Sensa is seen by many entrepreneurs in the upstream oil and gas industry as the benchmark when it comes to creating significant and sustainable value in a technology-based service businesses.
From identifying the potential application of fibre optics, to creating an integrated full service business model around the technology and ultimately exiting via a high value trade sale to Schlumberger, Sensa proves the strength of Epi-V's investment model.
Sensa's technology allows a delicate strand of optical fibre to be placed within the complex architecture of oil and gas well completions
Background
The fibre optic Distributed Temperature Sensing (DTS) method was developed in the early 1980s at Southampton University but struggled for many years to gain prominence in any of its targeted markets.
Epi-V partner Glynn Williams led a team that spotted the potential for the application of the technology to capture reliable, accurate and real-time distributed downhole temperatures and secured the exclusive licence for its use in upstream oil and gas.
The aim was to take advantage of the emergence of horizontal drilling (a major industry discontinuity that reduced the effectiveness of existing production logging techniques), by fully commercialising this technology and developing a compelling, global, full service business model.
The investment
With an initial $1.6 million investment from 3i, Glynn launched Sensa in 1996 and using his experience gained with Schlumberger and Expro, immediately built resources that designed a practical deployment method for the new generation of fibre optic sensors that allowed a delicate strand of optical fibre to be placed within the complex architecture of oil and gas well completions.
Through a number of targeted successful field applications, Sensa was able to demonstrate that its technology was capable of providing a complete temperature profile along the entire length of a fibre optic cable in real time, something which had never been possible before.
The innovative, game-changing system was able to provide continuous monitoring for the lifetime of an asset, enabling producers to understand more accurately the inflow of fluids into the well so that operating costs could be reduced and performance boosted via the accurate and reliable data it delivered.
The strategy
To fully capitalise on the technology's potential, Sensa developed an integrated full service business model that spanned R&D, manufacture and deployment and direct customer interaction and service.
The strategy included opening eight offices spanning 16 key territories in the international oil and gas industry.
This approach quickly established Sensa in the minds of major service providers as a global player, providing best-in-class technology and a supporting portfolio offering capable of truly adding value to upstream operations.
The rapid growth of the business attracted a further $5.5 million of funding from 3i and a $9.4 million investment from Limerock Partners in 2000. Sensa used this capital to drive the next phase of rapid expansion including the acquisition and integration of complementary businesses.
Outcomes
After firmly establishing Sensa as the leading player in a growing market, in December 2001, the business was sold to Schlumberger in a $100 million cash deal.
With the company now of high value to the major service providers, the strategic premium paid for the asset provided an average return of 12x to Sensa's shareholders.
The deal launched Schlumberger into fibre optic measurements market and significantly enhanced the service giant's offering in the advanced completions and field automation market.
To this day, Sensa remains the cornerstone of Schlumberger's fibre optic expertise.
"This acquisition will complement our developing capability to monitor and control, in real time, the key processes in wells and production systems that optimise the revenue stream, and increase ultimate reservoir recovery.
"Sensa has already demonstrated that fibre optic sensing technologies will play a key role in ways that are only just beginning to be appreciated. Combining their best-in-class measurement capability with the depth of our reservoir expertise and interpretation software will provide the industry with new capabilities."
