What do oil producers, boom time tech advances and $7,000 Bitcoin have in common? Blockchain is the revolutionary technology that will change all of them —and when you combine all three, we expect to have a second U.S. oil boom driven by major tech advances and traded on a system that is will affect every industry.
Say what you want about OPEC rolling out the red carpet of production cuts for U.S. shale. While U.S. shale has indeed seized the opportunity created when OPEC and NOPEC scaled back oil production in order to lift prices, it was able to take advantage of the opportunity only by rethinking its strategies. U.S. shale has emerged from the bloody battle leaner, meaner, and on the prowl for more. The next U.S. oil boom is now at its fingertips, spurred on by major technological advances—including groundbreaking blockchain technology.
If you’re looking to get your hands on a piece of the impending U.S. oil boom, here are five company stocks that have their finger on the pulse of this blockchain tech.
#1 Royal Dutch Shell (NYSE: RDS.A)
Along with partners BP, Statoil, Mercuria, and a handful of others, Shell is taking on the role of a supermajor pioneer in blockchain technology. The group is investing in creating a blockchain-based digital platform for energy commodities trading. This tool will allow oil and gas companies to deep-six all the paperwork involved in trading and operating in favor of e-docs and smart contracts, as well as improve risk management by taking all the grey areas out of cargo ownership with accurate timestamping. The end result: cost savings, more accurate data, speedier settlements for cargo, and improved security.
While others have tried their hand to spur on this technology, the backing of some of the bigger players this time around should improve the chances of success. Right now, the project is waiting for regulatory approval, so it’s ground zero for this venture, which will be a separate independent entity.
In the meantime, Shell beat analyst expectations—again—with Q3 earnings, and profits remain impressive. For long-term investors, this is an obvious choice: Shell is generating nearly $17 billion in free cash flow annually, with dividend payouts at close to $16 billion.
All of Shell’s cost-cutting measures since the oil price crash have paid off. In the words of CEO Ben van Beurden: “It is good to see that at $50 we can comfortably cover our cash dividend, play down our debt and maintain investment to grow the business, and at the same time see running room to improve further.”
#2 Petroteq Energy Inc. (TSX:PQE.V; OTC:PQEFF)
Petroteq’s tech contribution is multifaceted. For starters, it’s pioneering a solution for cleaning up the dirty processing of oil sands that are slipping out of favor with the public. Petroteq’s proprietary Liquid Extraction System can extract oil from oil sands in a way that is not harmful to the environment, and all for a production cost expected to come in at $22 per barrel. The tech has demonstrated that it extracts over 99 percent of all hydrocarbons in the sand, generates zero greenhouse gases, and doesn’t require high temperatures or pressures—a new must-have for oil drillers who want to stay off climate activists’ radar. What’s more, the clean sand can then be re-sold as fracking or construction sand.
And Petroteq is not just working on using this tech for itself—it’s planning to license this one-of-a-kind advanced technology globally, paving the way for the extraction of over a trillion barrels of oil that currently sit in the sands in Utah, Colorado, and Wyoming—along with tens of trillions of barrels located elsewhere in the world.
Petroteq’s technology has the potential to generate millions in licensing fees around the world, and it is eyeing the opportunity to file patents in many countries with oil sands reserves.
Petroteq has rights to 87 million barrels of oil equivalent in Utah’s Asphalt Ridge, which it acquired for $10 million. It’s a heavy oil, but they’ve proven that they can extract oil from both the sands and the shale with the new tech. In 2015, Petroteq produced 10,000 barrels.
Since then, the modular plant has been moved even closer to oil resources and is now being reassembled. Permits are already in place, and new production is scheduled to launch in early 2018. The goal for 2019 is production of 5,000 bopd at a production cost as low as $18 per barrel. And there’s potential, says Petroteq, to achieve 30,000 bopd with proven reserves.
With one plant, Petroteq says it’s potential is $10 million a year in profit at today’s oil prices.
Demand is expected to be voracious for oil that comes in at a $20 discount to WTI. And that’s just the oil from a single plant. The projected netbacks are impressive:
So, while oil sands in Canada are prohibitively expensive to produce in today’s oil-price environment, Petroteq has found a way to produce in Utah for only $22 per barrel.
Petroteq, like Shell, is also working with blockchain technology. It is now in the process of signing an agreement with First Bitcoin Capital which specializes in crypto currency and blockchain development. The visionary small-cap intends to license the blockchain built by IBM and will use this to make it industry-specific, giving the entire spectrum of oil—from upstream to downstream—access to massive data.
Once the product is finished, the goal is to have a free open source blockchain for massive oil data, including everything from how much oil someone bought to how much they paid and how long it took to deliver, where it was drilled, how it was refined. Petroteq has already been busy courting major energy players on multiple continents to get involved.
Bitcoin might be worth over $7,000 per coin, but the real cryptocurrency is data—and this is a gold mine for the energy industry.
By February 2018, when production is scheduled to resume from the relocation of their modular facility, this company could be in investors’ spotlights.
#3 Nvidia (NYSE:NVD)
Nvidia is hotter than hot right now, and it’s next gaming strength has the potential to push it even further. It’s even the top performer in the entire S&P 500. There are a lot of naysayers because this stock is already up to a whopping $213 a share, but there were skeptics when it sat at $180. Like the Jeffersons, this stock keeps moving on up, and the last 12 months have seen this stock gain close to 130 percent.
Nvidia isn’t a gaming stock in the strictest sense of the word, but Nvidia is expected to report strong gaming-segment sales on the back of its participation in Nintendo Switch. Nvidia’s chips are central to the gaming industry, but their chips are also central to some of the other hot market segments. Nvidia’s chips are lightning fast, and as such are at the top of the list for artificial intelligence (AI). They’re used in self-driving vehicle projects and Amazon’s Echo speaker as well.
Artificial intelligence—the betterment of which could revolutionize life as we know it—is also in Nvidia’s wheelhouse. Just days ago, Nvidia announced an revolutionary upgrade to its Volta GPU architecture for its SaturnV supercomputer. With 6 of the 10 most efficient supercomputers in the world, Nvidia is here to stay.
#4 BP (NYSE: BP)
It’s not your father’s oil industry. Gone—for now at least—are the days of $100 oil, and anyone not constantly looking for an edge will find themselves left behind. BP is not sitting idly by, instead it is looking forward into blockchain technology.
The oil and gas industry has been anything but stable, and pressures for drillers, operators, producers, and refiners are immense. All interested parties are looking for a leg up—constantly moving forward just to stay in the black. BP has its eye on blockchain as one possible solution to the industry’s moment-by-moment existence.
In no other industry is blockchain more useful than in the complex world of oil that has many hands in the pot along the way, from drillers to traders to shippers to refiners. A report from Deloitte stressed that industry players would either need to work together to drive innovation---or wait for the market to be disrupted at the hands of others—and BP is choosing the former. Together with Wien Energie and Eni Trading and Shipping, it has successfully concluded tests from a 12-week pilot blockchain program. Upon its successful test, it has extended the invitation for others to come on board, including Shell and Statoil.
Because it has the weight of many majors behind it, this blockchain tech has an increased chance for continued success.
BP has solid financials, with better-than-expected earnings in the third quarter, and in a show of confidence is restarting its buyback program.
#5 Schlumberger (NYSE: SLB)
Schlumberger has often found itself at the forefront of high-performance computing applications. In March, Schlumberger’s Executive VP of Technology presented the company’s HPC infrastructure evolution—specifically, how the cloud offers flexibility and scalability, which in turn improves efficiency in operations.
Confident in its long-term existence in a risk-laden industry, Schlumberger has made significant investments in many of its clients’ oil and gas projects, effectively giving it a say-so in its clients’ projects. Rival Baker Hughes is mulling over whether to copy this strategy—in a sign that Schlumberger may be onto something.
Schlumberger has a wide-range of tech ideas to implement in the near future, and its overall vision is one where the energy industry works within a “digital technology ecosystem” where users can customize interfaces that will allow them to complete all daily operations. Rig hardware—and all equipment for that matter—will be automated and integrated with others, and this is “what is coming down the road in the near-future, as the drilling process is reinvented,” according to VP Belani.
Schlumberger has many high-tech accolades under its belt, including drilling technology that allows real-time fluid mapping while drilling and first-of-its-kind all-OEM reservoir to flare stack deepwater technology.
While Schlumberger missed its Q3 expectations, it improved from Q3 2016.
Other companies to keep a close eye on:
Suncor Energy (TSX:SU): Suncor's Oil Sands operations cash operating costs per barrel are maintained at $23.00 - $26.00 despite the five-year planned maintenance turnaround at Upgrader 1. Some one-quarter of the company’s 2018 capital spending program is allocated towards upstream growth projects in the Oil Sands and E&P businesses.
If the next shale boom truly is to be in the oil sands then giants like Suncor is sure to do well out of it. While many of the oil majors have given up on oil sands production – those who focus on technological advancements in the area have a great long-term outlook.
Encana Corporation (TSX:ECA): Calgary-based Encana saw October oil production recover to more than 325,000 oil-equivalent barrels per day after matching analyst expectations at just 284,000 boe/d in the third quarter.
The oil market looks to be recovering and now appears to be the perfect time to get in on the rebound with companies like Encana that are seeing a tangible improvement in performance. There is very much a future in oil stocks and plenty of value to be found amongst the survivors in Canada.
Husky Energy Inc (TSX:HSE): This integrated oil and gas company out of Western Canada also has stakes in the South China Sea and the Atlantic. While shares have dropped this year, they’ve started to rally since the second quarter.
The dip in stock price in the third quarter certainly looks to be bottoming out now, with the Royal Bank of Canada increasing its price target to $17 and energy markets looking to be at a turning point.
Enbridge, Inc. (TSX:ENB): Enbridge Inc, based in Canada’s oil sands capital Alberta, is an energy delivery company focusing on transportation, distribution, and generation of energy. Operating in the United States and Canada, Enbridge owns and operates the largest natural gas distribution network in Canada and the longest crude oil transportation system in the world. Founded in 1949, investors can feel confident in Enbridge’s experience and market know-how.
Though not strictly dealing in commodities, Enbridge’s diversified assets and connections to a variety of industries position the company as solidified player in many Canadian investors’ portfolio.
Canadian Natural Resources Limited (TSX:CNQ): This 53 billion market cap giant is one of the biggest names in Canadian crude oil and natural gas exploration, development and production. In the second half of the year this giant has turned around its stock and has now seen consecutive months of strong gains.
There is certainly exposure to oil sands here, and production and profits are both on the rise. It is all looking positive here as oil markets turn around and oil prices appear to have found a new price range that will only see production rise again in Canada.
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Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that PETROTEQ will be able to produce oil as currently scheduled and at the targeted low prices from its Utah property; that oil will be as much in demand in future as currently expected; that PETROTEQ’s technology is protected by patents and that it doesn’t infringe on intellectual property rights of others; that PETROTEQ will find licensees for its technology and that it can patent its technology in many countries; that PETROTEQ’s technology will work as well as expected; that blockchain technology will help PETROTEQ achieve its goals; and that PETROTEQ will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company’s patents and other technology protection are not valid, patents may not be granted in countries where PETROTEQ wants to license its technology; production of oil may not be cost effective as expected, PETROTEQ may not raise sufficient funds to carry out its plans, changing costs for extraction and processing; technological results based on current data that may change with more detailed information or testing; blockchain technology may not be developed to assist PETROTEQ achieve its goals; competitors may offer better technology; and despite the current expected viability of its projects, that the oil cannot be economically produced on its properties. Currently, PETROTEQ has no revenues.
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