Palantir expands partnership with BP. What investors should know.

Shares of Palantir (PLTR) have risen to a 52-week high after the company expanded its partnership with BP (BP). Matt Babin, head of energy and natural resources at Palantir, joins Market Domination to discuss the five-year partnership and what Palantir brings to the energy sector.

Babin explains that BP will use Palantir's AI software to improve the decision-making process across the company:

"You can think of their business as a complete connected value chain, from reservoirs underground, up through their facilities, onshore or offshore, all the way to a refining or processing facility, all the way to an end customer. And so what they use our software for is all of the decisions along that chain. That's a complicated chain, and you can think of each decision you make along the way actually changes the decisions you can make downstream... What's new with this extension is layering AI on top of that underlying digital twin model of the entire business."

He adds that Palantir's technology will be able to connect decision-makers from all different disciplines and run simulations based on questions asked. "if you're a reservoir engineer and you're paying attention to what that subsurface reservoir is like, that's much different than sort of an operations or a base management engineer thinking of, 'How could I change the performance of this facility?' But this gives you one pane of glass to look at and collaborate over that."

Going into the expanded partnership with BP, Babin notes that there is significant competition in energy. "There was largely a choice between two ways of working. You could you could go to a hyperscaler and sort of have a horizontal infrastructure system... Or you could buy bespoke software that did one particular thing. And what we do is say you shouldn't have to make that choice. You should be able to scale while also being able to solve specific problems," he explains.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Video Transcript

Pal shares rising to a 52 week high and now up more than 100% so far this year.

On Friday, it was announced that the software company will be joining the S and P 500 analyst Wedbush saying this is, in their words, a validation moment for the company.

And meanwhile today, more news pal and BP announcing they have signed expansion of their partnership five year deal in which the oil giant will use pliers A I software to improve and accelerate decision making.

Across the company here with more is pals Head of energy and natural resources Matt Babin.

Matt, great to see you.

Thank you for having me.

So let's start with that news.

Uh, so expanded partnership with BP So the oil giant uses pounders A I software improve kind of speed up decision making across the company map.

What?

It walk us through Exactly what that means, though, are there examples you can give us?

Kind of illustrate.

Ok, I'm I'm a BP engineer.

How this helps me.

Yeah, um you know, we've been we've been working with them for more than a decade, and I think, you know, as the release states we've sort of worked on.

You can think of their business as a complete connected value chain, right from reservoirs underground, up through their facilities, onshore, offshore all the way to a refining or processing facility all the way to an end customer.

And so what they use our software for is all of the decisions along that chain.

That's a complicated chain, and you can think of each decision you make along the way actually changes the decisions you can make downstream, right?

So if you make one decision that changes all of the other options that are available to you, what's new with this extension is layering a I on top of that underlying digital twin model of the entire business got you.

So it's extending in time but also extending in scope of what you all are doing for BP.

Correct?

Yeah, so you can think of it as two main things.

One is it connects people who have different area disciplines.

So if you're a reservoir engineer and you're paying attention to what that subsurface reservoir is like, that's that's much different than sort of an operations or base management engineer.

Thinking of how could I change the performance of this facility?

But this gives you one pane of glass to look at and collaborate over that.

So that's that's one thing where it enables people without sacrificing any specificity of the questions they're asking or the work they're doing to work together.

The second is how can you then run hundreds, thousands, millions of simulations.

On top of those questions, you're asking in a secure way.

And one question I want to ask a question on the on the street, Matt for you, particularly, you know, in an energy segment.

And you're you're dealing with these energy companies.

Is it often kind of one time?

Um, engagements or no, What you're seeing is typically these are really now converting into long term recurring revenue.

Yeah, um, I think the the duration we've been working with them, you know, a decade in and we're we're signing up for five more years, says that these are long term deals.

You know, we we've founded the company to work on hard mission oriented problems, and those are places where our customers make decisions every single day.

So, you know, we we talked a lot about these boot camps, which are sort of one or two days but then lead to long term duration contracts.

Well, and we talk a lot about a I and sort of.

Obviously, with the advent of large L, large language models, there was a lot of talk about transformation.

Right?

It sounds like what you're talking about is not to diminish what you're talking about, focused on efficiency, focusing on making operations better.

Not that that's not going to be transformational in the longer term.

But it's not like this sort of, you know, overnight kind of change to the business.

Yeah, I think that's a good distinction.

I think if you look at a lot of industries, energy being one of them, maybe five or 10 years ago, everyone was saying, Oh, I'm gonna do a digital transformation project And and that's sort of like Well, why, right?

What's the real business problem you're trying to solve?

And I think over the last two years you've seen a lot of that in in the A. I space, right, I'm gonna I'm gonna a I this problem and and we take a We're contrarian in a lot of ways, but we take the view of what's the core problem of your business, right?

If the core problem of your business is, how can I produce more energy with safe operations and reduce emissions?

That's the problem, right?

And then the question is, how can I use technology, including a I to improve the way I tackle that problem?

And so yes, on the edge, I think those look like marginal improvements.

But if you get 1% better at what you're doing every single day you, that's that's how we think you transform your core business.

And and And when you signed this expanded partnership with BBP manager, curious was that Was there competition there?

Was that a bake off?

Um, I think there's competition in software all the time, right.

I think your your previous guests were were speaking about sort of what everyone is is trying to do in the space.

The most frequent competition that we see are, you know, I think in energy in particular, there was largely a choice between two ways of working.

You could you could go to a hyper scalar and sort of have a horizontal infrastructure system.

When it went to the cloud and then cobble together individual components of that yourself.

Or you could buy bespoke software that did one particular thing.

And and what we do is say, you shouldn't have to make that choice.

You should be able to scale while also being able to solve specific problems.

You have PhD level experts in all of these component pieces of that work flow.

They shouldn't have to trade off the power of their knowledge because of the tool set that they're using.

A at some point, are there diminishing returns from?

In other words, if you are improving efficiency analysis of a reservoir, for example, at some point you've done it right.

So then what?

Yeah, I. I don't think there are yet, Um, and I think you can look at that in terms of great.

So let's take that example on the reservoir, right?

The rocks are the rocks right, and there's only so much you can do with those rocks.

But if you can free up more time for people who are managing that asset to go do more exploratory activity, right?

If you look at the sort of generative space of going into what does carbon capture look like?

What does using these reservoirs and these storage caverns underground look like?

For sort of new parts of the energy transition problem?

I view it more as I'm I'm an economist by training.

So it's what's the opportunity cost of spending time.

So even if there's more diminishing returns to one particular problem, you're freeing up more time to tackle new problems and add them into the mix, and that's what we see our customers.