Wave of Technology Creating Opportunities for Small Businesses
Admittedly, Oil & Gas is an industry that predominantly favours big companies and they often have an advantage in the market over smaller organisations. Factors, such as economies of scale, brand recognition and cost of entry, all make it harder for new companies to compete and so most changes and developments that the industry faces tend to directly benefit the supermajors.
This has also widely been the perception of the digital oilfield and any other technology taking over the industry. To some extent, it is true: bigger companies can afford bigger investment and subsequently gain advantage from this. But there is a clear benefit for SMEs, too: many of these bigger companies like to outsource their operations, supplies and expertise. This creates an opportunity for both established and start-up businesses of a smaller size to contribute to the industry and make a niche for themselves.
One reason for this is the dropping of oil prices, which are not recovering as speedily as everybody had hoped for. To counteract this, many companies are looking to cut costs where possible without minimising their own operations. Such a mentality leads to using external resources, where the end product works out cheaper than manufacturing or overseeing it yourself: using this method, the companies do not pay for training, equipment, extra facilities, or the whole working force. This opens up an opportunity for smaller organisations to supply the skills and products, which is particularly profitable when focussing on one area of expertise.
Another way that small companies are thriving is through the willingness of larger companies to buy them up. Only this year, we have seen acquisitions of Summit ESP and Motive Drilling Technologies Inc., by Halliburton Co and Helmerich & Payne, respectively. Equipped with years of experience, a successful business model and a variety of patents, these make attractive targets to buy up.
As a relatively recent start-up ourselves, Dashboard strongly supports any and all progress that small businesses are making across the industry. We think it is creatively and economically important to accept new ideas and companies for the overall progress of Oil & Gas.