48 Title Rock Flow Dynamics 49

market In the framework of rising energy prices, Oil & Gas Field service
companies are struggling to optimize their mining activities. Hy-

overview drodynamic modeling software for mining sites is one of the tools
which allow such optimization.

Rock Flow Dynamics

Software for dynamic modeling of oil
World market for such software is estimated at $1.5B, growing by
10 – 15% per year
The growth is associated with the need of development of hardly
extractable deposits, heavy oil, extractions from sea and perma-
frost sites.

and gas deposits Russian market: about $200M.

Russian service market: $30M
Worldwide: about $2B.
Global service market: $400M

Rock Flow Dynamics

Supercomputer modeling Product RockFlow Dynamics develops tNavigator, a system for dynamic
modeling of natural deposits.

$2M received from Intel
Capital. Company is profitable
from 2007.
Required: M&A investments
overview As opposed to current market leaders such as Schlumberger, Com-
puter Modeling Group, Landmark, Roxar, which develop their
solutions based on continuous improvements of the technology
which dates back over 15 years, RFD is building its system from
scratch and is able to incorporate all the recent technology im-
provements.
tNavigator is currently installed at over 300 workplaces in major
Russian mining companies – Rusneft, Gazprom, Lukoil, TNK-BP
and others.
RFD Company was established in 2005 and has been profitable
since 2007. RFD generates cashflow from 3 main sources: selling
software licenses, support of installed software (approx. 20% of
license sales) and consulting services.

INVESTMENT RFD was backed by Intel Capital in 2011

The company is profitable and able to finance its organic growth

OPPORTUNITY The company is raising financing to capture available M&A

opportunities
Project’s annual revenue is about $3M, with operating profit
margin of 30%.
50 Rock Flow Dynamics Rock Flow Dynamics 51

Technology The project is aimed at development and industrial application

Sample of shale gas modeling
of software, which was specially created for dynamic modeling
of mining processes within oil and gas deposits. While the exist-
team
ing competitors’ products are based on technologies developed 15
years ago, our solution deploys latest innovation technologies. The
idea is to develop a revolutionary tool for oil deposit simulations
that can be adopted worldwide by operators and service companies
in the industry, a platform that can be used for oil and gas deposit
simulation in all regions with different specific fields.
We have ideas and know-how that enable us to achieve excellent
computing simulation results for hydrodynamic model creating.
Our software is fast and efficient on any platform, be that multicore
clusters with shared memory or desktop workstations.
In addition to adopting the latest computing technologies, Rock
Flow Dynamics developed a user-friendly interface for interactive
computing management – a feature that will be demanded in the
field of implementation of digital deposit technologies.
VASILI SHELKOV
These and many other features build up the quality 3D natural de-
posit modeling software and enhance its effectiveness.
Rock Flow Dynamics LLC was founded in 2005 in Moscow. The
main company’s activity is development and implementation of
software for hydrodynamic modeling of oil and gas deposits.
Our software is deployed by Russia’s top oil and gas companies:
Rosneft, GAZPROM, LUKOIL, TNK-BP, GazpromNeft. There are
over 300 installations at the moment. Over 30 experienced math-
ematicians, physicists, software engineers based in Moscow, Rus-
sia, form our R&D center. There is a sales office in Houston, USA,
and sales representatives in a number of Asian countries.
In 2010 an investment and marketing agreement was signed with
Intel. It brought our activity to the international level. In 2011 a
new partnership company was established in Huston, USA. Its
main activity is promotion of our technology on the US market.
In July 2011 Rock Flow Dynamics LLC became a member of
Skolkovo innovation center.
Vasily Shelkov
2011 – present: CEO of “Rock Flow Dynamics” Inc., Houston,
Texas, USA
2005 – present: co-founder, CEO of “Rock Flow Dynamics”

business model The company competitors are global petroleum service majors
(such as Schlumberger, Halliburton), which have mature well es-
tablished software products for reservoir engineering, however
LLC, Moscow, Russia
2004 – 2005: Department Head, Corporate Production Moni-
toring System, Yukos
based on a 15 year old technology. RFD’s fundamentally new ap-
2003 – 2004: Associate Physicist, Brookhaven National Lab,
proach to simulation should bring the company to a global level
Upton, NY.
within the next 5 years.
2000 – 2003: Senior Postdoctoral Fellow, Lawrence Berkeley
Main sales generator - licensing of the software product, software Lab, Berkeley, CA.
sales, services (software support, specific modules development, 1997 – 2000: Postdoctoral Fellow, Lawrence Berkeley Na-
training etc.). Major clients are the largest Russian oil and gas com-
tional Lab, Berkeley, CA
panies: TNK-BP, GAZPROM, LUKOIL, ROSNEFT etc. Clients sup-
1995 – 1997: TA/RA, Southern Methodist University, Dallas,
port will also be provided; cost of support is estimated at 20% of
the product’s annual licensing. Consulting services on modeling are TX.
available upon request; it is also considered an important revenue 1991 – 1992: RA, Joint Institute for Nuclear Research, Dubna,
source. Total company revenue is estimated at $3M in 2011, which Russia.
is +40% YoY. Global expansion is expected to ensure 20% annual 1986 – 1987: Technical Assistant, Joint Institute For Nuclear
growth in next 5 years. RFD is one of the most promising deposit Research, Dubna, Russia.
software modeling development companies in the region.
Education:
1992 – 1997: PhD Physics, Southern Methodist University,
Financial Highlights, $K 2011 2012 2013 Dallas, TX.
Revenue $3 000 $3 600 $4 300 1987 – 1993: M. Sc. Physics, Moscow Institute of Physics and
Technology, Moscow, Russia.
COGS $1 016 $1 200 $1 400
Gross Profit $1 994 $2 400 $2 900
SG&A $801 $950 $1 050
EBITDA $1 193 $1 450 $1 850
Amortization $78 $220 $320
EBIT $1 115 $1 230 $1 530
Interests and taxes $62 0 0
Earnings $1 053 $1 230 $1 530