What matters?

Generally speaking....if it's not producing revenue...it's an expense. In other words...in the oil industry...if it is not about finding oil or getting oil out of the ground faster...then it is an uphill battle in the budget cycle. Today...it seems like every department in the oil company is over budget. They are on a free-for-all to spend and get as much out of the ground as possible as fast as possible. These are good times.

Some folks see industrialization of India and China driving increased oil consumption further squeezing the demand/supply gap that became so "nationally" evident during the 2005 hurricane season. Others remind us that history has evidenced industry cyclicality many times and that under the laws of nature, oil should be around $22/barrel based in year 2000 dollars. One thing that may be different is that production decline curves (i.e. the curves that show the rate of depletion for oil and gas properties) are much steeper for recent vintage wells vs. older wells for the period 1990 through 2004).

What this means is that activity is going to have to pick up just to keep up. This means that a huge capital spending wave will be required by industry just to punch enough holes in the ground to satisfy current demand much less increased demand. There will be more rigs in more remote locations...wait a second.....there is a declining workforce...how the world will we staff the increased activity requirements? One methodology will be more money...in sort of a ".dom" way...hopefully without the black turtlenecks. The other method will be systems and information. Software and data are the replacement mechanisms for men (not really but given no other options it helps cover the gaps).

If this is true.....it is going to be a good time to invest in software and connectivity that sells to the energy industry.