News Article

Pedro Santos, OsComp's CEO, is planning to split his business into two separate companies
Author: Molly Ryan
Source: bizjournals ( click here to go to the source)

Featured firm in this article: OsComp Systems Inc of Somerville, MA




Oct 28, 2013, 1:25pm CDT
Houston energy tech company shakes up its strategy, plans spinoff and major growth
Molly Ryan
Reporter- Houston Business Journal


OsComp Systems Inc., a young energy tech company that specializes in natural gas solutions, is planning a massive strategy overhaul through which it will split itself into two separate companies.

Pedro Santos, OsComp's founder and CEO, explained that the company has three very separate businesses that each can eventually operate separately. Now that one of these businesses, its "Virtual Pipeline" business, is producing stable revenue by itself, OsComp has decided to spin it out into its own company. The "Virtual Pipeline" business is a service business that uses trailers to deliver compressed natural gas to customers that don't have access to pipelines.

The reason why OsComp has such different business elements is rooted in the management team's desire to survive during OsComp's tough early years.

When OsComp was founded in 2009, Santos explained that it was focused on a gas compression technology that, among other things, helps prevent compression systems from getting too hot, which can reduce their efficiency. However, in 2010, OsComp was in a tight spot — it hadn't yet secured enough venture funding or generated enough revenue to continue operations for much longer.

The company decided to start the "Virtual Pipeline" service to generate revenue in the short term and it bought itself some time to continue developing its compression technology. Then, at the end of 2011, OsComp's compression technology secured its first round of venture capital, raising $12 million in its Series A from Energy Ventures and Chevron Technology Ventures.

Energy Ventures and Chevron Technology Ventures also grew to like OsComp's "Virtual Pipeline" business. In the third quarter of this year, the firms invested an undisclosed amount in this business. With these funds and a stable source of revenue from customers, Santos said the "Virtual Pipeline" business will most likely become its own company sometime in the first half of 2014.

The "Virtual Pipeline" business will go by OsComp and will be led by Guido Rivas, OsComp's current chief operating officer. The business will keep about 20 of the company's 36 employees and have its own board of directors.

After the split, OsComp's former compressor technology business and another business, called ANG Technology, which is a new technology for storing natural gas, will operate as a new company, the name of which has not yet been determined. This company will have about 16 employees and Santos will act as its CEO.

In the future, Santos plans to spin out the ANG technology into its own company separate from the compressor technology; however, this will most likely be after the technologies are ready for commercialization. Currently, neither the compression technology nor the ANG technology are ready for commercialization, but Santos expects to begin field trials on the technologies in the second half of next year.

Also, in 2014, Santos expects the two businesses to have a combined employee count of 60 — close to double that of this year's headcount. Although the employee count is growing, the two businesses plan to stay in the same office location in Houston.

Driving the businesses' growth is the shale boom, which is producing unprecedented amounts of natural gas. This gas is creating the need for more infrastructure and more efficient ways to move gas, Santos said.