Computer Modelling Group (TSX: CMG and OTCPK: CMDXF) Part 2

What Does Computer Modelling Group Do?

CMG operates through two divisions: Reservoir and Production Solutions and Seismic Interpretation Solutions. I might’ve mentioned it before, but I never came around on businesses calling their products “solutions”. I don’t know. It’s just one of corporate actions that I find bizarre. We’re moving on.

My hunch is that most of you don’t know why CMG’s products are needed or what they do. I know I didn’t before I started my research. So, what are reservoir simulation and seismic interpretation software and what do they do?

The best way I can explain reservoir simulation without getting too deep into the weeds is to use an example. The two main sources, found via Google Gemini, for my definition can be found here and here. Let’s say an oil company thinks they’ve found a deposit, or reservoir as they’re also called. They can’t just take a picture of it. Instead, their engineers make a model of it. The model incorporates a lot of math and data analysis to predict the flow of fluids through rock formations. While not perfect, using reservoir simulation software aids companies greatly in helping them better understand what’s in the reservoir and how much oil can be extracted from it. It also reduces risk and time spent manually doing the previously mentioned math and data analysis.

This video does a great job of explaining reservoir simulation software. The software section starts at the 7:08 mark:

What does seismic interpretation software do for oil companies? It allows them to analyze and interpret seismic data to “see” subsurface (below ground) geology (rock formations). Images of the subsurface can be created by using soundwaves and recording their reflections. Ultimately, the software is used to better identify where oil and gas deposits are located. The benefits of seismic interpretation software are like those of reservoir simulation software. Again, I had to Google this information and verify the accuracy because there isn’t standard definition for what seismic interpretation software is. These five websites (1, 2, 3, 4, 5) were the sources of the definition that that I used.

Before moving on I’d like to inform you that the descriptions of CMG’s reservoir simulation and seismic interpretation software are very in-depth. It took me a long time to understand them, and I had to read and re-read them multiple times plus do plenty of searching to gain a basic understanding of them. If you want to rely on the previous general descriptions of each division and not learn about them further, then you can stop reading and move on to the next section which lists the unique features of Computer Modelling Group.

Reservoir Simulation Products

This segment offers 11 total products to customers which I have listed and described below. All data in this section came from CMG’s Software page and corresponding product information sheets unless otherwise noted.

CMOST – Acronym for Computer-Assisted History Matching, Optimization, Sensitivity, and Uncertainty Analysis Tool.

If you’d rather read about it then please skip to the paragraph below, but this video does an excellent job of explaining the full capabilities of CMOST:

To paraphrase from the video, the software enhances the traditional reservoir simulation workflow which includes geomodelling, reservoir simulation and history matching, a deterministic forecast, manual optimization, and economic analysis. The issues at play with the traditional workflow are that it’s a manual process, tedious, time consuming, and produces one result. That result is subject to several uncertainties in the data and doesn’t account for “what if” scenarios. CMOST does account for “what ifs” and uncertainties. It allows the user to see what happens when multiple variables, whether they are in the reservoir itself or operationally, interact with each other.

If you want to learn more about CMOST, then you can read through its information sheet linked here.

GEM – CMG states that it is the world’s leading reservoir simulation software for compositional, chemical, and unconventional reservoirs. Per a Google search, compositional reservoirs are those where the composition of the hydrocarbon liquids change between liquid and gas due to pressure and temperature variations in the reservoir. Unconventional reservoirs are those deemed difficult for oil to flow out of. Getting the oil out of these reservoirs often requires horizontal drilling or hydraulic fracturing. I couldn’t find out what chemical reservoirs are.

If you want to learn more about GEM, then you can read through its information sheet liked here.

IMEX – The world’s fastest black oil reservoir simulator, and is used to model primary, secondary, and tertiary oil recovery processes. “Black oil” has a more stable composition than the compositional oil I mentioned in the previous paragraph, and is typically heavier, darker, and has lower volatility. A key feature is that it is easier and less expensive to model than compositional oils. IMEX can also be used to model unconventional black oil reservoirs.

If you want to learn more about IMEX, then you can read through its information sheet linked here.

CoFlow – Per p. 11 of the FY 2025 Annual Report CoFlow is, “… the industry’s first fully implicit, multi-user and multi-disciplinary Integrated Reservoir and Production System Modelling (“IPSM”) software application. It provides a unified solution for integrated asset modelling by combining reservoir, production networks and geomechanics in one environment and allows reservoir and production engineers to make informed decisions on large, integrated oil and gas projects.” This video, which does a great job of explaining CoFlow’s capabilities, states that it is CMG’s platform to integrate surface and subsurface modeling. It can do everything from reservoir simulation to well engineering to facilities engineering, and end-to-end uncertainty and optimization.

If you want to learn more about CoFlow, then you can read through its information sheet linked here.

Focus CCS – Information and data for this piece of software were sparse. No information sheet or videos were provided. The CMG website claims that Focus CCS is “the easiest way to simulate and validate asset viability (without compromising accuracy), and de-risk your CCS project – getting us all to net zero faster.” CCS in this context means carbon capture storage. The website goes on to state that this software provides “step-by-step guided workflows allow you (and even newcomers) to quickly and easily build CCS models and view results in a single interface. Better preliminary analysis means the best site selection, and less risk for your project.” In layman’s terms, this software helps companies choose where to best inject carbon into the ground so that it won’t leak out.

CO2LINK – Here’s what CMG’s website states about CO2LINK, “Dynamic link between CCS simulator (CMG GEM) and the Transient wellbore simulator (KDI LedaFlow) for the modelling of complex CO2 phase transition systems.” There is no further mention of it on the website or in the annual reports, so I’m not going to mention it further.

STARS – Per its information sheet, “STARS™ is the undisputed industry standard for the advanced modelling of recovery processes involving the injection of steam, solvents, air and chemicals.”

If you want to learn more about STARS, then you can read through its information sheet linked here.

Results™ – There wasn’t an information sheet for this piece of software either, but you can guess a lot from its name. CMG’s Results™ produces the output from running its simulation software. Per the CMG website, “Results™ delivers state-of-the-art visualization and analysis capabilities to provide insight into reservoir characteristics, recovery processes, and reservoir performance.”

Builder – Interface that allows users to incorporate the data necessary to build a simulation model. Data can be integrated from IMEX, GEM, STARS, and external data sources.

If you want to learn more about Builder, then you can read through its information sheet linked here.

WinProp – Per its website, “WinProp™ creates tuned fluid property descriptions for CMG simulators and black oil fluid property data for third-party reservoir simulation software.” I was totally lost on what fluid property descriptions were. I mean I had no idea, so I went to Gemini. I asked, “What are tuned fluid descriptions?” Its answer was, “Tuned fluid descriptions are the final, validated models of a reservoir’s hydrocarbon fluids that have been optimized to accurately replicate experimental laboratory data. This process, also known as PVT (Pressure, Volume, Temperature) tuning, is a critical step in reservoir engineering to ensure that the fluid properties used in a reservoir simulation are as realistic as possible.” It went on to state that these descriptions are necessary because, “The behavior of reservoir fluids is complex, especially for volatile oils and gas condensates, because their composition and physical properties change significantly as pressure and temperature decline during production.”

ShaleIQ – This is CMG’s data analytics forecasting tool.

This short video does a great job of explaining how it works:

Seismic Interpretation Products

This segment is made up of three businesses: Bluware, Sharp Reflections, and Seisware which was acquired a couple of months ago.

Bluware – Per p. 11 of the FY 2025 Annual Report, “Bluware (BHV): InteractivAITM is a cutting-edge deep learning seismic interpretation tool that enables geoscientists to quickly analyze vast amounts of seismic data. InteractivAI leverages Bluware’s proprietary VDSTM (Volume Data Storage) data format which compresses raw and interpreted seismic data sets, making them adaptable and scalable depending on customer business needs, workflows and visualization requirements. VDSTM enables fast data access, cost-effective cloud storage, and compute-intensive workflows. FASTTM is a data streaming and transcoding tool, providing the ability to use VDSTM with existing interpretation applications to stream subsurface data from the cloud to legacy applications and workflows.”

Sharp Reflections – Per the same page, “Pre-Stack Pro (now known as Sharp Reflections software), is a leading high performance computing platform for seismic data processing and interpretation, with a specific expertise in large pre-stack seismic data sets. Sharp has recently expanded its offering to include 4D seismic analysis.” Pre-stack data sets, per a Google search, “… refers to raw, individual seismic traces collected from different source and receiver pairs before they have been combined or “stacked” into a single trace, a process that improves signal-to-noise ratio.”

SeisWare – Described as follows on p. 36 of the Q1 FY 2026 Financial Report, “On July 30, 2025, CMG Group completed the acquisition of 100% of the outstanding shares of SeisWare International Inc. (“SeisWare”), a Calgary-based software company specializing in geoscience interpretation and field development solutions to support subsurface exploration and development projects.”

What Makes Computer Modelling Group Unique?

The first unique factor CMG possesses is its incentive structure. We already know it’s excellent and requires no further analysis.

The second unique factor is related to the first. It doesn’t relate directly to the CEO’s incentives, but to three people involved with the business at a high level who work or interact with Mr. Jain and were associated with a very well-known compounder business.