Learn how some unique business drivers is splitting the profitability of the old fashioned upstream segment of the oil and gas vertical. And forcing the adaptation of new technologies. If your a tech company, you darn well better be playing attention to this trend!
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Hey, folks. Let’s learn something new about the oil and gas industry.
All right. In today’s show we’re going to talk about the difference in coaching between the American and Mexican soccer leagues. No, just kidding.
We’re going to actually talk about something that we’re watching develop presently right now and it’s could be a major business driver for the next couple of years. And if you’re a technology company, it probably affects your business as well, you may just not know it yet.
So traditionally upstream has been upstream, E&P whatever you want to call it basically getting oil out of the ground. And the majority of the money that was spent upstream for years is offshore. Well, now with hydraulic fracking we’re starting to see a split in the way companies are profitable whether they’re offshore doing traditional wells or onshore doing fracking.
Basically right now, offshore is all about hitting project start dates to be profitable and deliverables. So they do all the science upfront, all the geo modeling all the physics all the flow rates and they model all this and they know exactly what it takes to be profitable. Then, they actually have to go out and implement it and if they hit those project start dates and deliverable dates they make money. If they slip if they miss them, they lose money, right?
Now, on the fracking side of the world, it’s a little bit different, it’s actually a lot different. Theirs is all about operational efficiency, how quickly can we get a well in the ground, get in production and move on to the next one. And so, the E&P world is being split in the way that the companies are profitable and it depends on where they’re operating. But the one thing that’s coming across both levels is technology. Oh, my God in my twenty years of being in this industry, I have never seen technology being adapted so quickly right now, right?
So, anything that helps the offshore guys hit those project start dates and deliverable dates, they buy it, right? And they buy tons of it. And don’t just think conventional things like geo-modeling software, I mean it’s stuff like supply chain believe it or not, supply chains are major issues, so if you have some technology that touches supply chain, you should be selling for oil and gas industry.
And if we move over to the fracking side of the house, it’s all about operational efficiency. Any technology that you have to help them be more efficient, they’ll buy. In fact, the service companies; the Baker Hughes, Schlumberger, and Weatherford, they’re on a buying spree right now. All these small technology companies, they’re just buying them out right so they can sell that technology to their customers which is the Anadarko, the BPs, and ExxonMobil.
So, if you’re a technology company and you’re not tapped into this, you’re missing out on a ton, I mean a ton of revenue. It’s crazy. Like I said, we watch this develop, we actually have three clients of our own right now, they are technology companies that are selling to different place that just a year or so ago, they didn’t even know that existed that money is being left on the table.
One of my clients is actually grown their top line ten million dollars by selling their technology in the upstream. So, like I said if you’re a technology company, you better be jumping on this bonanza because it’s just crazy.
So hopefully this helps, we will see you next time.