Comment: North Sea troubles have been good for tech sector
The trials and tribulations of the North Sea oil and gas sector have been well documented in recent years, but there is growing evidence of an upturn and in recent weeks we have seen the price of Brent crude oil nudging over $70 per barrel.
It is hoped this upward trend continues but oil price aside, one of the more positive outcomes to emerge from the pain of lost businesses and lost jobs, has been a swathe of new technology start-ups. The need for greater collaboration, innovation and the sharing of ideas and methodologies which promote efficiency and improve safety has been a consistent requirement of the major operating companies, contractors and industry policy makers alike, and we are now on the threshold of seeing this bear fruit.
The Oil & Gas Technology Centre in Aberdeen is at the forefront of this push for greater cohesion across the industry and its TechX Pioneer programme will provide the launchpad for an exciting new wave of start-ups. TechX is a unique technology accelerator and incubator initiative which will help the next generation of oil and gas entrepreneurs bring new technologies and solutions to market in a much quicker timeframe. The Pioneers, of which the first cohort of ten have been selected, will receive up to £100,000 funding, as well as access to experienced business mentors, co-working facilities and introductions to business and finance partners.
Over the next ten years, TechX will invest in more than 100 start-ups and 200 SMEs to help unlock the full potential of the UK North Sea and anchor a new technology supply chain in the North-east. Entrepreneurs and innovators will be offered support and end-user access to reduce the time and cost of market entry for challenger technologies.
At Pinsent Masons we are delighted to have been appointed legal mentor to the TechX Pioneers. Throughout an intense 16-week programme, our energy and commercial team in Aberdeen will provide the Pioneers with advice on company structures, directors’ responsibilities, contract law, intellectual property and legal updates relevant to young technology start-up enterprises. For any start-up business, regardless of sector, putting the correct company structure in place from the outset can make the difference between being the next IPO success story or just another what-might-have-been. We often have to unravel ownership structures which have restricted the growth of a business because the initial shareholders have become misaligned, or the direction or requirements of the business has outgrown the contribution original shareholders are able to make.
Other fault lines can emerge around IP. Most potential investors are seeking a combination of the right people aligned to smart protected technology, but unless IP rights are protected from the start, investors may be put off from providing vital support which will take the company to the next stage of development, or at the very least the company will suffer value leakage which undermines a fund-raising round or sale proposition. Another important area in which we will help guide the Pioneers is on directors’ responsibilities and the need to be aware that, transitioning from the excitement of a start-up enterprise into a fully-fledged business brings with it an extra layer of legal and fiduciary duties.
The North Sea was built on innovation and enterprise and the technologies developed in the North-east over the last 50 years have underpinned a vast range of exploration and production techniques now deployed across the oil and gas producing world. To ensure maximum economic recovery and efficiencies in the UKCS over the next 50 years, we are duty bound to encourage this new generation of innovators that are coming through and, using our decades of expertise in the energy sector, we are looking forward to helping them turn their visions into reality by making the growth process as pain free as possible.
Martin Ewan is partner and oil and gas technology law specialist at Pinsent Masons