Digital and AI in Oil and Gas Earnings Calls: I Did the Digging So You Don’t Have To
- Ever wonder how much the Oil & Gas C-Suite talk tech in their earnings calls? I dug into this with a 32 call sample and some manual curation.
- Used transcripts from giants like Seeking Alpha and Yahoo Finance to pinpoint mentions of “digital”, “AI”, “Cloud”, and more.
- Findings? Most execs chat about company, safety, and operations performance (as they should). But digital and AI talk? Not so much.
- Some companies’ specific digital efforts made the call transcript: Vital Energy, Oxy, SLB and Halliburton
- Agree? Disagree? Hit me up with your insights!
- Have IT, Cyber, and Data strategy, execution, or other challenges?? We can help. Contact us for more information
Also Read: Why Hire an IT Consultant in Oil and Gas
When I have a question on the macro of what’s going on in the Oil and Gas industry and what people are really talking about, I read what they talk about in their publications and how they respond to questions in the earnings transcript. Execs are prepped on the biggest issues and highlights of their respective companies. Bad earnings transcript calls mean bad stock, so you can glean good insight.
It can’t be my only data point — Oil and Gas is a production business after all, topics and Q&A are planned ahead of time or are fluid in a conversation. I know many CIO’s and their teams at these companies work very hard and are talented…but it’s a data point after all. To quote Horowitz in one of my favorite business books: “What you DO is who you are”.
What I did was pull from a myriad of sources of the full transcript from Seeking Alpha and Yahoo Finance (for some reason, each site didn’t have everything. I tried doing it programmatically, but I felt my GPT Plus + Claude + Bard wasn’t getting the full context of what I was looking for — which was specific examples on how digital, AI, or cloud was bringing value to their businesses. For example, when searching for ‘technology’, ‘data’, and ‘artificial’ in my sample of 32 earnings reports, they couldn’t really discern between artificial lift and use of public data or frac model designs or non-IT technologies, thus enter manual curation. (Now I’m well aware that there are companies which offer this, but I’m a one-man band here)
With a glass of Laws in hand, I went through earnings reports of a variable sample (not random, but not curated) of US-based public companies (Mostly E&P, some service providers) which operate in multiple basins and have a decently-sized market cap (>$2B USD). I used this data set with the following notes:
- This data set has midstream, service providers, and a good set up E&Ps which may or may not have vertical integration
- common search terms across them all: “digital”, “AI”, “Intelligence”, “Machine Learning”, and “Cloud”.
- I also did searches for “data” and “technology” to help my findings determine context.
- Then I took notes and highlighted excerpts where appropriate which you can find in the data set with highlights below.
What I found is what I was expecting. Vast majority of C-Suite on these calls focus on earnings and big hitting performance of the companies, highlighting Capex, longer laterals, ESG (though some do not even mention Carbon!), and overall well performance and efficiencies (which is exactly what they should be doing).
But how many in my sample talked about technology, innovation, and data analytics in the classic IT sense? Other companies do it in other industries which primary push isn’t technology (e.g. Home Depot, UnitedHealth Group – literally calls out generative AI and multiple uses of AI/ML), why wouldn’t we see that in our Oil and Gas producers?
Reasons are multiple that we probably have hashed before, but that’s a longer blog post ($10mm to drill and complete a well versus a $800k annual IT budget, etc.)
Long story short, we’re seeing innovation being done at some companies and they are not being highlighted or the innovations and focus aren’t raising to the level where they have to be mentioned by the C-Suite — or the analysts aren’t digging on the investments and ROI of technology-based investments aren’t worth bragging about on a quarterly earnings call for most companies. Or technology like Cloud and AI doesn’t move the needle for O&G investors like ESG somewhat has…yet.
Some highlights which made me smile:
- Vital Energy (VTLE) had direct callouts – my favorite quote from this exercise from a C-level executive: “..positive impacts from our multiyear implementation of cutting-edge digital technologies that are improving both base production and our new wells.” Props to Brandon Brown and his team.
- SLB and Halliburton both mentioned digital and investing in cutting edge technology for their services projects. The SLB CEO in Q2 2023 says this about the 3 ways that digital trends are pivotal for our industry:
- Cloud Adoption at Scale
- Unlocking the power of data at scale
- Digital Operations are Gaining Maturity
- More on this in a future post.
Are these findings resonating with what you’re seeing? Did I get it wrong? Would love to hear from you!
If you’re a producer, IT team member, or are in the business and think great value can be added and are not sure where to start, reach out to Class IV. We’ve been through the ringer and are glad to help you navigate with a fit-for-purpose plan and solution to ensure your technology investments are paying dividends…and hopefully get mentioned in the next earnings call: https://classiv.com/contact/.