An offshore oil platform and wells are silhouetted by the setting sun off the Louisiana coast.... [+] (Photographer: Derick E. Hingle/Bloomberg) The Offshore Technology Conference, or OTC, is happening in Houston this week, celebrating its 50th year of bringing companies and technology providers together to discuss how to get more oil and gas out of the ground. Organizers expect around 70,000 attendees, about 7.6% more than last year thanks to rising oil prices. Innovation has been a popular buzzword in oil and gas circles in recent years given the shale revolution in the Permian Basin and elsewhere and companies' desire to become more efficient in a lower commodity price environment. Industry conference CERAWeek by IHS Markit featured several sessions in March that talked about technology, including 180 different speakers at its high-tech center Agora. "Technological innovation is the indispensable constant across the energy spectrum," IHS Markit vice chairman and conference chair Daniel Yergin said at the time. Given the emphasis on technology these days, deals are starting to happen in the sector. From 2016 to 2017, there was a 40% increase in digital oilfield M&A and a 30% increase in related partnerships, according to investment bank Tudor, Pickering, Holt, which began including "Energy Tech Tuesdays" as part of its well-read newsletter. "Though this is not the first time we've seen a surge in digital deals (last wave was in 2014), this is the first time it has not been accompanied by rampant commodity growth," analysts at the firm said in their April 24 note. Comparing the transaction mix between the first wave and second wave of digital M&A reveals a striking trend, TPH says. Increased technological sophistication has shifted M&A activity from data acquisition to data analysis, monitoring and maintenance to real-time, data-driven action. A lot of the energy technology industry is made up of privately held companies backed by individuals, venture capital or private equity firms. One startup that's been in the headlines recently is Austin-based RigUp, which has developed an app that helps oil and gas companies staff and service their operations faster and easier. Its customers include Anadarko Petroleum, EOG Resources, Halliburton and Baker Hughes, a GE company. In February it attracted $15.8 million in funding from the Founders Fund, Quantum Energy Partners and Global Reserve Group. One publicly traded energy technology-related company has been busy on the M&A front: The similarly named RigNet, which provides communications services, applications and cybersecurity solutions to help customers make decisions so they can perform better. RigNet has been a company in transition in recent years, with a new CEO coming on board in 2016 (Steven Pickett, the former CEO of wireless infrastructure provider 21st Century Towers). Management changes continued last year, with a new general counsel coming on last fall (Brad Eastman, who previously worked at Schlumberger unit Cameron International) and CFO Charles "Chip" Schneider resigning suddenly in December to pursue "other opportunities." This year RigNet seems to be moving forward, continuing to look for ways to push the revenue line upward and operating costs downward so as to boost margins. In February, RigNet said it paid an undisclosed sum for Intelie, a Brazilian company that's developed a technology platform for real-time predictive analytics that's being used by such oil and gas customers as Petrobras. Pickett said on a conference call in March that Intelie aggregates and correlates tens of thousands of sensor data points per second from wells and rigs. It then uses supervised real time machine learning to detect unusual performance and delivers that information back to decision makers through real time mobile dashboards. "Intelie’s key differentiator is combining both real time data collection from hundreds and thousands of collection points agnostically with simultaneous data analysis," Pickett said. Earlier this month, RigNet also added two oil and gas services providers to its mix, Automation Communications Engineering, or Auto-Comm, and Safety Controls, or Safcon, for undisclosed terms. RigNet said the two purchases will boost value across its systems integration and managed communications services businesses. RigNet's three deals this year followed last year's purchases of cybersecurity provider Cyphre for $4.9 million, Energy Satellite Services, or ESS, for $22.2 million and Data Technology Services, or DTS, for $5.1 million. "There is no doubt that what we’ve done in terms of moving up the stack is differentiating our managed communications service. And it’s beginning to contribute more significantly on the revenue and margin line," Pickett said in March. Last fall Simmons & Co. had RigNet at a neutral rating with a price target of $17 per share share. In January Wells Fargo initiated coverage of the stock, assigning it a market perform rating and a price target of $18 per share, although that was lowered to $15 in early March. The stock closed at $15 on Friday.
Oil and gas firms have shifted their focus from monitoring and maintenance to real-time, data-driven action, resulting in a 40% increase in digital oilfield M&A activity between 2016 and 2017. Among the start-ups involved is RigNet, a supplier of communications services, applications and cybersecurity solutions. In February, it acquired Brazilian firm Intelie, which offers real-time predictive analytics. Meanwhile, RigUp, whose app matches firms such as Halliburton and Baker Hughes with operators, secured $18m in funding from backers including Quantum Energy Partners and the Founders Fund.