New technologies to enhance exploration and production of oil and gas have attracted $7 billion in funding since 2003, specifically in the areas of shale gas, tight oil, and heavy oil, according to a report by Lux Research.
Investment peaked in 2011 at $1.6 billion, while deals hit a high in 2013 with 77 unique transactions.
The report’s findings include the following:
- North America’s oil and gas market was the investment leader, driven by unmet needs in tight oil/shale gas and heavy oil. It accounts for 76 percent of the 377 transactions during the period, and 87 percent of investment dollars. Europe was next with $770 million raised from 107 transactions, on the strength of its evolving deepwater sector, primarily in the North Sea.
- Technology developers in exploration and production rarely go public – they get acquired, notably by oilfield services companies. Schlumberger has bought the most, with 56 acquisitions of E&P developers, representing over 40 percent of the total acquisitions in the sector between 2003 and 2013.
- The Norwegian private equity firm Energy Ventures is the most prolific investor in E&P technology, with 47 transactions since 2003. Operator-owned investment funds, led by fund Chevron Technology Ventures, is the second largest investor with 33 deals.
Daniel Choi of Lux Research said he expects an uptick in merger and acquisition activity as companies improve their financials and start to eye technologies that can enhance existing industry processes, such as those from Acoustic Zoom, Robotic Drilling, Liquid Robotics and Field Upgrading.
A 2012 report by Lux Research noted that the cost of replacing a barrel of produced crude had risen from $6 per barrel in 1998 to $27 per barrel in 2011 because of increased exploration and production challenges.