Friday, December 04, 2015

Year End Closing

Where we currently stand to in the oil and gas industry is far from where we need to be. The deterioration of the capacities and capabilities can be felt draining from the industry in the past six months. Things that should be getting done are not even on the list of things to do. This of course is the old business model working as it does. Let the industry deteriorate until such time as shortages are created and then we’ll move to rebuild what was lost with other people’s money, again. The only thing the producers have today are spectacularly large balance sheets. These represent the money from the last time they fleeced the investors. The actions of the investors in the past few years shows that they’ve caught on to the game, and they don’t like it. They might sit this round of financing out. And therefore the producers will decay even further as shale’s flush production continues to overwhelm the commodity markets price mechanisms. The only way out is for producers to select the Preliminary Specifications decentralized production models price maker strategy. That way an industry wide method of production allocation, based on the equitable and fair basis of profitability of each and every Joint Operating Committee, can be used to determine which property produces and which property remains shut-in.

Until this scenario plays out People, Ideas & Objects and our user community have work to do. The forces of creative destruction in the industry are well in play. We need to commence work now in order to offset the difficulties in the industry. As they depreciate we’ll rise to recover from their failures. Eventually taking over from the ashes of what will be left of the producer firms that exist today. That is how creative destruction has worked in the past and how I expect it to function here. There will be many producers that might make the transition, however picking the winners and losers is a sport that Las Vegas would be more interested in. Our job is to get moving and to make sure that society does not have any difficulty in sourcing their needs of oil and gas.

It will be a cold, literally, hard slap in the face to those alternative energy and climate change people. They will think that the decline in oil and gas is an opportunity to build more wind and solar. I am always amazed at the extent that people can convince themselves of such foolishness. Those who think that they can just switch to wind and solar are fresh out of the looney bin. The oil and gas industry produces so much energy, and so much of it is used in industrial purposes that it would take centuries for wind and solar to catch up, let alone take over. Ever see a chemical plant next to a hydro dam? And you won’t. Society is not hooked on oil and gas. Oil and gas is the blood that makes society run. Let's not kid ourselves into believing in myths and fairytales before it's too late. Your participation in our user community is the mitigating factor and the destruction of this myth.

I will be taking the rest of the year off. I need to prepare for the early part of 2016. Producers will be once again preparing their annual reports for what has been a bad year in a dismal industry. They have no profitable operations anywhere. They have no financial resources and they are desperately short of cash. They need to show their investors and bankers, and most importantly their prospective investors and bankers, a plan on how they’ll turn this situation around. As we know they don’t have one and they’ll be unable to come up with anything in the next few months. What I suspect will happen is we will see the rats jump ship, so to speak. The bureaucrats will seek greener pastures knowing that the difficulties in oil and gas are beyond what they can resolve. After all that is their history and pedigree. Expect the announcements of retirements and resignations to begin once the bonuses have been distributed. That’s right bonuses. I am looking to return on January 11, 2016 and expect that posting may be light for the first four months of next year. This is crunch time for us. We must make this real. A decision has to be made to proceed with the development of the Preliminary Specification. I am looking to the investors and bankers that support the oil and gas producers to make that decision. So for now have a Merry Christmas and Happy New Year and will see you in 2016.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Thursday, December 03, 2015

Users Wanted

Yesterday we went through some of the difficulties people may be faced with regarding the decision to participate in this user community. We understand that it’s not for everyone and we are looking for specific people who are able to make the difference in the new oil and gas industry. If you’ve made the decision to join the user community of People, Ideas & Objects, what’s next. Review of the application process can be found here. We know it’s extensive and will take some time and effort to complete. It is important for us to be able to make our decisions based on the best possible information available to us. Once you’re approved, this information will be available to all users across the community, and as a result, users will be able to find like minded people with similar experience to work with.

The second point we should concern ourselves with is that we are a technology oriented solution. From a specialization and division of labor point of view we are providing a new, sub-industry between the oil and gas and the Information Technology industries. Our user community is being drawn from the oil and gas industry and we have all had dealings with those who are in the Information Technology world. Sometimes it seems that they are speaking a different language and are on a different planet. The sub-industry we are creating needs to be able to understand oil and gas but also needs to understand the Information Technology industry at the level where they can effectively communicate with them on that planet. You won’t be writing or editing software code, but I can assure you that you will be reading it. You will also be leveraging your ideas and needs through the software developers of People, Ideas & Objects and members of the Information Technology community. They will be the tools that you use to provide the oil and gas producers with the most profitable means of oil and gas operations.

There is time, and I would suggest that everyone, whether through formal education or self study, be capable of achieving the above requirement in the Java and database environments. We are Oracle Fusion Middleware and Oracle Fusion Application users as the base of the People, Ideas & Objects application. These are the technologies that will form much of the work that you will do. If you have avoided the technologies up until now, or have a strong aptitude in the Information Technology area, it doesn’t matter. Your key value to the oil and gas producer is the understanding of their business. Your creativity and capabilities in determining what and how you can do what you can do in the future, when you have a software development capability available at all times, will be so much more effective if you fully understand the technologies capabilities and limitations. There is much that we can deliver to the oil and gas producer in terms of value from an oil and gas point of view. And there is much that we can deliver to the oil and gas producer from a technology point of view. This can only be attained by having a “hybrid” user community that can bridge the two industries that we sit between.

I think that I am on record as stating that these technological requirements would be attained with six or seven university level courses in Java and database technologies. This would give you the level of understanding that would make you proficient in that world from the point of view of understanding the tools that will be at your disposal. Having the software development capabilities of People, Ideas & Objects and Oracle technologies at hand, with the user community vision, empowers you to achieve our success over each of the next 25 years. It is that time frame that we should consider that these systems will be under constant iterative development and will continue to evolve to provide the oil and gas industry with the ability to meet society's needs for energy.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Wednesday, December 02, 2015

Courage

A defining characteristic of People, Ideas & Objects user community is going to have to be its courage. This is not something that is usually expected in the domains of oil and gas administration and accounting. However what we are doing demands that we have the courage to overcome the difficulties that we face in the process of changing the industry to one that is dynamic, innovative, accountable and profitable. No one can think that this will be easy, it will be the most difficult work that most have undertaken in their careers. And it will not necessarily stop once we have developed and released our software into the marketplace. The user community is a long term solution to the bureaucracy and will be the replacement to that means of administrative and accounting capability. We can expect more than a few fights from the bureaucrats and a general lack of support from them as well.

When I speak of courage in this instance I would define it in its purest form as the “conscious self-sacrifice on behalf of something greater than one’s own self-interest.” Let's be clear, I am looking for leadership to be an element of the user community. Leaders who lack the courage to lead are not leaders. And there are other common virtues of courage other than leadership. These include honesty, integrity, confidence, compassion and humility. I am setting a high standard in terms of the individuals who are members of the user community due to the role that they will undertake that is so critical to our success and the success of the oil and gas industry. Our demand for courage from our user community and service providers may be unique in the environment that the bureaucracy has created for itself. What I see in the bureaucracy is a group that is committed to being unaccountable and as self serving, who will do nothing other than for themselves. I have stood up to them and paid the price, we need to create a climate where accountability and virtue replace this unaccountable and self serving bureaucracy.

General William Tecumseh Sherman defined courage as “a perfect sensibility of the measure of danger and a mental willingness to endure it.” Many have expressed their concern about participation in the user community. Identifying the risks associated to them in joining our user community. Fear is what I am sure everyone is feeling regarding participation. It is an exciting project with significant downside risk to their medium to long term prospects of their careers. But that is the point, without fear there would be no need for courage. There will be many people in the user community who are committed to the success of this project, purely out of fear. If that fear is greater than your courage to approach the difficulties that we share in the future you should stop reading this blog and forget about participation. If however, your desire to resolve these difficulties in industry are greater than your fears than you should move to act on those feelings by joining our user community. It is said that “you can live with pain. You can live with embarrassment. Remorse is an awful companion.” Coulda, shoulda, woulda might be too much remorse to live with in the future. “Don’t let the sensation of fear convince you that you’re too weak to have courage. Fear is the opportunity for courage, not proof of cowardice.” John McCain

What I have done to mitigate your risk is to ensure that we have our budget funded in its entirety before we commence any software developments. This might be unreasonable, however. With a value proposition of $45.7 trillion over the next 25 years, and over $700 billion in the producer's market capitalization losses. If the producers can’t be compelled to save themselves by funding our developments in full, then there is no hope for them. Therefore there will be no financial risk for the members of the user community during our developments. We do not expect any of the user community participants will be engaged on a full time basis during any of our developments. Though we have costed the user community participants time at an average of $190 / hour.

There is much to do before we get to that time and the application process that we have established is rather onerous. We will detail these in tomorrow’s post and give you a better understanding of what might be opportune at this point in time.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Tuesday, December 01, 2015

Your Involvement

As members of People, Ideas & Objects user community you will be applying the understanding that you have gained from your years of experience in oil and gas to the development of the Preliminary Specification. What we have now is the overall vision of how the system will provide value for the dynamic, innovative, accountable and profitable oil and gas producer and industry. What we need to do is to fill in the details of what are required for the areas that you're familiar within the industry. What functionality and process management is necessary for you to undertake the types of work that are necessary and desired in your area. Understanding that we are not replicating the status quo but building a new industry and new producer for the 21st century based on the vision of the Preliminary Specification.

You will do this work with the People, Ideas & Objects software developers who will take your input and develop the software that you specify. This will be comprehensive, collaborative and iterative work that is done with the input of many users representing a diverse range of experience. It will be in this way that we can capture the exceptions that occur throughout the industry and deal with those through the software. Key to this development process is the work that will be undertaken by the service provider organizations that you establish. They are the organizations that you the users will be building in order to deliver the People, Ideas & Objects ERP software and your services to the producer firms. Each service provider will be dealing with a small subset of the overall Preliminary Specification and apply it across the industries data set. It is in this way that you will be able to apply the principles of specialization and the division of labor to the work that you are doing with the other users and our developers.

In addition to your competitive advantages of specialization and the division of labor, you will have process automation capabilities developed with your work with our developers, and innovation based on your expertise in either the administrative or accounting domain that your service provider organization operates in. These are the comprehensive competitive advantages that have not been available in the administrative and accounting domains of the producer firms. In the current oil and gas industry the producer has to acquire the capability to meet the requirement, and has no scope or scale in which to apply any of these competitive advantages. As a result, the administrative and accounting burden is taxing the producer organization to the level where they’re incapable of earning profits. These current administrative and accounting capabilities are being replicated within each oil and gas producer yet are unshareable to offset the costs. It is the application of these competitive advantages through the long term relationship that our users will have with our developers that will increase the service provider's profitability and reduce the administrative and accounting costs of the producers.

The quality of this service offering that the producer receives will be far greater than what is achieved today. The producers will be able to profit from the reorganization of the industry in two specific ways. First there will be an effective cost structure that is more consistent with the producers revenues. The service providers focus is, as with all parties associated with People, Ideas & Objects, to provide the most profitable means of oil and gas operations. Their focus will be on reducing the cost to the producer or enabling greater revenues being earned through business model changes. Secondly the ability to expand the output of the service providers will enable the industry to conduct a greater level of administrative and accounting throughput with the same level of resources. Specialization and the division of labor are the two elements of all economic growth. These attributes would provide substantial value, however, the service providers are also the reason that the producers are able to implement the price maker strategy of the decentralized production model. Enabling a whole new manner in which to operate the industry.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Monday, November 30, 2015

I Got It

Clearly my point has been made. Recent discussions have shown to me that there is a strong concurrence in the marketplace regarding the future of the oil and gas industry. I am preaching to the converted. It's therefore time to get down to business. We need to spend some time on our user communities development which is our key focus. Our user community is one of People, Ideas & Objects primary competitive advantages. For too long users have been provided with substandard ERP systems that they have had to accommodate. These systems have been rigid and unchanging over the course of their lifetime and the users have had to work around these systems in order to get their work done. What is needed in the dynamic, innovative, accountable and profitable oil and gas industry is a user community that has the power and control over the development of the software that they use.

This power and control is provided to the user community through our user community vision. It is comprehensive in that it details the sources and means in which the power and control to affect change is provided to the users. Management of the industry is taken from the bureaucrats and is handed to the user community. It is the membership of the user community that will determine what is required, and what is desired in the industry in terms of their systems functionality and process management, and most importantly the business model that the users have effective control over. So that if there is need for a change in the price maker strategy of the decentralized production model, everyone will know that they need to turn to the user community to have these changes made.

And I would expect that in short order the user community will become the driving force behind the changes in industry. That the dynamic elements of the industry will be as a result of the capabilities of the user community to foresee the issues and opportunities of the industry and implement solutions within a timely manner that provide the most profitable means of oil and gas operations. Whether that is a minor change in one of the minor processes of the material balance report or wholesale changes to the business model. Change is going to be the dynamic that we will be faced with in this industry over the next 25 years. Our ability and capabilities to deal with those changes needs to be inherent in the organizations that we are establishing today and that is the why we are focusing today on the development of the user community.

What we expect to see is that there will be approximately 3,000 members of our user community. Each will be responsible for a specific process or sub-process within the oil and gas industry and be solely responsible for it across the North American producers. Each user community member will be the principal, or partner with other user community members in a service provider organization that provides the People, Ideas & Objects software solution and associated services to the producer firms. Whether that is an accounting or administrative process would depend on the background of the individual and their contribution to our development. We will not be handing out service provider licenses to those who have not contributed to the development of the Preliminary Specification. Over the next number of years the user community will be needed to determine the detail of the system's functionality and process management and this will be the time when users will be earning their goodwill toward a service provider license.

The service providers will be replacing the current administrative and accounting resources that are resident within the producer firms. Within the decentralized production model, the producer is stripped down to the C class executives, earth science and engineering resources, land, legal and some support staff. Therefore the estimated $45 to $60 billion in G&A costs that are currently incurred by the producers would be shifted to become the revenues of the service providers. Members of the user community are also compensated directly on an hourly basis for their contributions to the development of the Preliminary Specification by People, Ideas & Objects. This is a significant business opportunity for those interested in the user community of the new oil and gas industry.

Currently it is my opinion that we will be rebuilding the industry from the ashes of the destruction that is underway. Shale’s new dynamic on top of the bureaucracies muddling along strategy are toxic to the health of the industry. Continued inaction by the producers will eventually force the banks to take over. Providing an opportunity for the investors to purchase the oil and gas properties back from the banks. Then by using the Preliminary Specification, our users and the service providers will be able to manage the investors oil and gas properties profitably. Our appeal to the shareholders and investors of the oil and gas industry to rebuild the industry brick by brick, and stick by stick is the process that we need to keep our focus on. User community development is the first step in that process and one that we would be focused on if we had all our financial resources in hand. Therefore we are technically not wasting any development time by focusing on the development of the user community. So, what are you doing for the next 25 years? Take a look here to see if any of what we are doing interests you.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Friday, November 27, 2015

Third Friday Off


Thursday, November 26, 2015

Thanksgiving!


Wednesday, November 25, 2015

A Leadership Crisis

People, Ideas & Objects continues to look for the future leaders of the oil and gas industry. Those leaders that the user community vision appeals to, and who would be interested in establishing a service provider organization in the new oil and gas industry. It is this new sub-industry of our users and service providers that we are establishing to provide our developers with the input to what systems they want and need in order to manage and lead their oil and gas clients. This new leadership will be the replacement to the current administrative and accounting resources of the producers. And particularly will be the leadership that is provided to deal with the issues and opportunities of the new oil and gas industry. Their leadership will be exercised through the business model that they have control over, through their involvement in the user community and the manner in which the user community has been established.

That is how we propose to deal with things in the future oil and gas industry. What we have today of course is a crisis of leadership. Muddling along has always been acceptable as the business model of the bureaucrats. Taking long stretches of time between profitable periods is what the industry has had to deal with, so they would say. That is certainly what you would need to say when their is no leadership involved. With the same production profile as last year. And the same production profile in natural gas as six years ago. What exactly are bureaucrats doing or going to do about the situation in the industry. Maybe a better question is what is going to happen to cause a leadership change?

Alternatives need to be proposed. Check. We have that in this community. A viable business model and community that only needs financial resources to proceed. What we do know as well is that bureaucrats never change. It is not within their DNA to be capable of the act. Our proposal will transform the industry into a dynamic, innovative, accountable and profitable industry. That is the basis of how we propose to lead the new oil and gas industry. With our value proposition being $45.7 trillion when fully valued over the next 25 years. You would think that bureaucrats who are in a financial crisis would act. It’s only in the oil and gas industry that you can propose to generate this much value and die of starvation.

Peggy Noonan was writing in the Wall Street Journal the other day about “Uncertain Leadership In Perilous Times.” And what caught my eye was the last part of this quotation.

Exactly what is needed now in terms of America’s defense, what is needed to deal with a possible parade of horribles? What might be needed down the road? There is a possible grim short term, and a possible grim long term. Who is thinking all this through? Are they getting the resources they need?

We saw the difficulties that the industry went through in the 1980’s and 1990’s as a result of low oil and gas prices. Systemic overproduction was a phenomenon that was not identified or addressed. It exacerbated the difficulties of the industry and could have been so easily rectified. A long and difficult period that devastated the financial condition of the industry, destroyed the investors confidence and ruined people’s lives who had invested their careers in oil and gas. I was fortunate to have never been laid off during that time, however, the people who remained were permanently changed into risk averse, timid souls. Not what the industry needed but probably the genesis of why the industry hasn’t taken any action. These timid souls have evolved to become the bureaucrats.

What I want to know is where are the resources that Peggy Noonan is stating “Are they getting the resources they need?” People, Ideas & Objects is running short and the transition to a viable going concern needs this support now. We have a job to do, one that has been clear to most people for almost a year now. And I think we can establish the fact that the bureaucrats will never do anything to support us. I am frustrated by the pace of this transition and my present inability to make this transition real.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Tuesday, November 24, 2015

Who's In, Who's Out

I think the big guys, Exxon, Shell, BP and Chevron have decided to sit this one out. They are going to pass on the development of the Preliminary Specification. Which is typical and what should be expected of them. They don’t let the outside world necessarily affect them. They are masters of their own domain. And that is ok from the point of view of our progress. We are focused on the higher level beings who are the ones with the money the producers will come begging for in short order. The investors and bankers that are as overjoyed with the performance of the industry as we are. It is they who we look too to fund the transition from the bureaucratic oil and gas industry to the dynamic, innovative, accountable and profitable one. We speak the same language as those investors and bankers, unlike Exxon, Shell, BP and Chevron.

Has anyone noticed that we’re still producing just as much oil and gas as we did at this time last year? Bureaucrats do not change, it is impossible for them to do so. The typical oil and gas company is configured just like the one that was established in 1932. They use computers today, however, they use computers to feed the people with the work. It should be the other way around. In November 2016 we will see the exact production profile that exists today and the same complaints from the bureaucrats. Another round of layoffs of people’s jobs will be cut for good measure, because we all know that people are the issue.

It is our community of users and their associated firms the service providers, and People, Ideas & Objects software development capability that generates significant monetary differences between our business model and the status quo. Our focus on the user remains our key priority at People, Ideas & Objects. It is the area that we are able to keep our development timelines on track and this project moving forward. If we had our budget secured we would be spending the same time and energy on user community development as we are today. Therefore we are in essence not losing any time in these, what can best be called ambiguous days. I would encourage everyone to read the user community vision and why the user holds such a critical role in the future of the oil and gas industry.

The producers will try to ride this downturn out just as they have done so many times before. Creating losses in this business is just part of the reality of being in the oil and gas industry, so they will say. Where do I invest? Sounds so exciting! Each day the local news has some disheartened individual who has been laid off from the industry and how they’ve had enough. They’re moving on, away from the industry. What these producers don’t seem to understand is that there are alternatives to investing in their firm and there are alternatives to working in oil and gas. Although you might say to the press that you’re making money at $50, your audited financial statements are calling you a liar. But they’ll argue those are sunk costs. And say so in front of the banker and investor that they want to volunteer their money to join that big pile of sunk costs on their balance sheet. This attitude in the face of such a dire financial situation is the delusion at full scale and we are close to that end. You can’t run a business like this in the 21st century. People will move on, jaded by the experience, never to return.

This will be the issue that the industry has to face in the next 10 years. Where to get the capital and who will work for the industry to meet the energy demands of society. People, Ideas & Objects can solve the first part of the difficulties, establishing a business model in which people will invest. The people will return when they see that the industry has the maturity to earn a profit on each producing property each and every year for a good decade, before they’ll even consider working for oil and gas.

And maybe that is the point. The maturity of the industry. You have self interested bureaucrats who lost sight of the purpose and reason for doing what they were doing. And even with the issues staring them in the face, and People, Ideas & Objects barking out a solution, they chose to do nothing. Feathered their nests as the destruction became evident and the problems became too big to solve by their means. And eventually we’ll see them just exit out the backdoor to a retirement where it’s sunny and warm.

People, Ideas & Objects our user community and service providers will provide these oil and gas investors and bankers with a profitable industry through the Preliminary Specification. Where the focus is on providing the producer with the most profitable means of oil and gas operations. It is through our price maker strategy of the decentralized production model that we are able to generate the profits that will enable the producers to fund their own capital investments. Something that a mature industry does. One that doesn’t dilute its shareholders with ever expanding annual share offerings to fund their capital budgets. That is how we will enable the producers to be profitable and earn the funds necessary to maintain their profitable production profile. A completely different attitude and understanding compared to the lunacy and corrupt bureaucracy of today’s industry.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Monday, November 23, 2015

Standing at a Crossroads

That is where we are today in oil and gas. At a crossroads between the past oil and gas industry and the new dynamic, innovative, accountable and profitable industry. I might be selling my book, as they would say, when I say the choice is one or the other. Chose the future and implement the People, Ideas & Objects Preliminary Specification, our user community and service providers. Or stay the course with the status quo bureaucracy. There are many reasons not to want to change to implement such radical surgery to the industry and to each producer. But then there are those commodity prices. I am not of the belief that we have time to debate the point. The industry needs to have a plan that they can show the financial community of how they will operate the industry in a profitable manner. Shale has introduced a new dynamic into the oil and gas industry and as it stands shale is not a commercial venture. And will never be under the current administration, the status quo bureaucracy.

Here we have the situation where the business model has been developed in People, Ideas & Objects. And because it challenges the established bureaucracy in terms of its existence. It remains unresolved in the marketplace. Despite the obliteration of over $700 billion in market capitalization of the top 14 producers, and the potential of trillions of dollars in future oil and gas revenues. The bureaucracy must have its way. I have identified the issue in the marketplace. I have created the solution to that issue in a timely fashion. And you can not imagine the difficulty that I have had in bringing this solution to this point.

There is no respect for the ideas put forward by People, Ideas & Objects in the mind of the bureaucrats. They just don’t care enough about the oil and gas business to give a damn. Remember what I continually say about them hightailing out of here when the heat gets too much to handle. Anyway they’re more than capable of doing everything on their own without the assistance of any outside help. And this is the trend that we see in all industries where the bureaucrats start copper mines in order to have the copper available for the computer chips they’ll manufacture for their employees computers that they also manufacture. The fact is the bureaucrats can’t run the oil and gas business as it stands in 2015. This is evident in the current financial status and future of the industry. It is time for someone to step aside, their ways and means expired in the last century. I think it was 1962. I remember seeing the flash just after sunset.

We need to focus on what we are able to do within the organizations that we establish. An oil and gas producer with the competitive advantages of their earth science and engineering capabilities, and land and asset base have a large domain to cover. Providing the oil and gas producer with the most profitable means of oil and gas operations is also a broad scope. However review of the Preliminary Specification shows that we are establishing a sub-industry to deal with the scope and scale of the competitive advantages that we are undertaking. No producer today would set out to differentiate their offering on the basis of a more effective administrative and accounting capability! It is therefore the wise thing for them to offload from their domain of capabilities and leave the administration and accounting to someone who can compete based on an enhanced competitive advantage. One such as specialization, the division of labor, automation, having the computers work for us and innovation based on administrative and accounting expertise. Add to this the software development capabilities of People, Ideas & Objects and you have a dynamic capability in the business model of the oil and gas industry. So that when things change, the industry will change. No more muddling along waiting for things to inevitably change to a positive situation.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Friday, November 20, 2015

The Walking Dead

Time is wasting. Industry has little time in which to present a plan to its investors and bankers on how it will proceed with a viable business model. Everyone can see that this situation is not workable. Are we just going to muddle along for year after year in this malaise? No, we are not. We are going to continue until such time as the cash runs out. At the rate of cash burn today, and the limited resources of the industry, all but the integrateds will be out of business in six months. Action therefore is needed to be taken within the next six months to do one of two things. Come up with a plan. After all McKinsey doesn’t have one. The chance that you can develop a viable plan in six months, what took me 25 years, is next to impossible. Or you need to subscribe, quickly, to the Preliminary Specification, our user community and service providers. Then, one way or the other, you will be able to present a viable plan to the investors and bankers on how the industry will get itself out of this mess and rebuilt as a viable going concern. If the bureaucrats didn’t believe that the Preliminary Specification was a viable plan, then why did they hire McKinsey to copy it?

The full $6 billion for software development is required upfront. So much harmony and trust has been built up between the bureaucrats and People, Ideas & Objects over the past ten years. That I’m not going to undertake the development of this system without the funds upfront. I don’t need bureaucrats being distracted by some shiney object halfway through and cutting our funding. Or doing that just to show it’s unworkable. I’d be a fool to proceed on that basis. If I rely on the producer's goodwill that they will provide the money down the road, they also may not be there. Therefore the full budget is necessary to be provided before any software development work is done.

It used to be that I thought if a company took a hit to their stock from a single “event.” Where the impact of that “event” on the company's stock was in the range of greater than 50% of the market capitalization. Then that company was the walking dead. The ability to recover would require that the “event” be identified as being a significant occurrence to the history of the firm. And dramatic remedial steps taken to rehabilitate the company. I have only seen Apple return from this type of “event.” Oil and gas producers are in the situation where approximately 75% of them have achieved this milestone. What we therefore have is an industry that is the walking dead. I can’t recall this occurring in any industry outside of a financial crisis. This “event” is evidence that the industry is operationally incapable and there is no faith in the management of the industry.

We can sit around and debate the controversial aspects of my words but the industry doesn’t have that time. It needs to act by funding our budget. And slowly earn their credibility with the investment and banking community by purging those responsible for this crisis.

Or maybe I’m being too melodramatic. A distinct possibility. It takes a lot of effort to motivate a bureaucrat to act. Usually the self interest of their financial position is what works. However they know the writing's on the wall, and it has been on the wall for many years, and they are the odd man out in this 21st century way of working. They have put up the good fight against People, Ideas & Objects. Thrown the resources and value of the oil and gas industry into the garbage can for their own self interest over these past ten years. Expecting them to respond to this “event” is not going to happen. Their expectation was to exit when the heat became unbearable, that's what bureaucrats do. Cut and run. I hope I’m not the only one waiting for someone else to act.

I’m probably the worse person in the world to determine the timing of all these changes. Too invested in change. But at what point do we act? Just as the frog is sitting in the slowly heating skillet, it’s in industry's best interest to jump sooner rather than later.

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Thursday, November 19, 2015

Shale is Viable

One of the falsehoods that the bureaucrats have been hiding behind is their bloated balance sheets of the producer firms. People, Ideas & Objects have been hammering on the oversized balance sheets for a number of years and have taken significant flak from the bureaucrats, with the requisite number of giggles. If I lined up all the bureaucrats that laughed at me in the past ten years I could walk across the pacific. What they are finding here today, in this wonderful financial environment that they’ve created, is that their balance sheets, the things they thought were so magnificent and significant, are really quite useless. And in most cases, with the large asset write downs that some producers are getting out of the way before the big rush at year end, turning out to be the proof that the past decade has been a complete waste of time and money in terms of their administrations. Who would've thought something like this would have happened? Giggle.

The phenomenon of the bloated balance sheets has shown that the bureaucrats have obtained the same characteristics of each and every twelve year old girl. They can spend money. If you take the “profits” that they may have reported in the past ten years and look at the size of the write downs that are to be taken for fiscal 2015 they come to a handsome negative number. If you take the current working capital of the industry, outside of the integrated producers, you have a handsome negative number. This does not mean that the past ten years have been for nothing. There are the many handsome cabins and boats that the bureaucrats have. And an assortment of other luxuries. The fact of the matter is the losses that are being realized on the current production, I am talking about the gross margins of the business, another handsome number that is negative, there is nothing of value that is or has been generated in this business.

What good did bloated balance sheets ever provide any producer? Evidence of the ability to spend money. Check. The evaluation of the bureaucrats performance is what accounting is all about. In oil and gas it has become fashionable not to consider “your sunk costs.” It is this thinking that has lead to the overproduction problem. If everyone is evaluated only on the gross margin of the business then everyone is going to rush in to invest. Overinvestment and overspending lead to overproduction. In the past ten years no one has considered the costs of the capital that went into exploration and development because those were “sunk costs.” Making an evaluation on this basis is what a fool would do. What the producers did on top of this foolish behaviour is they capitalized everything that moved. Generally 80% of the overhead of the producers General & Administrative costs are also capitalized. PennWest even tried to capitalize its royalties. Which shows the systemic desire to capitalize as much as possible.

The appropriate position or attitude would be / is to remove these capital costs from the balance sheet and have them hit the income statement as quickly as possible. Evaluate the performance of the management on a reasonable, going concern basis. That way the performance can be evaluated appropriately and the future decisions made on the basis of actual performance. Oil and gas producers have been reporting bloated profits because they never accounted for the cost of capital by leaving all of these costs on the balance sheets. The limit to the amount that they could record as assets was, and is, the sum total of all of their reserves times the current oil and gas price. Which is the sum total of all future revenues! Ludicrous. As it stands today with the write downs that are being realized in the industry. The balance sheets will still be bloated because they will still represent the sum of all of the reserves times the current oil and gas prices. Ludicrous, or did I say that. The fact of the matter is the sum total of the value of the entire industry is south of zero. It loses money therefore you’d have to pay to get rid of it.

If producers realized the costs of the capital assets on a reasonable performance basis, these capital costs would be replaced on the balance sheet by other asset types. Asset types that include cash, accounts receivable, short term investments and other working capital items. That is because they would have had to sell their products for a profit, which generates cash. All that the industry has done in the past ten years is subsidize the consumer of oil and gas by fleecing the investor.

This hasn’t been a business since the 1970’s when the SEC approved Full Cost accounting. This is the net result of that decision, financial armageddon and systemic overproduction. In defence of the SEC they define the outer limits of what is acceptable. The auditors should have said that it is unnecessary for the entire industry to push the outer edge every year. Pick and choose your own culprit from these three groups.

What the Preliminary Specification, our user community and the service providers provide the oil and gas industry today is a go forward basis in which to operate the industry. One that is reasonable and evaluates the performance of the producer in an effective manner. Without the People, Ideas & Objects and our associated communities the oil and gas industry will continue on in this spending exercise with the same discipline as any twelve year old girl. Shale can be profitable, but only with our system in place. The industry therefore has to choose, and quickly, because in six months they will otherwise be out of business. Do they have a sustainable plan to operate the industry on a go forward basis? With the Preliminary Specification, our user community and service providers that’s a definite yes. But they’ll need to decide, and soon. If they don’t have a plan in place in six months, fill in your own blank here...

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here

Wednesday, November 18, 2015

Some More Cold Hard Facts

It is the user’s, our service providers and our developers who provide the oil and gas producers with the most profitable means of oil and gas operations. It may be altruistic to state this, however I see it as a clear division of labor. Producers will find and produce oil and gas. And we will make the producers profitable. Without us, there is this, this malaise and bankrupt style of operation that has been going on in natural gas for six years and in oil for the past year. Maybe bureaucrats will figure out what to do. I’m banking on the fact that bureaucrats have never been able to change their stripes, like a Tiger it fails every time. I expect them to hightail it out of their positions when the heat gets too much for them to handle. That is their history, look it up in the history books. Creative destruction is the process that is well under way in oil and gas. If producers don’t have a viable plan in place by the time they run out of money, about six months for most producers, then their toast.

So it's goodbye bureaucrats, hello users and service providers. We’ll be taking over soon, as soon as we build our organizations and applications. Before we can do that however we need to secure our budget. You would think with the state of affairs that we would be able to do that! No, bureaucrats are stubborn people. It's not their money their burning by incurring these losses and it's not their profits that are in jeopardy in the future.

I also expect that when we get to the point where we take over from the bureaucrats. They haven’t trashed the place like some adolescent punk rockers. I expect the place to be clean and neat, the floor swept and mopped, the garbage taken out and the place in as good of shape as is possible. The bureaucrats are failing in their responsibility to appropriately manage the business, that doesn’t mean that they can just trash the place and leave a mess behind for us to clean up.

I’ve heard a number of times now that what the industry needs is a vision of how to deal with the difficulties that it's in. And it has one in the Preliminary Specification. If that is inadequate then you can start the process and end up with a workable model in about 25 years. I wish you luck and hope you enjoy the ride. It truly is an adventure. I think that whoever invented copyright law was a genius of the highest order. But that’s besides the point. In addition to leaving the place in good condition once the bureaucrats leave I expect even more from the producers. Let's assume after all the noise and argument, the People, Ideas & Objects Preliminary Specification fails. I’m sitting on an island in the pacific drinking pina coladas having the time of my life. With the configuration of the budget I can guarantee that. The question that needs to be asked is what will the producers do then. It is this opportunity that they have today, the Preliminary Specification, user community and service providers that the producers need to be involved in. Don’t expect one individual to be the solution to all of the difficulties. I’ve done my hard work, the producers hard work is to come.

And that hard work will be working with our user community participants and detailing what it is you need in your producer organizations now and in the future. Don’t expect someone to walk up and provide you with a custom tailored suit without ever seeing you. The producers direct participation with our user community, the only manner that you have to deal with your needs, is the key to the success of your organization in the future and the success of People, Ideas & Objects Preliminary Specification.

This is the structure of how successful systems are developed, and how successful organizations are managed in the 21st century. The producers have trillions of dollars on the line here. If they expect someone else to deliver the solution to them. A solution that meets their unique organizational needs and delivers that value without their input. Then I have some property in Florida that I’d like to sell you.

The only thing worth owning here in the 21st century is Intellectual Property, or a license to Intellectual Property or working for someone who has Intellectual Property or a license. It’s not enough to own the oil and gas asset anymore. You have to own the oil and gas asset and have access to the software and user community that makes the oil and gas asset profitable. Now and in the future. This is the new reality and the source of the difficulties that I have had in delivering People, Ideas & Objects to the marketplace. The bureaucrats could ignore me before, but now they can’t because they messed it up so bad. Now the search for a vision usually takes what is available in the marketplace. Anybody see any other viable business models floating around?

The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here