This is the full transcript of the video interview between CruxOCM CEO Vicki Knott and VP of Finance Alex Le.
Vicki Knott, CEO of CruxOCM, sits down with Alex Le, VP of Finance at CruxOCM, — former physical oil trader at JPMorgan and Portfolio Manager at Millennium Management — to discuss geopolitical risk, midstream valuation, and why midstream automation is the last real growth lever for pipeline operators.
Vicki: Hi everyone, I’m Vicki Knott, CEO of CruxOCM — the only agentic industrial automation platform purpose-built for the oil & gas industry. Hi Alex, thanks for doing this coffee chat. If you could do a quick intro, we can get started.
Alex: Hi Vicki, thanks for having me on. By way of background, I cut my teeth in the energy industry by trading physical oil and gas at JPMorgan back when they were more active in the space. I went on to be a Portfolio Manager at Millennium Management, running a traditional long/short equity strategy — I put a lot of emphasis on energy and software names there.
Vicki: Let’s talk geopolitical wild cards. We’ve seen recent massive volatility driven by Iran and Venezuela. As a former O&G investor, how do you distinguish between a short-term geopolitical spike and a long-term shift in market fundamentals?
Alex: In the short term, geopolitical headlines move spot prices and time spreads through fear and positioning. If you see little actual change in the long-term global supply of barrels, that is a geopolitical spike. Geopolitical spikes tend to revert as positioning clears. Good energy risk management means knowing the difference.
For fundamental shifts you need to start seeing structural changes in the industry. For example, actions that actually curtail production and exports, structural under-investment in certain basins, or policy changes that hamper demand and raise the cost of capital. These changes show up in forward curves lifting, breakevens creeping higher, and capex guidance changing across E&Ps.
Vicki: How does this impact U.S. energy security in the long term?
Alex: From a U.S. energy security perspective, this matters because you can’t build a strategy around every headline. Two things still remain true for the US:
- Domestic energy consumption continues to grow, especially in the commercial and industrial sectors, but supply constraints are still there. Recently at CERAweek, Google’s global head of energy, Amanda Corio, said that bottlenecks in natural gas supply is constraining Google’s AI in energy industry data center ambitions.
- The U.S. is now widely accepted as the most dependable swing exporter of both crude and LNG. However, these pipeline industry challenges — throughput into export hubs still constrained — cap U.S. exports.
To ensure US energy security the industry needs to maximize throughput capacity to ensure domestic energy security and to maximize export capacity. Operators that can flex their throughput capacity can really take advantage of these structural opportunities.
Vicki: Let’s zoom in on a midstream operator level. Average breakeven costs for many U.S. producers are currently 0–0. If production stalls due to lower prices, how does a midstream company protect its take-or-pay contract revenues?
Alex: If WTI prints below breakeven you have a real risk of drilling activity slowdown — especially for longer-dated capex projects (offshore, oil sands).
Even though take-or-pay contracts provide baseline revenue, they’re not bulletproof if counterparties are stressed or if you have under-utilised assets.
How would a midstream company protect take-or-pay economics? If I’m a midstream CEO, there are a few things I would focus on:
- Portfolio and contract design: diversify counterparties and basins, stronger credit support, and flexible MVC rights. I’d rather have slightly lower tariffs across a diversified shipper base than max price with concentrated risk.
- Operational flexibility: customers will demand more operational and contractual flexibility as margins compress. That’s where oil pipeline management through agile pipeline operations automation lets you repurpose capacity to different grades, origins, or destinations instead of letting pipes sit under-utilised.
The real edge is flexibility in both your book of business and the physical pipeline system itself.
Vicki: How are midstream operators valued on the stock market?
Alex: Midstreamers are usually valued on EV/EBITDA on a forward basis. Midstream oil and gas analytics software and operational data are increasingly part of how the Street models EBITDA forecast quality. The multiple a company trades on is all relative to how the Street views them vs their competitors. Great operators will trade at a premium to their peers and vice versa. End of the day these operators are valued on the cash that they can generate relative to their peers.
Vicki: How should they prioritize capital projects in the current environment?
Alex: After the 2010 oil crash, the Street demanded strong resilient balance sheets. This forced operators to only focus on capital projects that had clear near-term ROI. Long-dated megaprojects with uncertain timelines quickly fell out of favor.
Through the 2010s most major U.S. shale basins (e.g., Eagle Ford, Permian, Marcellus) finished their big build phase. However, major regions like the U.S. Gulf Coast became congested. It is now very difficult to build greenfield projects in those key regions.
Recent heavy consolidation in the industry has exhausted future inorganic growth opportunities. There aren’t many smaller players that the big guys can buy that would meaningfully move the needle. The bigger players are now too big to swallow each other whole.
So really the last bastion of growth is to look inward. Operators have to maximize their own systems — I’m talking about singles and doubles that squeeze 3–5% more out of their current assets.
Vicki: That’s great that you mention that Alex! Through our agentic AI systems for oil and gas, Crux has proven that we can add 7–12% of throughput for our customers. How do you think Wall Street would view Crux?
Alex: The Street would love this play. If someone told me hey look there’s this company that can get us 7–12% throughput uplift — real hard barrels — faster and more capital efficient than traditional capex projects can? I’d go to the CEOs of all my portfolio companies and say why isn’t this technology deployed across your entire system yesterday.
To me there’s a clear opportunity here. For every of EBITDA they add the industrial automation oil & gas market values that at call it 10x. Across say a 1 MMboed system that adds what 70–120 Mboed of new barrels. So at normal midstream economics that adds ~60M–00M in enterprise value.
I’m assuming y’all don’t charge 00M per customer. So, absolutely, this is a clear winning strategy for any operator.
Vicki: We definitely don’t charge that much! That’s great to hear that we are a clear force multiplier in the industry. CruxOCM is the midstream solutions platform that delivers those barrels — our oil pipeline software adds real throughput on existing systems that no traditional capex project can match at this speed.
Alex: Those are just tolling revenues, right? An integrated company can also get downstream refinery margins or export pricing as well.
Vicki: One last question: if you were the CEO of a midstream company today, what is the one piece of technology or strategy you would prioritize to ensure your company remains profitable regardless of oil price fluctuations?
Alex: Optionality and flexibility of operations. Combining steel and code is really the future of this industry. That combination of physical and digital optionality. You want assets that don’t just survive the downside case, but gives you real levers to create upside when the macro doesn’t cooperate.
Vicki: I think that too — steel and Crux code is the future of oil & gas. CruxOCM is the only midstream energy software platform that adds real barrels on existing pipelines through agentic automation. Thanks for sitting down with me, Alex!
