As much as there is a consolidation happening in the large operator landscape and the seismic acquisition space, the same applies to the subsurface software business.
“Let’s face it,” says Bill Shea from Sharp Reflections, “in a market where there is not an awful lot of natural expansion, creating room for newcomers, only the strongest will win.”
“A consolidation such as what we have now seen with CMG, makes sense in such a market.”
“Whether we will ever be able to knock Petrel out of the park is another question,” he laughs. “Ultimately, they have got resources we certainly don’t, but yeah, we are here to join the battle.”
Let me introduce Bill and Herman very briefly. Bill is the founder of Sharp Reflections, the company that has earned its mark in the time-efficient analysis of pre-stack and 4D seismic data. Herman Nieuwoudt is the President of Bluware, the company that is on the frontline when it comes to developing tools for seismic interpretation supported by AI. Both companies were recently acquired by CMG, which has a long tradition in reservoir simulation development.
A platform or not a platform
“Will this combination of companies lead to the establishment of a new platform that facilitates the workflow from seismic processing all the way to reservoir simulation?” I asked Herman. His response is probably very different from what people would have said ten years ago.
“We don’t believe in locking people into a platform, because there will then be compromises along the way. You will never be the best of everything,” Herman says.
“Instead, people should have the ability to do something else in another software, and seamlessly bring it back into our workflow again. That’s where CMG wants to go. It started with the acquisition of Bluware, then Sharp Reflections came in, and there will be others in the future. But we will not become that single platform that people will not be able to work with flexibly.”
Looking at the subsurface tech industry as it is today, nobody wants to be locked into a single platform anymore. This trend can be seen everywhere.
“Let’s look at the Apple iMessage debacle as an example,” explains Herman. “Initially, the company attempted to lock its users in by having blue bubbles for messages only if it was received from other users of the iMessage software. This created a backlash soon after, to the extent that Apple opened up iMessenger to other non-Apple product users such that all messages are now shown in blue. Even Apple had to admit that an open architecture is the way forward.”
“Without pretending we are as big as Apple, there is a parallel with the story nonetheless. We know that in order to stay competitive and attractive for companies and people to buy our software, we need to be open. That’s why one of my main concrete targets when it comes to the development of our software is to make it even easier to dip in and dip out of it in a seamless manner. If you don’t implement that, people will just not do it and strike a compromise towards something that just produces a good enough result.”
That’s why Herman has spent quite some time lately with customers and prospective customers to identify where friction exists when it comes to creating seamless workflows. “I thought it is interesting to see that in an industry that produces most of the lubricants in the world, there is so much friction,” Herman says. “I see people working too hard for what their output is.”
The lower the oil price, the better
“Believe me, I know what a 60 dollar oil price means,” continues Herman, who worked for Baker Hughes for many years. “But when looking at our niche in the market, the workload doesn’t tend to decrease; it is the number of people who have to perform those tasks. So these people have to find ways to become more efficient instead, which is where our software offering comes in. In addition, change usually happens in wartime, not at peacetime. In that sense, we are prepared for some things to happen, as operational departments start to feel the squeeze from dipping oil prices. We see it as an opportunity for the industry to adopt new tech.”
New tech in a fast-moving space
But how does the development of new tech work after an acquisition of this kind? I asked Bill.
“I feel that we have been running a three-lap race,” he says, “with the first one being the establishment of the company as a start-up. Then, Equinor Ventures came on board, which changed the game completely and shifted our concern from “do I have something the market wants, to how can I get more eyes on it.” The third lap, and that’s the one where we are in now, is the one in which we have the challenge of how to capitalize on the customer-base that CMG already has.”
“I’ll be the first to admit that our technology, which is very much based on CPU and memory, may not have the future some of the GPU-based technologies have. There is a reason why NVDIA is one of the richest companies out there.”
“But, at the same time, I am not worried about use cases that suit our solution,” continues Bill. “Last week, I visited a client who wanted us to put every frequency iteration into our 4D software to understand what they are getting from a full-scope FWI exercise, with the simple reason that such a project costs more than six times what used to be a reverse time migration cost four years ago. Each iteration costs huge sums of money, and we can help show what it’s delivering”.
“What concerns me more is the question of whether we’ve got the creativity, listening bandwidth and development resources to meet the demands of an industry that is moving ahead so fast.”
Bill is still very driven to help shape Sharp Reflections’ future under the CMG umbrella. “A lot of companies discard founders straight away,” he says, but I saw a differentiating element in CMG’s offer for me to stay on for a while. “We benefit a lot from the insights he brings to the table; not only when it comes to his own company, but also the wider perspective,” says Herman.
A bet
“It is good to stay around, as it creates some continuity for the business, and I value the confidence management has in me to be around for a little longer.”
“We don’t overlap much, and although we don’t connect like a glove, there is a lot of potential there.”
