Canada’s oil and gas industry says investing in digital oilfield technologies can generate a strong return on investment even in today’s difficult market, according to a survey of industry professionals conducted as part of the Daily Oil Bulletin’s 2020 Digital Oilfield Outlook Report.
The survey asked respondents to evaluate 11 key digital applications along three dimensions: return on investment, technology maturity, and the readiness for their organizations to adopt the technology. The applications represent how organizations use technology to deliver value.
At a time when many companies are in survival mode as they attempt to hang on until the pandemic-inspired collapse in demand for their products abates, return on investment takes on particular significance.
Evaporating cash flows have left many companies in no condition to make any investments, let alone those that don’t virtually guarantee positive short-term returns. Many survey respondents said the sense of risk-taking on new technologies – with the attitude they could fail fast and move on – has withered.
However, there was widespread recognition and consensus across industry groups (producers, midstream, OFS) and levels (CEO to analyst) that digital technologies in general have high return on investment with all 11 technology use cases believed to represent a return on investment compared to or higher than other uses of capital in the organization. This bodes well for digital oilfield technologies vying against other investment opportunities in difficult times – an indication they will pay for themselves more quickly than other forms of investment.
The use cases felt to deliver the greatest return on investment – Production Asset Optimization, Automated Production Asset Operations and Predictive Maintenance – play into that narrative for their ability to reliably cut costs and deliver efficiencies. As quickly maturing technologies, they can be delivered for relatively affordable investment with low risk.
Also of note was that Fleet Management, Remote Asset Monitoring and Field Productivity are amongst the most mature and best known, and have return on investment that is closest to other comparable uses of capital. They may have already produced considerable gains in recent years and be perceived to have reached a level of saturation that is more difficult to improve on. Conversely, Biometric Monitoring, at the bottom of the list, maybe seen as one of the least mature use cases from an industrial perspective and therefore considered a high investment risk in difficult times.
Attitudes toward the return on investment have shifted in the five years since the Daily Oil Bulletin’s first survey was conducted. In comparison to the results of the 2015 survey (in which some applications were not polled), there is much more confidence in return on investment from optimizing field workforces, with “remote” applications having seen the biggest jump in perceived return on investment. Of the eight comparable use cases, those that climbed the most in rank over the past five years were Remote Asset Operations, Remote Asset Inspection and Remote Asset Monitoring.
While it is a sign of shrinking workforces in the midst of a major downturn in the industry, it could also be an early indication of more to come as companies are forced to deal with the secondary crisis of the pandemic and the physical distancing that entails for employees. Indeed, “remote” has become a watchword in all sectors of the economy as workers have been forced to adjust to the new COVID-19 reality. The ability to remotely operate, inspect and monitor assets simplifies the physical distancing aspect of these activities even as it trims costs.
For more information, the Daily Oil Bulletin’s 2020 Digital Oilfield Outlook Report, sponsored by Amazon Web Services and Rackspace Technology, is available for download here.
Note: In terms of ROI, a score of three represents a return on investment comparable to other uses of capital, four is higher than other uses of capital, and five is much higher.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
