How This New Trend In The Energy Industry Could Affect You
As global markets continue to be volatile, and the on-going COVID-19 pandemic affects the workforce, the energy sector has progressively become more conservative and it’s affecting the way investors perceive the industry.
Modesty and moderate are the latest buzzwords that are permeating the industry, whether it be talking about oil, gas, petrochemical, or renewable energy projects. It’s leading to a deeply rooted defensive buying strategy among many companies.
In turn, companies are taking on less and less risk to avoid a “swing and a miss,” and are ensuring they have calculated the return on capital projects; the current focus being on integrity projects to maintain production, with capital projects likely speculated for Q3 or Q4 based on remaining capital.
This however could lead to a painstakingly slow process for project consideration, as approvals require numerous levels of bureaucracy. With the lack of capital investment, only the projects providing extensive value will be the ones to proceed with the increased focus being on shareholder value.
That being said, with limited funding contributing to this low-risk culture, the result will be less innovative projects moving ahead during this time. Even though these unique projects are those that drive the industry forward, the focus will be on achieving only priority projects that require execution as soon as possible.
The risk aversion level could potentially stifle or even shelve numerous projects that could help companies grow. Fewer people will be required to work on fewer and fewer projects, creating additional reorganizations and lay-offs. Enterprising businesses that emerge from these tumultuous times will be the ones who have a balanced eye on risk as well as opportunity.
Right now, the opportunity is for operators to listen to vendors for alternative buying strategies or new innovative technology to maximize their returns and vet their vendors to ensure risks are mitigated. Companies will continue to develop more efficient ways of doing their due diligence and making the best use of capital expenditure and maintaining a healthy bottom line; but not completely closing the door on new technological advancements.
As a firm with innovation at its core, we take precautions and operate with engineered controls, strict procedures, and high safety standards. This allows us to challenge competitors that have created a monopoly by being early movers. As a result, we instill confidence in investors by presenting a valid alternative and a better option for a more efficient solution.
So, if you require specialized industrial solutions for your next project, get in touch with our team today. With many years of experience, Red Flame Industries Inc. will help you, as we focus on our customers’ problems, which leads to creating tailored offerings.
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