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Flotek Industries Is Digitizing Custody Transfer - Here's the Upside
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Key Takeaways
FTK is digitizing custody transfer, uncovering up to $3.5M in annual underpayments.
Pilot tests are converting to recurring monthly contracts, boosting Data Analytics revenues in Q2 2025.
With Viper, FTK offers real-time compliance tools, positioning itself as a leader in custody transfer reform.
Energy services provider Flotek Industries (FTK - Free Report) is starting to make a name for itself in custody transfer — a part of the oil business that is often ignored but significant. It is the process that decides how oil and gas revenues get split among producers, royalty owners and midstream companies. This process has typically been done manually, but Flotek’s JP3 XSPCT Analyzer brings automation and real-time data into the mix.
In early testing at eight sites in the Permian Basin, the system found big problems — up to $3.5 million a year in underpayments when compared to the old manual method. That’s not just a small error; it’s money that should be flowing to the right parties but isn’t. Naturally, the industry is starting to get noticed.
Starting in Q2 2025, Flotek is turning those pilot tests into monthly contracts, which means steady, recurring revenues for its Data Analytics division. What was once a test expense is now becoming a high-margin service. With its digital platform Viper, Flotek also offers tools for continuous monitoring, reporting and compliance — all in one place.
Even more importantly, Flotek is becoming a leader in updating an outdated process. With more focus on transparency and ESG (Environmental, Social, Governance) standards, real-time custody transfer may soon become a must-have. By moving early and showing strong results, FTK is in a solid position to expand — and help reshape how the oil industry tracks its revenues.
A Market Dominated by Infrastructure Giants
In the custody transfer space, Emerson Electric (EMR - Free Report) and Honeywell International (HON - Free Report) are two established players offering flow measurement and automation systems for oil and gas transactions. ‘
Emerson plays a major role in oil and gas custody transfer through its Daniel Measurement and Control division. Emerson provides advanced ultrasonic and Coriolis flowmeters that deliver the high accuracy required for financial transactions. These meters are supported by smart diagnostics and software tools like MeterLink, helping operators detect problems early and reduce measurement errors. By combining precision hardware with intelligent monitoring, Emerson helps improve trust and efficiency in custody transfer systems.
Honeywell is also active in the oil and gas custody transfer space through its Enraf Tank Inventory Systems, which are widely used in refineries and storage terminals. Honeywell's ENTIS platform ensures accurate, secure, and real-time data for inventory control, custody transfer and reporting. By supporting certified applications for fiscal metering, Honeywell helps operators manage oil movements safely and efficiently while meeting regulatory and cybersecurity standards.
FTK’s Price Performance, Valuation and Estimates
Shares of Flotek Industries have gained around 72% year to date.
Image Source: Zacks Investment Research
From a valuation standpoint, FTK trades at a forward price-to-earnings ratio of 27.76.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Flotek Industries’ 2025 earnings implies a 56% improvement year over year.
Image Source: Zacks Investment Research
The stock currently carries a Zacks Rank #1 (Strong Buy).
Image: Bigstock
Flotek Industries Is Digitizing Custody Transfer - Here's the Upside
Key Takeaways
Energy services provider Flotek Industries (FTK - Free Report) is starting to make a name for itself in custody transfer — a part of the oil business that is often ignored but significant. It is the process that decides how oil and gas revenues get split among producers, royalty owners and midstream companies. This process has typically been done manually, but Flotek’s JP3 XSPCT Analyzer brings automation and real-time data into the mix.
In early testing at eight sites in the Permian Basin, the system found big problems — up to $3.5 million a year in underpayments when compared to the old manual method. That’s not just a small error; it’s money that should be flowing to the right parties but isn’t. Naturally, the industry is starting to get noticed.
Starting in Q2 2025, Flotek is turning those pilot tests into monthly contracts, which means steady, recurring revenues for its Data Analytics division. What was once a test expense is now becoming a high-margin service. With its digital platform Viper, Flotek also offers tools for continuous monitoring, reporting and compliance — all in one place.
Even more importantly, Flotek is becoming a leader in updating an outdated process. With more focus on transparency and ESG (Environmental, Social, Governance) standards, real-time custody transfer may soon become a must-have. By moving early and showing strong results, FTK is in a solid position to expand — and help reshape how the oil industry tracks its revenues.
A Market Dominated by Infrastructure Giants
In the custody transfer space, Emerson Electric (EMR - Free Report) and Honeywell International (HON - Free Report) are two established players offering flow measurement and automation systems for oil and gas transactions. ‘
Emerson plays a major role in oil and gas custody transfer through its Daniel Measurement and Control division. Emerson provides advanced ultrasonic and Coriolis flowmeters that deliver the high accuracy required for financial transactions. These meters are supported by smart diagnostics and software tools like MeterLink, helping operators detect problems early and reduce measurement errors. By combining precision hardware with intelligent monitoring, Emerson helps improve trust and efficiency in custody transfer systems.
Honeywell is also active in the oil and gas custody transfer space through its Enraf Tank Inventory Systems, which are widely used in refineries and storage terminals. Honeywell's ENTIS platform ensures accurate, secure, and real-time data for inventory control, custody transfer and reporting. By supporting certified applications for fiscal metering, Honeywell helps operators manage oil movements safely and efficiently while meeting regulatory and cybersecurity standards.
FTK’s Price Performance, Valuation and Estimates
Shares of Flotek Industries have gained around 72% year to date.
From a valuation standpoint, FTK trades at a forward price-to-earnings ratio of 27.76.
The Zacks Consensus Estimate for Flotek Industries’ 2025 earnings implies a 56% improvement year over year.
The stock currently carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.