When Neil Brown, president of Calgary-based Computalog, goes a-hunting, he doesn’t mess around with small fry.

The global oilfield service industry is a Big Game, by any definition, and Brown’s stalking more dangerous prey than even Hemingway dared to tackle.

Larry MacDougal, Business Edge
Neil Brown says Computalog is ready to take on the giants in oilfield services

Brown and Computalog intend to place the fattest targets on the continent within their cross-hairs. No. 1 on the hit list is the Halliburton Company, a global titan.

Only the largest oilfield service company in the U.S., Dallas-based Halliburton reported net income of $382 million in the last quarter, reported in late July. Next up is Schlumberger Oilfield Services, which is – you guessed it – the second largest U.S. oilfield services outfit.

To round out the triad, we give you Baker Hughes, No. 3 in the U.S. Late last month, Baker Hughes reported that its operating profit shot up by a paltry 169 per cent in the second quarter.

Clearly, Mr. Brown has Big Eyes. He’s also convinced the company has the ammunition to pick off the quarry, or at least to shake things up a little.

Reluctance or inability to adapt quickly to changing conditions, or techniques, could cost the biggies a significant portion of their market share.

That’s what Computalog is banking on, anyway. By the way, Brown is not going hunting with a blunderbuss. His weapon of choice is an acronym: LWD, or logging-while-drilling technology. LWD capability is the latest leg-up available to energy companies involved in deep-water, offshore exploration.

The technology allows engineers to monitor, as well as to transmit, reams of complex drilling info. This allows field strategists to turn on a dime, and respond to the data with intelligent drilling decisions.

“In deep offshore exploration, companies (i.e., Computalog’s prospective clients) are hungry for data,” Brown said. “The more they get, the better, so they can evaluate the prospects of their property.”

Unlike the wireline method of data collection, still in wide use, LWD capability allows engineers to make rapid decisions, based on up-to-the-minute drilling data, received in real time.

That means engineers can change trajectory of the well, in immediate response to data received. Minute-by-minute, they can evaluate whether their well is properly placed for maximum production.

The global market Computalog wishes to crack is worth the effort. It’s worth about $2.5 billion a year, “and it’s growing,” says Brown.

Certain competitors are already steamed at Computalog for hiring away key creative minds while energy markets cratered in the late 1990s.

These high-end researchers were unhappy where they were because their employers had slashed research and development budgets, insisted Brown.

But the moods of the wizards brightened, when they were invited to develop Computalog’s next-generation digital version of LWD, “from a blank slate,” at the company’s R&D base in Houston.

Brown has even bigger guns covering his backside, personified by Hank Swartout, the Calgary-based CEO of industry kingpin Precision Drilling Corp.

A little more than two years ago, Precision paid a reported $109 million to purchase the well-testing company. And Swartout is 100 per cent behind Computalog’s planned assault on global clientele, judging by the frequency of his strategic powwows with Brown.

By the way, don’t let Precision’s relatively flat stock price fool you. Gas prices have faltered in the short term, but, hey . . . it’s late summer. And most analysts believe long-term consumer demand, particularly from the gas-starved U.S., will remain fairly bullish.

So does Brown, who confesses the topic has been a lively in-house debating point.

Certain facts can’t be argued. A recession has set in, flattening demand. And previously high gas prices drove some consumers to convert to alternative fuels.

However, other fundamentals remain in place. U.S. production rates have declined, while the country’s needs continue to escalate. Even at today’s lower prices, solid profits are ripe for the plucking.

“You’ve got to be a solid service company. You’ve got to acquire the data efficiently and effectively, at your client’s wellsite,” Brown returned to the fundamentals. “We feel that we can design a more reliable tool, a more accurate tool, and a cheaper tool, at the end of the day.”

When the sparks start to fly later this year, we’ll find out for sure.