this market who wants to keep producing but needs to be mindful of costs, this technology tackles these challenges and delivers meaningful results."