Velocity Insight attended the 26th annual Enercom Oil & Gas Conference in Denver this week. It’s always a nice venue to see what investors and C-suites are thinking about – if you didn’t make it, the recordings are available.
VI was invited to sit on a panel Wednesday afternoon with some smart data-oriented folks – Luis Rodriguez, Pete Fischer, and David Forsberg. Check out that discussion on Enercom’s website or scroll to the bottom.
We (okay, Zack) sat through many hours of pitches from E&P companies and spent even more hours chatting it up in the halls and happy hours. I’ve been attending Enercom annually since 2009, and it’s interesting to think about how things have changed. A few quick themes we heard a lot about:
01. ESG, ESG, ESG.
Compared to the last in-person Enercom conference in 2019, I would guess that acronym’s usage is up 10-fold (Environmental, Social, and Governance, if you’re wondering). It’s gone from a bullet point to a full slide, or from a full slide to the whole deck. I heard it from all sides – C-suites, investors, private equity sponsors, and lenders. There’s definitely a sense of “if you ain’t on the bus, you’re getting run over.”
02. E >> G >> S, at least from the C-suites.
In rank order, I heard the most about methane/carbon emissions, relatively less about governance, and still less about social issues in the E&P slide decks. A typical deck might have a full slide on air emissions (not a whisper about soil/water impacts), several bullets on governance (board construction, executive comp, etc.), and a single bullet on diversity and inclusion statistics. Politically-exposed operators spent a fair bit of time on community outreach (DJ operators especially), but usually in the context of Environmental Impact.
03. Shareholder distributions are basically required.
No surprise here, but lots of talk about initiating dividends, increasing dividends, and share buyback programs. I heard more than a couple investors ask direct questions to CEO’s about how those efforts could be accelerated. If you’re a public E&P that isn’t either aggressively paying down debt or distributing cash, you’re in the doghouse. $65 oil is not an excuse to outspend cashflow anymore.
04. Little talk of G&A reductions.
After two years of the steady drumbeat of headcount/G&A cuts, I don’t recall a single mention of layoffs, early retirements, etc. Combining that with the uptick of job listings I’ve seen/heard, I suspect E&P employment may have bottomed for the moment.
So what does all that mean for data management and analytics? My guess is that E&P IT/analytics budgets are at least flat, if not rising modestly. Data management for the air emissions aspects of ESG is *not* simple, and grinding down LOE/CAPEX to pay those divvies is a lot easier if you’re investing in technology. That said, I don’t think I heard AI and ML thrown around as buzzwords nearly as much as I did in 2018 and 2019. Centennial was the only operator I saw dedicate serious airtime to it. Somebody get this man a word cloud, stat!
My final thought is on the dramatic difference in the tone and content from URTeC (see our takeaways from the biggest petrotechnical conference of the summer) to Enercom. It went from lots of talk about new technology and digital transformation, to almost none. The stuff that reservoir engineers and petrophysicists are talking about is definitely not the same stuff that COO’s and portfolio managers are talking about.
Watch the panel
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