Vicente González Dávila
Director General
Geo Estratos
View from the Top

Recovery Through Technological Development

By Pedro Alcalá | Wed, 11/18/2020 - 13:28

Q: What have been the highlights of Geo Estratos’ development since 2017?

A: The company has undergone a significantly critical process throughout these years. The truth is that we came close to shutting down completely. We had to reestablish our processes to deal with the fact that we had been dragging some crises in our wake for a number of years. This was partially due to the fact that our business model was not as compatible with the national context as we wanted it to be or as compatible as we thought it was. Our company is dedicated to the development of new technologies and to adapting to market conditions where the added value of cost reduction has not been as much a requisite as it should be. This is the unfortunate case of the Mexican context. This has caused us to become a different kind of company in many ways. I can look back and say that the company evaded more problems by staying out of exploration and production activities as operators. This ultimately led us to become a sturdier company that could better adapt to the industry’s realities. At the same time, the entrance of new operators into the market has created a new and more positive outlook regarding cost-cutting technologies that we see growing over time. This growth has been exacerbated by the recent oil price crisis.   

Q: How is Geo Estratos adapting to this new context?

A: Our service portfolio is focused on competing within the upstream market for the most highly impactful exploration and production applications. Our core strengths still include the development of new technologies. The industry believes its tried-and-true empiricism to be reliable and is unlikely to innovate as a result. We find, analyze and solve the technological challenges involved in increasing a field’s productive life. We are particularly interested in finding new ways of applying conventional technologies to the extraction of unconventional resources. As you know, unconventional resources are a bit of a political taboo in Mexico and there is still a long road ahead of us before these kinds of operations are allowed and feasible within our national territory. However, we have found a number of ways to uncover areas of opportunity within these kinds of fields and assets through reservoir characterization and through the study of fluid mobility and transport in naturally fractured porous mediums with active aquifers. These and other processes make the development of production systems much more complex. We have focused on developing technologies that can cut the costs involved through real-time monitoring that creates new chains of decision-making that do not significantly increase OPEX while allowing operators to apply new AI technologies to the management of their fields. This has all made us competitive in the development of new tools that go well with our expertise in horizontal wells, which leads to higher levels of accumulated production in less time. At the same time, we are focused on creating advantages for operators that are applicable for the medium- to long-term prosperity of their fields as opposed to short-term increases in production levels. We earn new patents every year so we are still developing new technologies based on short-term development cycles but we are restructuring ourselves so as to rely more on services and applications that allow us to be a long-term partner for our clients. To us, capital invested in the development of these new technologies is not risk capital at all but a safe investment in our own added value.

Q: How would you describe the context in which your service portfolio competes within the industry?           

A: Significantly large oil field services companies that are predominant in the Mexican market, such as Halliburton, GE Baker Hughes, Schlumberger and Weatherford, might present or provide advantages that a much smaller company like ours simply cannot reproduce. However, when it comes to the ultimate effect of actually reducing operational costs for their clients, our agility and ability to customize our offering means that we can achieve this in a way these companies likely cannot. This kind of customization will only become more necessary over time. PEMEX is going to require the application of the kinds of EOR and IOR services that companies like ours can provide. This is especially true because, as the exploitation of unconventional resources becomes more common in Mexico and the erosion of the taboo surrounding the subject becomes more apparent, the management of water resources will become an enormously important subject for all upstream operators. The efficient use of water for the displacement of oil and gas in assets and reservoirs will become a focal point of companies’ finances and investment strategies, and this is a niche that we are quite well-specialized to address. In Mexico we do not yet have the ability to execute fracking operations efficiently. The infrastructure, resources and logistical capabilities are simply not quite there yet. Thankfully, many of our country’s unconventional plays have a great deal of available resources where conventional technologies and methods can still have a great impact and generate significant additional volumes of production. Some of our most recently awarded patents are able to achieve precisely these kinds of objectives and the severely reduced cash flows that PEMEX will be dealing with for the foreseeable future will mean that its need for these technologies will increase greatly. This also applies to its reserve incorporation ambitions, meaning its objectives to turn as many 3P reserves into 2P and 1P reserves as they possibly can.

The only thing that is really standing in our way is market reputation, meaning the perception that a Mexican company is unlikely to develop its own technologies without significant help or support from industry majors. This is a difficult boundary to breach. Mexico’s position on the international rankings for indicators such as corruption has an impact in the way in which investors perceive the choice of relying on Mexican technologies, particularly for exploration and production projects and processes. It is a cultural issue. Engaging with it from our perspective and protecting our reputation has represented a significant degree of PR maneuvering. The ultimate truth is that the market is always watching.


Geo Estratos is a Mexican services company with 20 years of experience in providing technology solutions and research to optimize oil operations. It is expanding into upstream through CNH’s licensing rounds.

Pedro Alcalá Pedro Alcalá Journalist and Industry Analyst