The energy industry continues its march forward, embracing new technologies in an effort to improve production and safety while also reducing costs.
The latest example of this trend comes from the oil fields of Alaska.
In early June, BP PLC ADR (BP) received the Federal Aviation Administration’s (FAA) very first approval to run a large-scale commercial drone operation in the United States.
The drones that BP will use are 4 feet and 7 inches long, have a 9-foot wingspan, and weigh only 13.5 pounds. More than anything, they closely resemble a model airplane. In fact, like a plane a kid would play with in the backyard, the drones are launched by hand.
Better in Every Way
A company called AeroVironment (AVAV) is manufacturing BP’s commercial drones after agreeing to a five-year deal with the oil major.
The drones will capture data from BP’s remote Prudhoe Bay field, one of the biggest North American oil fields, while producing 3-D maps of the field’s pipelines, well pads and the surrounding roads.
The use of drone technology represents a big breakthrough for the oil industry, particularly in the Arctic region, where companies must monitor pipelines and wells in harsh weather and below-zero temperatures.
Thus, it doesn’t come as a shock when BP says drones will allow the company to operate “more effectively, more safely and at a lower cost.” On top of that, BP says that these drones collect far more data than current manned aircraft do.
A Bright Future for Drones
Once drone technology is fully realized in Alaska, it’s sure to be used by the energy industry in other remote locations, both on and offshore.
This bodes very well for the only pure-play in this technology niche, AeroVironment. The company was first pointed out to our readers by our Chief Resource Analyst, Karim Rahemtulla, in early October.
The key point I want to emphasize is that AeroVironment is already a profitable company.
In its latest quarter, the company’s net income came in at $0.49 per share, which was well above analysts’ estimate of $0.19 per share. Meanwhile, AVAV sports $69.2 million in revenue – a 47% year-on-year rise – which beat consensus estimates by $4.3 million.
So far, most of the company’s profits have derived from drones sold to its largest customer, the U.S. military.
But that’s likely to change in a big way in the years ahead as the energy industry becomes an increasingly important customer. So if you’re looking to establish a position in an upwardly trending technology, this may be the company for you.
And “the chase” continues,