The energy landscape is rapidly changing, with new technologies and digitalization creating a “new era” for energy, according to the International Energy Agency (IEA). “Over the coming decades, digital technologies are set to make energy systems around the world more connected, intelligent, efficient, reliable and sustainable,” the IEA wrote in a recent report.
Big data, 3D printing, drones, predictive analytics – these are just some of the trends that are sweeping over the oil and gas industry.
Oil companies are deploying miniaturized sensors and fiber optic sensors in their projects, which allows for much greater recovery of tough-to-get oil and gas reserves. Automated drilling rigs and robots are increasingly used to inspect pipelines, repair subsea infrastructure and monitor transmissions lines and storage tanks, the IEA argues.
But there will be winners and losers in this new era. Companies stuck in the past, doing things the old way, will die off, ceding ground to new innovative upstarts.
The companies that blaze new paths, adopt and invent cutting edge technologies, will be the ones to reap the profits of the digital age.
Here are 5 companies that are leading the way on a new generation of oil and gas exploration:
#1 GE (NYSE: GE)
GE is one of the most recognizable names in industrial manufacturing, and for good reason. But it has had a brutal year, with its share price off by more than a third since January. GE made a few untimely bets on natural gas peaker plant technologies, investments that have gone sour as the electricity business moves aggressively into solar, wind and energy storage.
But GE is still the leader in a long range of cutting edge oil and gas exploration technologies. In 2016, GE demonstrated the use of a new helicopter drone in the Fayetteville Shale in Arkansas – the drone could detect and monitor the emissions of methane from oil and gas wells. GE also is at the forefront of a long line of technologies that will increasingly be taken up by E&Ps looking for an edge, such as subsea production systems, flexible pipes, and other offshore technology.
Yet, it is the pivot to digitalization that should catch the investor’s eye. GE partnered with Apple to develop the Predix platform, which allows industrial companies to crunch Big Data in real-time, deploy machine learning models that detect anomalies, predict maintenance, and optimize performance.
For example, the Predix can collect and analyze data from thousands of little sensors at refineries, allowing the operator to improve productivity and turbocharge profits. It is an Industrial Internet of Things platform for which manufacturers large and small will pay big money.
#2 Petroteq Energy Inc. (TSX:PQE.V; OTC:PQEFF)
Petroteq Energy Inc. offers a unique, one-of-a-kind oil production technology that could unlock millions of barrels of oil, and it will be able to produce the oil cleanly and at a low cost. Better yet, Petroteq plans on licensing its technology around the world, raking in hefty profits in the process.
Petroteq has developed a patented technology to extract oil sands in an entirely new way. The conventional method involves mining, lots of water and steam, toxic trailing ponds, lots of emissions, and an incredibly dirty PR image. Canada’s oil sands industry is a pariah in many parts of the world – the target of environmental groups, divestment campaigns and increasingly stringent government policy.
Petroteq turns that whole idea on its head. The small company uses a proprietary technology that consists of a closed-loop system and a solvent that cleanly extracts heavy oil sands. It extracts 99 percent of all hydrocarbons at the site, uses no water (so no need for toxic trailing ponds), requires no high temperatures or pressures, and generates no greenhouse gas emissions.
Petroteq is the first company to generate sales from Utah’s massive heavy oil reserves in the Unitah basin, which holds an estimated 32 billion barrels.
But surely this can’t be profitable? On the contrary, Petroteq will have a plant up and running by February that will produce 1,000 barrels per day with production costs as low as $28 per barrel.
Better yet, the company recently moved its modular plant much closer to the resource, eliminating transportation costs, which could put production costs in the low-$20s per barrel. With efficiencies and scale, Petroteq is aiming at producing 5,000 bpd in 2019 at $18 per barrel. The company is confident it can eventually reach 30,000 bopd based on the proven reserves.
Oil sands from Canada typically trades at a discount, often as much as $20 per barrel below WTI. Some of that is due to quality issues, but a lot of it is due to a shortage of pipeline capacity from Alberta to markets in the U.S., plus the cost of shipping itself.
Petroteq is leaving Canada’s old oil sands in the dust. Its location can’t be beat, it avoids the hassle of shipping, and the company is nearing agreements with oil majors to purchase 1,000 barrels per day. All of that means that Petroteq’s heavy oil is selling at a price that is about on par with WTI – a level that Canada’s oil sands giants could only dream of.
But Petroteq’s operations in Utah are really just a proving ground for the real moneymaker: licensing its technology to producers around the world. Countries with heavy oil – Canada, China, Indonesia, and parts of South America – are at the top of the company’s list. Producers would pay Petroteq a per-barrel fee for the use of their clean oil recovery technology.
That isn’t all. In addition to profitable oil sands in Utah and technology licensing, the third leg of Petroteq’s stool is blockchain development, which will revolutionize the trade of commodities by offering secure, digitized, tamper-proof and open source data. Petroteq is signing a deal with First Bitcoin Capital, licensing the blockchain built by IBM and turning it into an industry-specific platform (to be completed within the next six months), allowing for the secure flow of data up and down the supply chain.
As The Economist put it earlier this year, “The world’s most valuable resource is no longer oil, but data.”
Put it all together, and Petroteq offers a compelling investment case that nobody will want to miss. A profitable and clean oil sands extraction technology that has no other competitors; a plan to license that technology all over the world; and a blockchain platform that will lead the industry into a new era.
#3 Intel (NASDAQ: INTC)
Another innovative leader that is set to see sales soar from the energy digitalization wave is Intel (NASDAQ: INTC), a pioneer in computing and data analytics. The Intel Scalable System Framework and HPC solutions allows oil and gas companies to rapidly process seismic data, reservoir simulation and high-fidelity data visualization.
In other words, Intel provides the software and high-powered computing to allow oil and gas drillers to move a lot faster, make better decisions, and ultimately recover more oil and gas at a fraction of the price. The old days of sticking a drill in the ground and hoping for the best are gone. Oil drilling is increasingly a computerized affair. Intel’s Scalable System Framework integrates the hardware with the software.
At the same time, Intel also sells commercial drones for the oil and gas industry – small, unmanned units that can be used for inspections, capturing visual or thermal images of flare stacks, underdecks cooling towers and can be used in confined spaces.
In a world of $50 oil, cost savings are the name of the game. There has been a lot of red ink in the past three and a half years, and any oil company looking to survive in the years ahead will need to rely on data solutions provided by the likes of Intel.
#4 ExxonMobil (NYSE: XOM)
ExxonMobil is a world-class oil driller, and in many ways, there is no parallel. 50 years ago Exxon pioneered 3D seismic imaging, something that is now ubiquitous in the oil industry. There is no shortage of other technologies developed or pushed along by the world’s most successful oil company.
More recently, Exxon has deployed a long list of new technologies, such as Full Wavefield Inversion, an advanced 4D seismic surveying capability that incorporates time-lapse, supercomputing, and high-definition imaging to see more of the subsurface than ever before. The upshot is that Exxon doesn’t drill dry holes like other companies.
Separately, Exxon is now drilling horizontal wells longer than anybody else. It recently completed four shale wells in the Bakken that extended horizontally for 3 miles. And the oil supermajor is close to drilling a 4-mile well, which Barclays says would be “a game changer that could potentially allow the company to leap frog the competition in unit cost and return metrics.” Exxon was late to the shale game but now does it better than anyone. It is also light years ahead in terms of profits.
It is arguably already the best offshore oil driller in the world – it recently made several world-class discoveries off the coast of Guyana while the rest of the industry is cutting costs and cancelling projects. It is also rapidly scaling up Permian shale production even though it only recently made a foray into the shale basin.
But that is what ExxonMobil does. It makes smart decisions, avoids reckless bets, and uses cutting edge technology to earn profits that blow away the competition.
#5 Halliburton (NYSE: HAL)
In August, Halliburton announced a deal with Microsoft (NASDAQ: MSFT) to enter into a strategic alliance to drive digital transformation across the oil and gas industry. The marriage between one of the largest oilfield service companies with a leader in computing will bring machine learning, augmented reality (AR), user interactions and the Industrial Internet of Things to the oil and gas industry.
The partnership of Big Oil and Big Data will allow for “real-time data streaming from IoT edge devices in oilfields and the ability to apply deep-learning models to optimize drilling and production to lower costs for customers,” the companies said in an August press release.
It sounds like jargon, but let’s be blunt. Halliburton has struggled for business during the oil price downturn, and needs to offer oil producers (its clients) savings in order to revive drilling activity. Discounting services will only go so far, at some point you have to deliver savings and entice them with juicer returns. The partnership with Microsoft, then, should be seen in this light. The massive reams of data can now be analyzed, cloud computing can connect it all together and artificial intelligence can help companies make better decisions. This will turn oil drilling into something that more resembles manufacturing. Ultimately, everyone makes more money.
Honorable Mentions:
Pengrowth Energy Corp. (TSX:PGF): Another company that looks to have halted its falling stock price and is now preparing to ride the bullish sentiment in oil markets. Having shed a lot of excess weight this year in massive asset selloffs, investors can expect a much leaner and meaner Pengrowth in 2018.
For those investors who like to follow the smart money, billionaire investor Seymour Schulich bought millions of extra shares in Pengrowth in early October, boosting his position from 19 percent of the stock to 24 percent. He claims that he is confident that oil and gas is going up.
Pembina Pipeline Corp. (TSX:PPL): The North American pipeline industry has had a tough year, but the recent approval of the Keystone XL pipeline route and the growing need for transportation capacity should act as a boon for the sector.
Pembina Pipeline Corp. has ridden the oil price crash in an impressive manner, maintaining a good stock price and increasing its dividend. This is a stock that pays you to wait, and as the sector continues to improve it is likely investors will see good gains here.
Inter Pipeline Ltd (TSX:IPL): Another pipeline company that holds plenty of upside for the coming year, IPL is particularly interesting for its exposure to the oil sands sector which is sure to see a boost in production as more and more companies focus on increasing output in the new high oil price environment.
The crisis in Venezuela has already seen heavy oil imports to North America drop, and as demand for the product increases and prices for oil continue to rise, companies in the space are sure to see growth.
Gibson Energy (TSX:GEI): has a long history in Canada’s oil and gas game. Established in 1953, Gibson knows the industry inside and out. The company has a diverse portfolio which includes transportation, storage, processing, marketing and distribution of oil, condensates, oilfield waste, refined products and natural gas.
With Gibson’s huge array of assets and its multi-platform sales strategies, investors look to Gibson with a confidence. And with a recent dip in the stock’s price, the company is open for business, with a modest entry point for those interested in dipping their toes into the Canadian oil market.
TransCanada (TSX:TRP): is a major oil and energy company based in Calgary, Canada. The company owns and operates energy infrastructure throughout North America. TransCanada is one of the continent’s largest providers of gas storage, and owns and has interests in approximately 11,800 megawatts of power generations.
With TransCanada’s massive influence throughout North America, it is no wonder that the company is among one of Canada’s highest valued energy companies. Investors can feel comfortable with the company due to its huge and diverse portfolio, and continuing eye for success.
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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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PAID ADVERTISEMENT. This communication is a paid advertisement and is not a recommendation to buy or sell securities. Safehaven.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively “the Company”) has been paid by the profiled company to disseminate this communication. In this case the Company has been paid by PETROTEQ sixty two thousand five hundred US dollars for this article and certain banner ads. This compensation is a major conflict with our ability to be unbiased, more specifically:
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