Joel Gay, president and CEO of Energy Recovery, spoke about navigating the rocky oil market with Yahoo! Finance on Friday.
Energy Recovery’s products, including the Vorteq hydraulic pumping system, allow oil and gas operators to reduce inefficiencies and increase profits.
The Vorteq system is designed to isolate hydraulic fracturing pumps from abrasive proppants that cause pump failure. Last year, Schlumberger signed a 15-year agreement with Energy Recovery for the exclusive rights to use the Vorteq system. The deal was valued at $125 million.
Energy Recovery’s strong balance sheet allowed it to invest in innovation, and it paid off with the Schlumberger deal.
“It’s an interesting time to be in energy,” Gay said. “In particular if you’re a company that has a strong balance sheet because when you’re at the low point of a cycle and you have a strong balance sheet, you can invest in innovation that will ultimately result in cost efficiency.”
Gay, who was named CEO last year, said the company will continue to innovate and develop new products for the oil and gas industry. Energy Recovery also developed the IsoGen System, which captures pressure energy and generates electricity from high-pressure fluid flows.
As the industry battles depressed crude prices, Gay said companies with the ability to invest in the future will be well-positioned once the bull market returns.
“We can play at every point of the cycle, whether it’s a bear market or a bull market,” Gay said. “In a bear market, we can bring down the cost base so that operators can remain competitive. In a bull market, we can expand gross margins.”