Enteq Upstream PLC (LON:NTQ) has taken out a licence from oil giant Royal Dutch Shell PLC (LON:RDSB) to use its intellectual property and other technology in a specialised rotary steerable drilling system.

Rotary systems, which provide directional control with continuous rotation, are becoming the go-to for drilling of oil, gas and geothermal wells. Enteq is already an equipment supplier to a number of directional drilling companies.

The market for rotary steerable drilling is currently estimated at $1bn, according to Enteq broker Investec, within a global directional drilling sector expected to grow at around 7% a year.

Shell’s IP and the license taken by Enteq relate to an early-stage prototype of a system that will take up to two more years to bring to market.

This and some initial payments to Shell will require a total investment of up to roughly $3mln over that period, Enteq calculates, with a subsequent construction of trial and commercial inventory requiring further investment in due course.

Shell would be paid royalty payments when the system is being sold commercially.

“The Enteq team has a track record in commercialising innovative engineering projects which have achieved good market share,” said the company’s chief executive Martin Perry.

“We look forward to building upon Shell’s innovative work to date in order to bring an exciting new product to the directional drilling market.”

Enteq, which last year returned to underlying profitability on strong revenue growth, said in June that its targets included the introduction of new products, building technology partnerships and broadening its addressable market.