Recon Technology, Ltd (NASDAQ: RCON)

Recon Technology, Ltd provides oilfield specialized equipment, automation systems, tools, chemicals, and field services to petroleum companies primarily in the People’s Republic of China. The company’s core activities include supplying high-efficiency heating furnaces, burners, pumping unit controllers, RTUs for natural gas well monitoring, wireless dynamometers, electric multi-way valves, natural gas flow computer systems, and SCADA-based oilfield monitoring and data acquisition systems. Additionally, the company offers technical consulting services, EPC services for pipeline and well monitoring, video surveillance and control systems, and digital oilfield transformation services through its variable interest entities, Beijing BHD Petroleum Technology Co., Ltd. and Nanjing Recon Technology Co., Ltd.

Recon Technology, Ltd generates revenue primarily through the sale of automation products and equipment, technical consulting services, and field services to oil and gas exploration and production companies. Revenue is derived from providing high-efficiency heating furnaces, burners, automation system components, SCADA systems, and related software solutions. The company also earns income from oilfield sewage treatment, oily sludge disposal, residual oil recovery services, and gas station operation and management solutions. Its main customers are large state-owned petroleum enterprises in China, particularly Sinopec and CNPC, which together account for a significant portion of the company’s revenue.

The company operates through the following segments: automation product and software, equipment and accessories, and oilfield environmental protection.

• Automation product and software: This segment includes the Recon SCADA oilfield monitoring and data acquisition system, RTUs for natural gas well monitoring, wireless dynamometers, wireless pressure gauges, electric multi-way valves for metering station flow control, natural gas flow computer systems, and intelligent gas field management platform software. The segment also covers gas well data acquisition and monitoring software, Recon’s Video Intelligent Recognition Software, solar permanent magnet semi-direct drive intelligent control software, and intelligent billing and settlement systems for vehicle owners. Trademarks associated with this segment include “Recon” in classes 7, 9, and 42, and “DT” in classes 9, 35, 37, and 42.

• Equipment and accessories: This segment provides high-efficiency heating furnaces with 90% thermal efficiency, burners featuring high automation, energy conservation, and high turn-down ratio, and tubular type, vacuum phase change, negative pressure, and high-pressure natural gas furnaces. The segment also includes safety couplings, fracturing packers and valves for oil wells, electricity collection devices, and oil pumping units. The “BHD” trademark is registered in classes 7 and 11 for this segment.

• Oilfield environmental protection: This segment focuses on oilfield sewage treatment solutions, oily sludge disposal in Gansu Province, and residual oil recovery services using unique formulas and equipment to enhance profitability for oilfield companies. It includes the development of customized treatment chemicals and onsite services. The segment is supported by patents such as the suspended sludge filtration and purification device for oily sewage and the biological activator for oilfield re-injection water treatment.

Recon Technology, Ltd holds a competitive position in China’s petroleum automation industry by leveraging its locally developed technology, deep understanding of Chinese business culture, and cost-effective operations. The company competes with both domestic and foreign firms in the oilfield services sector, though many competitors possess greater financial and technical resources. Its competitive advantages include ownership of intellectual property, product safety and efficiency, Mandarin-language software and support, and an experienced executive management team with strong industry relationships.

The company serves primarily petroleum exploration and production companies, their subsidiaries, petroleum administration bureaus, and local service companies in China. Historically, its major clients have been Sinopec and CNPC, with revenue from Sinopec accounting for 17%, 19%, and 32% of total revenue in the fiscal years ended June 30, 2025, 2024, and 2023, respectively. Revenue from CNPC accounted for 44%, 48%, and 43% of total revenue in the same periods. These two state-owned enterprises represent the core of the company’s customer base.