Driven by shale gas, tight oil, and heavy oil, North America is the runaway leader
with an 87% share of the dollars invested and 76% of the transactions
since 2003, says Lux Research
BOSTON, MA – November 25, 2014 – New technologies to enhance exploration and production of oil and gas have attracted $7 billion in funding since 2003, according to Lux Research, as waves of innovation have opened up new kinds of plays in shale gas, tight oil, and heavy oil.
The years 2010 to 2013 witnessed a surge in megadeals led by Larcina Energy, underlining investor enthusiasm. In terms of dollar amounts, investment peaked in 2011 at $1.6 billion, while deals hit a high in 2013 with a record 77 unique transactions.
“Unlike in the past, the oil and gas industry now embraces emerging technologies from adjacent industries,” said Daniel Choi, Lux Research Analyst and the lead author of the report titled, “Investing in Next Generation Oil and Gas Technologies.”
“We expect an uptick in M&A activity as companies improve their financials and start to eye technologies – from companies such as Acoustic Zoom, Robotic Drilling, Liquid Robotics, and Field Upgrading – that can enhance existing industry processes,” he added.
Lux Research evaluated the investing environment for oil and gas technologies. Among its findings:
- North America leads investment. North America’s booming oil and gas market was the runaway leader, driven by unmet needs in tight oil/shale gas and heavy oil. It accounts for 76% of the 377 transactions during the period, and 87% of investment dollars. Europe was next with $770 million raised from 107 transactions, on the strength of its evolving deepwater sector, primarily in the North Sea.
- Acquisitions are most common exit strategy. Technology developers in E&P rarely go public – they simply get acquired, notably by oilfield services companies. Schlumberger has been the most prolific buyer with 56 acquisitions of E&P developers, over 40% of the total acquisitions in this space between 2003 and 2013.
- Norwegian firm is top investor. The Norwegian private equity firm Energy Ventures is the most prolific investor in E&P technology, with an extraordinary 47 transactions since 2003. Operator-owned investment funds, led by fund Chevron Technology Ventures is the second largest investor with 33 deals.
The report, titled “Investing in Next Generation Oil and Gas Technologies,” is part of the Lux Research Exploration and Production Intelligence service.