NXT Energy Solutions Aims to Claim Bigger Share of $600 Billion and Growing Industry
Wed, Sep 26, 2012
Investment In The Oil And Gas Industry
This year total investment in expanding and maintaining oil and gas exploration and production (E&P) will rise to another new all time high.
Researchers at Barclays estimate the total global E&P spending by oil companies to hit $614 billion in 2012. That’s a sharp increase from $556 billion in 2011. It’s even higher than 2008 when oil hit $147 a barrel.
Clearly, this sector of the oil industry is growing strong and will continue to do so. After all, it’s growing steadily despite volatile oil prices, vast improvements in technology which are driving down costs and increase returns on investment, and it’s all happening throughout a period of global economic malaise and upheaval.
For investors, where there’s growth, there’s opportunity. This time is no different. And one tiny company has an opportunity to dominate an important segment of the growing global oil E&P technology market.
Anatomy of a Winning Investment in Oil Technology
NXT Energy Solutions (SFD:TSXv, NSFDF:OTCBB) is a small oil exploration technology company changing how oil companies explore for oil, slashing its customers oil exploration costs, and helping some of the world’s fastest growing oil companies find oil cheaper and faster than ever before.
Better yet, the company has positioned itself to capitalize on one of the largest opportunities in the energy industry.
NXT Energy’s technology is actually a perfect solution to one of the energy industry’s biggest cost drivers.
Right now the costs of finding a barrel of oil are high and rising. A U.S. Energy Information Administration (EIA) study found the cost of finding and lifting a barrel of oil out of the ground is about $30. That’s an average of all oil regions around the world. It includes an estimated $7 per barrel in Saudi Arabia to $41 in the Gulf of Mexico.
NXT’s technology can reduce that significantly. And since the finding and lifting costs account for as much as half the market price of oil, any sizeable reduction in that cost could significantly increase an oil company’s bottom line.
Yes, that’s good, but it’s not even the best part.
The best part about NXT’s technology is it actually works.
It’s already in the field being used by multi-billion dollar private oil companies and even one of the world’s top national oil companies.
More on that in a second. For now, let’s start at the beginning so you can understand why demand for NXT’s technology is already strong and could be much more in demand very soon.
Pay Day: 15 Years in Waiting
Over a decade ago George Liszicasz, a Hungarian-born engineer who now lives in Canada, discovered a unique phenomenon in geology.
The phenomenon he discovered relates to “the detection of subsurface stress changes in rocks.”
The Stress Field Detector (SFD) is NXT Energy’s wholly-owned technology which tracks, identifies, stores data about, and then analyzes the subsurface stress changes. Liszicasz is the inventor and developer of SFD technology and is President and CEO of NXT Energy Solutions.
The SFD system has many benefits over traditional subsurface analysis tools. For example, by discovering and analyzing the subsurface stress changes, oil and gas companies can greatly increase the accuracy of early-stage oil exploration techniques, increase the size of the area they can search, refine targets for future drilling, and do it all at significantly less cost than they could with traditional technologies.
Here’s how it works.
The SFD technology is relatively simple in theory.
The technology is based on a complex series of sensors which are placed in a small jet and flown over the targeted area.
The sensors detect subterranean geological anomalies and the changes sub-surface changes in stress. For a more detailed explanation of how SFD works, follow this link.
This difference is the competitive advantage for SFD.
Since SFD is airborne, it has many advantages over older subsurface geological analysis technologies. The biggest is size and speed. SFD can cover areas of land 100 times larger, cover them faster than traditional 2D and 3D seismic, and do it all without a dozens of personnel on the ground to move bulky equipment around.
And since SFD technology significantly reduces the time and costs of collecting seismic geological data, it really does have the potential to save the oil industry billions of dollars a year.
Finally, SFD is an innovation in an industry that’s still in high demand.
Right Time, Right Place
The seismic data collection industry has been one of the biggest winners of the current oil bull market.
CGGVeritas (NYSE:CGV) is one of the leaders in the seismic data collection industry. It sends out thousands of its employees across the world to help its oil company customers locate potential onshore and offshore oil reserves. It has a $4.5B market cap.
With oil prices back near triple-digits, CGGVeritas services are in high demand. Last year the company booked more than $2.9 billion revenue from its seismic services. It’s on pace to book more than $3.5 billion in sales this year. And analysts estimate the company will surpass $4 billion in revenues in 2013.
And CGGVeritas is just one company in the seismic information subsector of the oil industry. There are plenty of other smaller competitors who focus purely on seismic data collection and the large oil service companies like Schlumberger (NYSE:SLB) have entire corporate divisions devoted to seismic data analysis and collection.
Clearly, demand for the data which will help oil companies find more oil is in high demand and getting higher.
That’s where the value of SFD technology comes in. In all of the deployments of SFD technology, the net benefits to users of its technology were astounding.
Winning Combination: Better Data, Better Results, Better Price
The real value of SFD technology is simple. It delivers significantly more data to its customers at much less cost.
Take an example of a $3.5 million seismic data collection effort using SFD technology and tradition 2D seismic technology.
The difference in area covered is striking:
As the image above shows, the data collected from SFD is more than 20 times great than that of the 2D seismic.
More importantly, this example shows the 2D seismic campaign identified one potential oil reserve on the project. SFD, however, identified four potential oil reserves.
So the area covered is much greater and the potential oil discoveries to be made are much, much higher as well.
There’s another advantage here too. That’s time.
It takes weeks (often a couple of months) to shoot two or three kilometers of transitional 2D seismic.
SFD, however, can be run within a few days time because it is run from the sky and there is no bulky infrastructure and sensors which need to be laid out on the ground and collected afterwards. NXT Energy’s plane containing the SFD technology simply flies over the area.
All of this is why SFD has proven the potential to increase oil discoveries and reducing the cost by as much as 90%.
And most importantly, these are the reasons why some major oil companies are turning to SFD increase their productivity as inexpensively and efficiently as possible.
Big Oil and Small Oil Buy SFD Technology
Now, we’ve all seen a lot of new technologies in all sectors.
History is littered with inventors with better mousetraps and their disappointed investors.
Only a small fraction of a new technology will ever succeed. Most will simply fail.
That’s where NXT is already ahead of the game in this case.
NXT has a number of customers which have already used its SFD technology.
Its customer list includes many smaller oil and natural gas companies like Renaissance Energy, Nextstar Energy, Calpine Canada, Infinity Oil & Gas, and more.
But its customers also include some large, multi-billion dollar oil companies.
For example, Pacific Rubiales (TSX:PRE) has been one of the fastest growing oil companies in the world over the past decade. The company has successfully capitalized on tapping Colombia’s massive oil reserves and grown itself into a sizeable oil producer valued at nearly $7 billion.
The thing is, Pacific Rubiales has targeted even more growth in the years ahead. And it’s publicly announced its using SFD technology to reach its goals.
Back in 2009 Pacific Rubiales signed up for an SFD survey over some of its projects in Colombia. The survey had a budget of $2.3 million.
Jump ahead to today and an even bigger oil company has engaged SFD. Mexico’s national oil company, Petrolēos Mexicanos (PEMEX), has engaged NXT to complete a $4.73 million survey.
The survey couldn’t be coming at a more critical time either. PEMEX has faced declining oil production since 2003. The long decline is leading the current president of Mexico to overhaul the company , potentially bring in some private oil company partners, and to get PEMEX’s oil production back on the rise.
SFD technology will go a long way to getting that process started. And do it all at a fraction of the price of more traditional methods.
Keeping it Simple
If you’re looking for growth in the current economy, oil is one of the few places where there’s growth and its actually getting stronger.
The inherent advantages to SFD technology have a strong foundation that will make NXT Energy Solutions into a short-term and long-term winner.
The company is in highly advantageous position.
Oil companies are desperate to find and develop new oil reserves. They are investing record amounts of capital to do it.
Meanwhile, the costs of finding and developing new oil reserves are going steadily higher.
The result is a boom for companies which can help the Big Oil companies to meet their production targets.
NXT Energy Solutions has spent over a decade developing a technology so efficient, disruptive and potentially valuable to its customers, it has already started taking a significant share of the massive expenditures by the world’s oil companies.
Rapid growth of market share in a steadily growing industry could make NXT Energy Solutions one of the biggest success story of the oil boom which has already produced many 1,000%+ success stories for early stage investors.
The Group of Big Investors in United States.
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