Investment in innovation — the key to realising new market opportunities

It's funny, but as I enter my fourth decade in oil and gas services sector, I'm finding myself increasingly being asked how I manage to maintain such a high level of interest.

It's quite easy for me to answer as investment in technology-driven service businesses is simultaneously one of the most exciting and important areas in the oil and gas space.

The imperative is clear&hellp; turning hard-to-reach and non-conventional reserves into economically viable prospects will be key if the industry is to meet energy demand which is predicted by the IEA to grow by 40% — 50% to 2035.

That means for service businesses with the technology capable of cost-effectively addressing the challenges posed by deep waters, complex geological reservoirs or difficult new types of hydrocarbon recovery, this dynamic is opening up sizeable new growth opportunities.

The million dollar question I'm then asked is — "where are these ground-breaking technologies going to come from?"

Again it's a straight forward answer for me — many of them are already right under the industry's nose…

Spotting the opportunities:

We've been active in the upstream services space for a long time and Epi-V's Partners have all seen plenty of potentially high value technologies fall by the wayside.

On countless occasions these solutions are being applied and marketed to a narrow or shrinking segment of the oil and gas industry, when at their core is a concept or piece of kit which can optimise production and drive process efficiencies in new growth markets.

Often the barrier to targeting these opportunities and driving rapid and widespread adoption is not the tech itself, but that the business which owns the IP lacks the funding and business framework needed to fully capitalise on emerging sector trends.

It's these types of businesses which get me and Epi-V so excited. It's because we know that through the right mixture of development capital, industry insight and commercialisation competence, we can turn this potential into a high growth business and a highly attractive prospect.

Case in point — Shale:

The rapid rise of shale gas and oil is just one of the areas which are providing exactly this type of investment opportunity.

Shales were previously considered completely uneconomical due to the extraction challenges created by their low porosity and extremely low permeability.

With the advent of new controllable rotary drilling systems and completion methods, the potential of these vast reserves has opened up across the globe creating a new frontier full of opportunity.

In the US alone there are currently 980 drilling horizontal wells in the unconventional gas and unconventional oil shale basins

The economic and technical challenges this market poses is placing strategic premiums on new technology capable of maximising reservoir contact and productive capacity, while at the same time simplifying operational processes and reducing time and costs.

Naturally we're right at the heart of this market, examining a broad range of businesses with products and services that are capable of addressing specific process challenges such as the need for real-time modelling of reservoir dynamics, sand management solutions and technology which enables drilling efficiencies whilst optimising safety.

My role as an investor

For most technology-driven service businesses, securing funding is just one element of the mix required to successfully break into these growth areas.

What's critical is the effective deployment of that capital to commercialise the technology, drive industry take-up and create an optimal business structure capable of supporting rapid and sustainable growth.

It is in these two areas where active sector specialist investors like Epi-V have a crucial and exciting role to play.

We know the by identifying specific market opportunities and working closely with management to fully exploit their technology in that space, our model can turn a promising business into a significant market participant with a major role to play in the growth and success of the whole industry.

It's all this which keeps me driven to succeed over the coming decade and beyond.