Friday, December 08, 2017

Holiday Schedule

I've decided to move forward by one week the time that I take off for Christmas. I'll be returning on January 15, 2018. Merry Christmas everyone.

Thursday, December 07, 2017

Two More Days

Can't' shake this flu / cold.

Wednesday, December 06, 2017

It's Just Not Working Is It

I am yet to see any evidence of the oil and gas investors buying the renewed profitability and discipline story being parroted by the producers. Since the third quarter there doesn’t appear to have been any change in the mindset of investors wanting to participate in the industry. It’s not that the investors don’t believe the producers renewed talking points, regarding profitability and discipline. Its that they would like to see some concrete actions in that direction. The other glaring aspect of the producer's business that frustrate the investors is the inability to address the commercialization of shale. Is shale a viable business? As it stands today it’s not, and the producers won’t address this point. Promoting the upside of shale is easy, everyone understands there’s lots of it. What investors want to know is how can they make money?

People, Ideas & Objects focus on profits has been discussed from the point of view of the investor on this blog. However, if you read the Preliminary Specification it is society in general that we are seeking to build value for. If the investors are satisfied with the profits they’re earning from the oil and gas industry it would be reasonable to assume that all elements of society would be satisfied too. And the counter argument is certainly valid today. The only ones benefiting from the current downturn are the bureaucrats. Their fine and appreciate your concern. The people who work in oil and gas, the people who work in the service industry, the service industry vendors, the royalty holders, the governments that collect the taxes on profits, the people who will need to work in oil and gas in the future and the overall prosperity usually associated with a healthy oil and gas industry in the communities where they operate have all suffered substantially for many years now. If the investors were satisfied these people would not be living such miserable lives and our focus on the investors is more representative of how the system works then it does on one specific group at the expense of all the others.

People, Ideas & Objects plans for 2018 continue to gain focus over these last few months. Our plans seeking to source our financial needs through the issuance of an Initial Coin Offering (ICO) remain fluid however. What was clear on September 26, 2017 was the bureaucrats had no interest in developing the Preliminary Specification. These bureaucrats are too conflicted to do what’s in the best interests of everyone else. Our pursuit of the producers as a source of revenues ceased at that time and we are proceeding with our alternative plans. These include appealing to the oil and gas investor, our user community and others to participate in our ICO. The extrinsic value of our coin will be the differential between the commodity prices realized today and those prices that will be realized through use of the Preliminary Specifications software when operational. Value that the producers have proven to be uninterested in and otherwise available for the taking.

The Preliminary Specification is now four years old and more valid than at any time before. Proving its business model is appropriate for the oil and gas industry. Not only is the Preliminary Specification still valid but the bureaucracy is still failing at a substantial pace. The test of time is a strong advocate for the work that People, Ideas & Objects are doing. And should provide strong support to the oil and gas community at large in terms of continuing to provide that value. The issue for the bureaucracy is they just can’t make the changes to the business model in the Preliminary Specification without the software being developed first. Any attempt by them to only produce profitable properties will only keep all of their properties producing because they have no means of assessing profitability on a property by property basis. Their overheads are all corporate and fixed, whereas the Preliminary Specifications overheads are charged to the property and variable. Therefore the property will always record at least miniscule profits when you capitalize all of the costs under the sun, including on average 80% of overhead, recognize that capital over a 27 year period in some cases and not recognize any of the costs of Houston, Dallas, Oklahoma or Calgary and their overheads. What property wouldn’t make a “profit” in that case?

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 05, 2017

Parallels to the Industrial Revolution

I read an interesting analysis regarding the lead up to the industrial revolution that may have direct application to the Information Technology revolution that we seem to be going through. It was from  voxeu.org  and I recommend everyone have a look at the article in order to appreciate the implications in today’s marketplace. Although it could be argued that the IT revolution has provided much promise, outside of automated emoji’s and Facebook we have gained very little. I think this article addresses that point with a discussion of the proceeding years and their impact on society that in essence enabled the industrial revolution to begin. It would be my opinion that many of these foundational aspects of the industrial revolution are currently missing in the IT revolution. Which might be the cause of its poor uptake.

What the article states is that in 1534 Henry VIII had a spat with the Pope and broke off from the Catholic Church. Henry then acquired the taxes that were being forwarded to the Catholic Church for his own purposes and when that was not enough, seized the land of the monasteries in England. This turned out to be approximately ⅓ of all of the land in England and when the administration of such was too much, Henry decided to sell the land. The articles authors hypothesis that the creation of these land markets “can be linked to local differences in subsequent development and, ultimately, industrialisation.” Fostering the entrepreneurial spirit. The authors conclusion is as follows.

The Dissolution created a land market and started the modernisation of land tenure relationships. This led to division of labour, innovation, greater productivity, rationalisation of property rights, and changes in social structure. Ultimately, these factors coalesced into industrialisation in those places where the monasteries held lands centuries before the Industrial Revolution. The institutional change driven by the Dissolution is a more important driver of local industrialisation than commonly used explanations – such as local abundance of coal.

My argument would be consistent with today’s bureaucracy having the same effect on development as the Pope did in 1534. Although we have no need to dump the Catholic Church we should dump the bureaucracy as I’ve described in the Preliminary Specification. The development of markets is the impediment to the full development of the Information Technology revolution. To People, Ideas & Objects the now mature Information Technologies are lying dormant as a result of the bureaucrats unwillingness to let go of the past. The implementation of the Preliminary Specification would establish within the industry and producers the use of the Joint Operating Committee as the key organizational construct. It would also provide the Resource, Petroleum Lease and Financial Marketplace modules. In the administrative and accounting areas markets would be established for the user community and, most importantly of all, the service providers, the means in which we can provide oil and gas producers with the most profitable means of oil and gas operations.

People are locked up in their cubicles and offices unable to exercise their entrepreneurial spirit. Constrained by their lifestyle and the ease that the bureaucracy provides for that. But also itching to want to do something more than count the days. They too can see the IT resources developing around them and understand the impact they could have if they could only… Such is the nature of work today. People need to see these markets forming in a somewhat concrete manner in order to make the transition. The real impetus to change will be the investment capital resources have to lead. That is their role in society and although withholding capital from the producers is the first phase of these changes. We need them to transition to the second phase and begin to support these markets and methods of organization that will provide them with real value in the long run.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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, December 04, 2017

Energy Independence in North America

Energy independence in North America is the objective that everyone can agree on. It is understood by most everyone to be a win, win, win situation for society. With the development of shale based reserves this objective isn’t just a dream but a highly desired and obtainable possibility. What this post will detail is the means in which energy independence is proposed to be obtained by both the current administration and People, Ideas & Objects Preliminary Specification.

The Preliminary Specification reorganizes the producer and industry to accommodate variable production volumes. This is done so that producers can ensure that they only ever produce from profitable properties. Unprofitable properties are shut-in until such time as innovations can be found to reduce costs, increase production or enhance the reserves. This is enabled through our decentralized production model and its price maker strategy. Which seeks to match costs more accurately with the revenues that are generated. Under the Preliminary Specification any shut-in properties will incur a null operation, no profit but also no loss. This is done as all of the costs of the producers are converted into variable costs based on production.

This conversion of all of the producers costs into variable costs is through the reorganization of the producer and industry. By moving the administrative and accounting resources of the producers to individual service providers that are focused and specialized on one individual process. Where each service provider has the entire industry as their client base. Then processing of their administrative or accounting process is completed and the associated overhead fees of the service provider are charged directly to the Joint Operating Committee. If there is no production for the month then nothing will be processed for that property through our task and transfer network and the service provider will not be conducting any work or charging the Joint Operating Committee any of the fees for their service. This has moved the burden of cost control in the area of administration and accounting from the producer firm to the service providers themselves. In which they will be able to budget and plan on an annual basis for the contingency that they may have upwards of 15% of their revenues decline due to the volume of industry wide shut-in production.

Establishing all of the industries production on the basis of earning a profit will substantially enhance the profitability of each producer. No longer will they be diluted by the unprofitable properties that continue to be produced in today’s current environment. The reserves that would otherwise have been produced unprofitably can therefore be saved for a time when they can be produced profitably. Reducing the cost of the remaining reserves by not adding each year's incremental losses to the costs of the reserves. Forcing the property to recover the chronic losses in subsequent years. And most importantly, the commodity markets will be able to find the marginal cost of those commodities and enhance the profitability of the industry through higher commodity prices.

By establishing the industry on the basis of profitable operations oil and gas can be managed as a mature industry. The belief that growth in the industry is the objective may have been an appropriate posture in the 1940’s. Today it is time that the industry began to perform from a financial perspective. It has used the investors money in the past four decades to subsidize the consumers of energy. The amount of the consumer subsidy being equal to the outsized property, plant and equipment accounts that the bureaucrats cherish so much. These account balances are nothing more than the unrecognized capital costs associated with past production. These capital balances should have been repeatedly turned over to generate the cash to operate the business. Instead the investment remains dormant for up to 27 years in property, plant and equipment while the producers continually issue new stock offerings to spend and build their capital asset balances ever higher. Oil and gas hasn’t been a business, it’s an engineering and geological science experiment.

Once the Preliminary Specification has established the industry on a profitable footing then the deliverability can be increased profitably in order to attain the objective of energy independence in North America. Producers today are just waiting for the investors to return. The Investors that went on strike when they finally learned what their role in the industry was. Just as soon as producers can begin issuing more stock the quicker energy independence will be achieved. That investors maybe on the hook for many trillions of further investment, which would glow radioactive in the property, plant and equipment accounts for the next few decades, has to be encouraging. After oil and gas experienced an existential threat over the last decade. And the only actions of the bureaucrats during this time appears to have been a recent “striking up of the band” for another round of the same. What investor doesn’t want to be part of that energy independence in North America shindig!

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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, December 01, 2017

Manic Times

Today we hit the high water mark in terms of the manic - depressive cycle that North American producers have put themselves on. With a fresh extension of the OPEC agreement, prices close to $60 / bbl, things haven’t looked so good in the industry for years. Ever get that feeling of deja vu all over again. Buoyed by a compliant and cheerleading media the producers have world dominance at their fingertips. There’s just nothing that can’t be done by them. Their costs are down and they’ve learned to believe in profits which is what they believe their investors are asking for. From my point of view there is only one major difficulty. It’s not working.

The nature of this overproduction and oversupply issue is not something that can be ignored and assumed to fade as OPEC clears up any global inventory overhang and consumers demand more energy. There will always be consumers and there will always be inventories. There will also always be the other shale producers who are responsible for the overproduction. Each and every producer will ensure anyone that will listen that they are not the source of the overproduction issue. Each of the North American producers believe they have it within their domain to control themselves. Clearly they don’t, they need the cash.

What surprises me is the number of producers who have stated that their costs have been reduced. Nothing could be more incorrect. Almost all of the producers have increased the number of years in which they are depleting their property, plant and equipment accounts. Increasing the number of years by 30% since the end of 2016 for our sample of 23 producers. That will make an impact on the income statement and the appearance of reduced costs, and higher profits however this is accounting shenanigans. The probability that any of the producers actually reduced their historical costs is zero. Once you pay $1 to drill and complete a well that is what it costs. Any attempts to reduce the costs in the current period would have to be fraudulent. You can’t change historical facts. It is possible that the field operations are more refined and downhole work more efficient which has brought about some cost reductions. These would only apply to the current work in progress which may account for all of 5% of the producers properties.

Which brings up the rationale of why are the high cost North American producers crowding out the low cost OPEC producers? The logic doesn’t exist for this to continue in a market economy and it is therefore reasonable to assume that OPEC won’t be the one to always withhold production. Shale producers are proving to be resilient in terms of production growth and for lack of a better word aggressive in terms of their entitlement to first priority in the marketplace. Can this continue? What if the belief is true that the Saudi’s are only playing nice for now until they complete their Saudi Aramco IPO. Then once that’s complete they can sell their production at whatever price the market provides. Understanding that the overabundance of oil over the next 50 years will only provide for the lowest cost producers. Will the cooperation being expressed by the North American producers towards who is entitled to produce now earn them a seat at the table tomorrow when low cost producers are just looking for revenues?

The Saudi oil minister said after yesterday’s meeting that finding equilibrium in oil markets will take another two to three years. A sober reflection of the issue at hand. Contrast this with the attitude of the North American producers who appear hell bent on world domination. I think it is a clear reflection of the desperate financial position that they’ve put themselves in. Their outlook is towards the next payroll and to sell as much production as they can. The business of the oil and gas business doesn’t concern them. They can produce unprofitable production at investor expense for ever. That is just as soon as the investor's return.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 30, 2017

Differing IT Strategies

I read a comment the other day regarding how the oil and gas industry might solve its Information Technology related issues. The point being asked was, would there be a large solution like People, Ideas & Objects in the marketplace or a continuation of what I would call the ad-hoc approach of today? I found the argument they put forward was interesting in that it seemed to be attempting to refute what was becoming the consensus in the industry, that the large solution was the answer. Whether this is just me being optimistic or there is that consensus building is unknown to me. These are the thoughts that I have about this topic and why we need a comprehensive solution like what People, Ideas & Objects have proposed in the Preliminary Specification.

The first point that I would make in our argument is that People, Ideas & Objects are not the comprehensive, “big-bang” style of solution that it may be perceived of initially. If we look at the user community and their related service provider organizations these are fully independent organizations that are specializing in their particular area of the industry. The Preliminary Specification is using specialization and the division of labor to expand the throughput of the industry. This can’t be done in a centralized fashion, only a decentralized market can approach the type of scope and scale that the oil and gas industry presents. We believe that too much reliance is placed on each producer to develop the accounting, administrative and IT capabilities within each producer. That these capabilities are redundantly replicated within each oil and gas producer and are therefore unshared and unshareable. They are certainly not core to the producers competitive advantage. Therefore having each producer building these requisite capabilities to meet these demands and each one of these producers capabilities being redundant in terms of building the overall capabilities for the industry, is one of the key reasons for the lack of profitability in the industry.

People, Ideas & Objects are dedicated ERP software developers providing the Preliminary Specifications development. Providing a change based software development capability to the oil and gas industry. One that will accommodate the needs of the industry as it develops in the future. This capability is wholly missing from the marketplace at this time. There are a number of ERP systems providers and many developers working on these applications within the producers and within other software vendors. The industry has however fallen into a situation where it is leaderless and directionless. Software occupies a much larger role in our lives than we probably recognize. To leave the future of the industry in the hands of a disparate marketplace without leadership and without direction will only leave us with the same issues. I have believed for many years that there is only one type of business. That being the software business. Anyone who thinks otherwise is quickly going out of business. In oil and gas it’s not enough to own the oil and gas asset, it's also necessary to have access to the software that makes the oil and gas asset profitable.

The question becomes how much financial damage have the producers and industry sustained? What are the prospects that these can be resolved and overcome with the industry moving forward with a dynamic, innovative, accountable and profitable future for all? The media would have us believe that the shale producers have OPEC on the run. The only missing element of that vision is the continual fresh injections of your cash into the shale producers. I see the financial consequences of these issues for the producers for the past decade as permanent and terminal. There is no coming back from this for the current producers. Are we to feebly limp along as a damaged and destroyed industry that makes its best efforts? Or should we take control of the development and management of software that is proving to be such a critical element in our society today and realize the full potential that exists for these next 25 years. The answer to this question I think is the same as the answer to the question that we began with here today. Is the solution to the industries IT needs a large solution like People, Ideas & Objects or a continuation of the ad-hoc approach we’ve seen for the past 40 years.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 29, 2017

Markets

During our research phase one of the topics that we spent significant amounts of time on was the study of markets. This was primarily through the work of Professor Richard Langlois and several other prominent researchers. Review of our work in this area can be sourced from here and here. The important question that we needed to ask was; if producers were too bureaucratic and inefficient today, what organizational method would facilitate a more dynamic, innovative, accountable and profitable oil and gas producer and industry. The answer of course was the use of markets in allocating resources, developing capabilities and organizing the industry. Only then could the performance trajectory of the industry begin to be addressed and we begin to move away from the constraints of our current organizational issues. Therefore for the oil and gas industry to change its future prospects it must change its organizational methodology.

Within the Preliminary Specification there is a decided move toward markets. First we establish the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable producer. Align the compliance and governance frameworks of the hierarchy with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee to achieve a speed, innovativeness and accountability that is unobtainable in the current organizations. Then by establishing the Resource Marketplace, Financial Marketplace and Petroleum Lease Marketplace modules as part of the Preliminary Specification we have the software to define and support these frameworks and markets.

We then take the concept of markets one step further by establishing the marketplace of our user community that defines the software that is developed by People, Ideas & Objects developers. For all intents and purposes this is a stand alone market established for providing the quality software that the oil and gas industry needs. In addition we have established a market for service providers who will provide the administration and accounting services to the producers in connection with our software.

Without these structural changes to the producers and the industry then no change will occur to the behaviors that we see today. And particularly in this day and age where we are so dependent on software to define and support our organization's, changes must be planned and implemented in the software before the changes can take place in the organization. We see a number of businesses today believe they can make the transition from one business model to another when the time comes. Yet I have never seen it happen in real life outside of the forces of creative destruction. You have two seemingly opposing objectives of growth and profits. Where profits are foregone at the expense of growth. This was the model used by the oil and gas producers. It is the model that is currently being employed by Amazon and Tesla. Amazon has made such little money in its lifetime that it’s strategy of being everything to everyone will only fail as that strategy has failed so many times before. And Tesla has proven itself, like oil and gas to have great technology, no profits and no cash. Elon Musk has also displayed the propensity to spend money like only oil and gas producers can.These organizations can not now just hit a switch, say they’re going to make the change from growth to profits, as the producers are parroting today, and transition to a profitable organization. It has to be built from the ground up, brick by brick and stick by stick. Like Apple who have experienced phenomenal, substantial and real profitable growth throughout its second life.

Creative destruction has always been the force in which People, Ideas & Objects implemented these changes. Today the financial performance and structure of the industry is in desperate condition. Producers believe that their well defended balance sheets with large balances of property, plant and equipment reflect value. It is an illusion. These are the unrecognized capital costs of past production and are supported by equally bloated share distributions and debts. Who wants to invest in an unprofitable, spendthrift operation that forces you to dilute your interest to a negligible value at closing? The revenue of these firms barely cover the cash costs of production as the industry experiences a cash crisis like no other. The transition to markets will begin soon as the status quo becomes untenable even to its current cheerleaders. This is creative destructions finest hour and the beginning of a markets based approach to oil and gas.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 28, 2017

Like an Ostrich, With It's Head in the Sand

Although it’s a myth that Ostriches stick their head in the sand when confronted by a predator. For our purposes here we can draw the parallel of the producers with their heads in the frac sand. Unable, or most probably unwilling, to comprehend the business that they operate extending beyond the well bore. Critical review of the third quarter financial statements of the producers should have embarrassed those that are responsible. There is a tragedy unfolding and they’re oblivious to it and their involvement in it. All that we’ve heard from the media and PR departments is how comprehensive the producer's control over the science and technology of the oil and gas shale operation. And that in the face of chronic, unprofitable, full production, everywhere and always, that markets will rebalance.

In business you have to be tough and be able to fight. When you get knocked down you pick yourself up and get moving again. Over and over, year after year. Resiliency is a characteristic that ensures you’ll be back another day. Success is the only objective and that can only be measured in profits. For the past fourteen years I’ve detailed the deficiencies in the oil and gas producers business model and offered an alternate solution to those issues. Although initially times were good in oil and gas and the Preliminary Specification was easily ignored. The problems began soon after the 2008 financial crisis. Natural gas prices declined in early 2009. Oil prices followed in 2014. Nothing has been done to remediate these issues while the producers have spiraled downward in their capabilities and capacities. Today with no support from their investors and bankers they pretend that they’re viable going concerns because their field operations continue to attain great scientific and operational performance. The problem they don’t see is that they’re in desperate financial condition with little time to deal with significant issues and currently have no alternatives in which to deal with them. Resiliency therefore is not a characteristic of the oil and gas producer.

Commodity prices have responded well to the OPEC production sharing agreement. What we can determine from their actions is that the commodities of oil and gas follow the characteristics of price makers. Removing 1.8 million barrels per day has effectively doubled the price of oil. A small sacrifice enabling everyone to win. The difficulty with the production sharing agreement is the method is bureaucratic and uneconomic. What is needed is a more reasonable methodology of production allocation that would preclude the need for any agreement, include the North American producer and be fair and equitable. People, Ideas & Objects propose the only fair and equitable method of production allocation. Where only profitable production is produced.

This reasonable business approach to the oil and gas business. To only produce what is profitable is considered to be collusion by the bureaucrats in power. What I think we can now prove is that in both the oil and gas commodities North American producers, for whatever reason, are colluding to keep prices down. Why any business would do this and incur the kind of financial losses and damage that oil and gas has experienced is an interesting situation that I think we’ve never seen in business before. Our efforts to convince them to make the changes to improve their businesses have been met with nothing but violent resistance. An undying, misguided faith in the myth of “market rebalancing” providing the cover story for their inaction.

With an overall increase of 12% in the price of oil during the third quarter of 2017 producers anticipated good times. However in the second quarter our sample of 23 producers reported $6.33 billion and in the third quarter reported $7.83 billion. A $1.5 billion increase in suspect accounting profits for the three months. Clearly 12% isn’t going to be adequate to solve the issues of the day. Our calculations show producers need close to $150 / bbl in order to deal with the financial damage they’ve incurred and be profitable in the current environment. The question then that needs to be asked is, what is it that they’re doing?

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 27, 2017

Maybe the Investors Will be Happy

Bloomberg’s Alix Steel was interviewing Conoco’s Chairman and CEO Ryan Lance on the floor of the New York Stock Exchange. During the interview he stated the following.

If you asked me to be a betting man today and I had to average the price over the next five or six years, we’re not making bets on a higher price. I think if you need that higher price to bail out your business model, you’re going to be really disappointed.

I think Mr. Lance is mistaken about the purpose of our business model, the Preliminary Specification, with its price maker strategy. We are not focused on raising prices we are focused on producers earning real profits. If the property can earn a real profit considering all of the actual costs of exploration and production, based on a reasonable accounting then that property will produce. If it can’t generate a real profit then it is shut-in until such time that it can. What is it that the oil and gas industry is doing? Diluting their profitable properties with unprofitable production is a fool's game. If you shut-in your unprofitable properties, your profits would increase. It’s also true that commodity prices would rise however that would then stop the investment community from subsidizing the consumer for their energy needs.

Several years ago investors and bankers abandoned Mr. Lane’s “business model” due to its misguided adventures in destroying their capital and not charging enough for their products. None of the producers have ever made any money if you consider that the capital costs of past production are glaring at everyone in the property, plant and equipment account. In Mr. Lane’s case he’ll be depleting Conoco’s $47 billion in assets over the next 9 years. Why? Are your investors that patient that they can wait for that capital to be returned to the company for reuse? It’s a capital intensive business, doesn’t that impute that capital should be reused again and again or is it as these producers suggest that capital is used just once in the lifetime of the business? And what about Conoco’s $2.4 billion in losses so far in 2017? I know, profits don’t matter in oil and gas. It's how efficiently you inject the sand into the formation during the frac that makes the difference.

Although $1.5 billion in third quarter earnings may be satisfactory to the likes of the oil and gas producers. It’s a poor performance when you consider that property, plant and equipment totals $478 billion for our sample of 23 producers. Though earning 1.25% annual profits on conspicuous accounting would be a big step up from last year. Cash continues to bleed from these producers at a rapid pace. Without the annual injection from investors of free money to spend, and the business not performing as a business, because we’ve determined it to be a consumer subsidy, I’ll accept Mr. Lane’s criticism of the Preliminary Specification. Recall too that producers claimed that they’re profitable at as little as $30 and prayed for $50 oil to return. These profits and the hemorrhaging of cash show that even with the prices that they prayed for, and the deferral of the recognition of their capital costs for decades to property, plant and equipment, the bath tub that is oil and gas continues to drain at a remarkable rate.

The fact of the matter is that any producer will say anything on any specific day. Today it’s profit’s over production, tomorrow they’ll say they're committed to energy independence. There is no plan other than to drill and complete that next well. The entire focus of the organization is on the technical aspects of oil and gas exploration and production. Thinking that the business end of the business will take care of itself. The problem with that is there is a crisis undergoing in the business of the oil and gas business and no one is paying attention or listening to what others might be saying.

We learned last week that crude oil production reached 9.66 million barrels per day. This being the highest point of oil production in the shale era. It’s a good thing that producers are focusing on profits and not production, so they claim, otherwise who knows how high this number would have been. The issue is that there is no control whatsoever over the volume of oil that a producer will produce. It is full production everywhere and always. I’ve completed my review of the third quarter reports of our sample of 23 producers. With a 12% increase in the price of oil much was expected from these producers. I’m afraid that we’re not in the position, as an industry, to continue on in the manner that this industry is proceeding.

These comments from the CEO of Conoco, and comments from others are evidence of one thing, in my opinion. The producers are not enamoured with our free money strategy. That we are proceeding with our developments without their involvements is not something that we could have contemplated earlier or what they would have considered possible. Our coin offering will create one of the producers largest costs in the future of the industry. A cost that is incurred in providing them with “real” profitable operations. Something that they’re unwilling and incapable of accepting as necessary. That the Preliminary Specifications price maker strategy is openly criticized now is good news for us.

What the third quarter reports show is that the trend in which the decline in producers performance and financial health has continued unabated. No remedial action can be seen on any of the producer's behalf regarding any aspect of their organizations. These third quarter reports also provide evidence that their investors still believe that shale is, and never will be commercial. Action on part of the producers is what the investors have been waiting for. People, Ideas & Objects provided an alternative for producers but we have chosen to build our software with our free money strategy. Oil and gas investors were previously only on strike, now they know producers haven’t done anything, and most importantly, now can’t do anything. It sounds to me like action by those investors is necessary and probable.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 24, 2017

Thursday, November 23, 2017

Thanksgiving

No Posting Today

Monday, November 20, 2017

Still Under the Weather

Need a few more days to heal.

Monday, November 13, 2017

Friday, November 10, 2017

Thursday, November 09, 2017

Bright, Shiney Object

Successful implementation of shale technologies in China and Argentina are the news of the day. Other areas of the world such as Africa are also pursuing the technology. There is little in the way of each country accessing these technologies to develop their shale reserves. The United States holds 17% of the world's shale reservoirs. Just the initial phase of the implementation of the technology has had the effect of destroying the global oil and gas commodity prices and the financial health of the North American producers. The real question to ask is what will be Saudi Arabia’s strategy when the world is awash in shale based production. Will they continue to forgo their low cost production in order to support a price that somewhat covers the high costs of shale? Or will they, as it is suspected, soon after their IPO of Saudi Aramco, just produce their low cost fields for whatever price they can and at least obtain some value from them? Leaving the price issue in the hands of the shale producers. What then is the logical strategy for each side to pursue?

What we may see is a continuation of the low price environment that we’ve all come to know and love. With continued and increasing unconstrained production of everything all of the time the oil and gas industry is destined never to be a commercial enterprise again. This must be what the investors see for the business and can only find verification of these facts with each of the producers quarterly financial statements. Where is the mid to long term logic and strategy for shale? A technology that has in as little as ten years increased the global oil reserves to the point where we have double what we need for the next fifty years. And why is it that the only strategy being pursued is full production everywhere and always? Is oil and gas still a scarce commodity or did shale change the business of oil and gas exploration and production?

North American producers have not resolved this issue in the first phase of shales implementation. As shales technology goes global it will be beyond their scope to deal with as countries such as China may satisfy their own internal markets. Reducing the global demand in the supply - demand equation. People, Ideas & Objects are currently focused on the North American producers however there is no reason that once our technologies are developed they can’t be deployed globally. Maintaining a global discipline where all production of oil and gas is profitably produced.

Of course all of this is as clear to anyone who’s familiar with the industry. Why producers don’t hedge their bets and pursue two opposing ideas at the same time, that is continue with their current strategy but also develop the Preliminary Specification is beyond me. Maybe they know something that I’m unaware of. If they’re unable to implement a dual track strategy now how will they do it when shale is produced globally? Maybe we should see this as evidence of the terminal nature of their approach and their business.

All of this can be attributed in large part to the deferral of recognition of the producer's property, plant and equipment. As I should have noted yesterday this makes a young producer look very profitable as they have flush production and can defer most of their costs. Causing investors to rush into what appears to be a highly profitable enterprise. Creating the overproduction of the commodities that appear, even today, to be profitable. As producers age to the level the industry is today the buildup of property, plant and equipment conspires against the producer. As time passes, they begin to recognize more of those deferred costs while their production curves decline steeply downwards, in a marginal enterprise where investors are frustrated with performance. In a capital intensive business it makes no sense to defer the recognition of your capital. A business competes by turning over its capital quicker than other businesses and other industries. Why oil and gas is permitted to defer the recognition of its capital for decades is a unique situation that should never have happened. Accountants should have known better that accounting is about performance. Competition for capital is why we assess performance in the accounting that is produced. Therefore why would you defer the recognition of capital assets for decades? Of course this argument is rendered mute due to the fact that oil is up 1.5% on the day.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 08, 2017

Industry Update

I’ll have a full report based on the third quarter financial statements of our sample of 23 producer firms on Monday. I’ve been pretty sour on the oil and gas industry for the issues that I identified on this blog and the solutions that the Preliminary Specification resolves. Suggesting that these issues will be terminal should the producers attempt to “muddle along” much further. Although not all the producers have reported at this time, what we do know is that there is a tragic cash crisis accelerating in the industry. Working capital is evaporating at a much faster rate. Earnings are down substantially from the second quarter. It appears that the third quarter may have generated no earnings even though oil prices were up 12%. That includes a decrease in the amount of property, plant and equipment being recognized for depletion in the third quarter. Operations are consuming more of the revenues. And the volume of cash being consumed is epic. The volume of short term liabilities has also grown disproportionately to the rest of these firms accounts. Producers are now pushing their suppliers for extensions on their payments. The amount of cash is becoming dangerously low and I would express my concern that there is little being expressed by the producers concerning their cash balances. They are either unaware of their situation or fundamentally do not care.

What we do know is that these producers can’t, won’t and will not ever subscribe to the Preliminary Specification as the resolution of their issues. Which wouldn’t matter anymore anyways. We are of the belief that they’ve moved beyond the point where we’d be able to help them. We have chosen to pursue other methods of implementing our solution in the oil and gas marketplace and believe fundamentally that these financial statements are the beginning of a meltdown in the industry. Who will jump in to support them? Both the investors and bankers have been absent and unwilling to participate for years. They too can see that the amount of capital necessary to fix this problem is well beyond the capacities of the investment and banking communities. Even if they did re-invest the producers would only regress to their old behaviors, resume their typical operations and be back at this same spot in as little as five years, wasting the trillions that were given to them now. They are beyond hope.

Prospective members of our user community must realize the time for them to act is upon us. It will be our collective action that will be looked upon as the method that the industry is able to rebuild itself. There is no shortage of hard, difficult work in which we need to do. Preparation of your application to the user community should be your first priority with an understanding that action may be called upon us much sooner than we’re prepared. Our preparation as a community is the most effective thing we can be doing. It begins the process of software development and brings us closer to the day we deliver our software.

These excessively bloated balances of property, plant and equipment are dead weight that will pull these producers down faster than in a normal environment. If an investor were to look at a producer with the prospect of investing they would see those bloated assets supporting the large number of shares outstanding and prior capital raised. Demanding the new investors spend large amounts of capital for half and quarter percentages of the outstanding number of shares. Exciting. Investors know that these bloated numbers represent the unrecognized capital costs of prior production and their investment dollars are in essence only providing working capital for the producer to keep the lights on for a few more quarters. Very exciting. If the producers attempt to eliminate these bloated balances they’ll only show the world how spendthrift they’ve been and end up recording losses that exceed the entire capital structure of the company. The only thing I think they can do is keep going until people’s paychecks bounce and then move on to another industry.

This is a very tragic situation. I am unaware of any industry that has so destroyed capital in this fashion. For four decades money has been raised and spent with no respect to value or understanding of profits. It may become obvious to most what has been going on for many decades now. But I’m happy to have been the thorn in the side of the industry for these past 14 years. They knew what I was talking about and instead of doing anything about it they did everything they could to silence me. My point is that all of this was unnecessary.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 07, 2017

Starting a Successful Oil and Gas Industry

People, Ideas & Objects primary focus will always be on our user community. There is no purpose or reason for anyone to develop a system such as the Preliminary Specification without the involvement of the user. User community based developments are the only means in which to provide the quality systems that the users want and need. Development of our user community began as soon as the Preliminary Specification was published in its final form in December 2013. We then began seeking out users to join the community and published our user community vision. Providing it with the power and capabilities necessary to drive the transition in the oil and gas industry. Our commitment to user community based developments is uncompromising.

With all that has happened in the last quarter with People, Ideas & Objects. The cancellation of the project's software development start date in late September most particularly. Our focus has not changed. And neither has the user communities. We don’t currently have any software development plans however there are many things that the user community can be doing. Those that are interested in participating with these software developments should continue with their applications and prepare as if we’re moving forward imminently. Preparation is the key to success. If we wait until our ducks are all in a row then we’re unnecessarily wasting time now by not proceeding with the user communities development.

Our commitment to our user community requires us to have it developed before we begin software development. The more time and energy that we spend on the user community at this point the sooner we’ll be able to deliver our systems. The key determinant to our quality and our delivery date is the development of our user community. Something that we’ve been doing since December 2013 and continue to do. We will not begin developing software without the direction of the user community. Therefore this is our focus and priority. If ever you wanted to have systems that meet your needs, they’ll only happen with your involvement.

We may at anytime find the resources to proceed with developments. That’s not the point we should be looking towards. We should be asking ourselves what is the state of affairs in the oil and gas industry? What is its future for the next 25 years? Its issues and opportunities and how will these be met by the current producer organizations? Can we get there from here? If you believe the current producers can fulfill this future then our user community is of no interest to you. If you believe that changes are necessary and that the current course of destruction is terminal then the user community may be what you can do to make the industry dynamic, innovative, accountable and most important of all profitable. Real profits, ones that will generate value outside of accountings financial statements.

If you see a future for yourself in the oil and gas industry then the user community may be the ideal vehicle for you. There will be plenty of very hard work for everyone to get through. Overproduction and oversupply are unquestionably the biggest issues oil and gas has ever had to face. How it handles these from this point forward is purely a function of the user communities success and dedication. We are not losing any time in terms of the delivery of the Preliminary Specification to market if the user community continues to be developed. We are the first element that needs to be put in place and we can organize ourselves here and now in anticipation of the time that we’ll be needed. If we don’t prepare in this manner then the oil and gas industry will never be successful again, its that simple.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 06, 2017

The Dynamic Nature of our Coin Holders

Organizations are defined and supported by the ERP software that they use. Any change in the organization must be made through the software first, before it can be implemented in the organization. Otherwise with the software unchanged any attempt to change the organization will cause it to subsequently regress to its former state. This is the reason that People, Ideas & Objects and our user community provide a software development capability to the oil and gas industry that is so critical for today’s business environment and for the long term. In order to make the changes in the behavior of the producers they’ll need to change the software first. Now as a result of the inability of the producers to support our September 25, 2017 software development start date, issues such as their chronic overproduction and oversupply will continue.

There have been a number of new dynamics introduced into the oil and gas industry. We have indicated the state of affairs in the ERP marketplace in terms of choices the oil and gas producers could make. Without People, Ideas & Objects there are no systems developments being undertaken as a result of the history and past behavior of the producers. Everyone has left. I would seriously question the producers ability to raise the attention of any vendor at this time. The market is small in terms of the number of producers and their habit of abuse in the past is legendary. With People, Ideas & Objects efforts over the past fourteen years of promoting our solution which uses the Joint Operating Committee, who will come up with a more competitive offering that solves today’s issues, in a reasonable period of time and will continue to pursue that solution on behalf of the producers for potentially decades? It would seem that the bureaucrats who run these producer firms would rather run their companies into the ground than solve their problems.

The opportunity for producers to participate in our September 25, 2017 developments would have enabled them to acquire that software development capability and move forward with resolving their issues which include the chronic overproduction and oversupply that plagues them. As a result they will not have this capability made available anytime soon. And therefore the issues and opportunities that the industry faces in the short, mid and long term will not be resolved or realized by any known current method. They will be stuck in this current state until such time as some alternative and unknown ERP software enables the industry to implement the changes that are necessary.

At the same time People, Ideas & Objects are focused on our true customers, the coin holders from the Initial Coin Offering (ICO) that we are preparing. These are the disgruntled oil and gas investors who have been on strike for over two years. We feel we offer a highly competitive offering in terms of return for these investors to consider. Especially in comparison to what the producers have been able to provide these past decades. What our coin holders will do will be to negotiate with the producers for a share of our trillion dollar value proposition that we provide the industry. More can be understood about our free money strategy here. This also provides our coin holders with the means in which to begin the much needed transition of the industry, through creative destruction, into a dynamic, innovative, accountable and profitable industry.

It will be our coin holders that will have the means in which to make the changes to the oil and gas industry that they want and need. They will have the exclusive software development capability of People, Ideas & Objects and user community available to them. They will also have the service providers which provide the administrative and accounting capabilities in which to operate the industry. We have always believed that the level of change that is introduced in the Preliminary Specification is too dramatic for the existing producer organizations to undertake. Rebuilding the industry brick by brick and stick by stick has been what we have stated all along, even as far back as 2007. The financial damage to the current producer firms has been catastrophic. A rebuilding would seem to be necessary. Will these organizations be able to deal with the future of the industry? We do not believe they will ever be able to approach North American energy independence. They will need to establish themselves as profitable organizations before they can expand their throughput. Profits, real substantial profits, not the accounting profits they’ve reported for decades, have never been part of their culture. And as we’ve noted, they won’t have the software development capabilities to reconfigure themselves in order to begin to earn real profits.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 03, 2017

Thursday, November 02, 2017

Oil Prices, Again

People, Ideas & Objects have proven that oil and gas producers can’t, won’t and will not ever develop any ERP systems on their own. After a decade of losses they did not participate in the proposed development of the Preliminary Specification starting September 25, 2017. We use this as evidence, upon the history, culture and behavior of the producers over the past decades in terms of dealing with ERP providers. That our coin holders will not face any competition as a result of any industry sponsored ERP software developments. We can also state that for Oracle and IBM to return to the market would require that same change in behavior of the producers that we know is missing today, and that these vendors identified earlier this century which prompted their exit. We can also assure our coin holders that no alternative ERP software developments will be sponsored based on the Intellectual Property inherent in the Preliminary Specification. The Permission Rights the coin holders earn are exclusive.

I have been highly critical and sarcastic towards the oil and gas producers throughout the last decade on this blog. The tone has been consistent and establishes a level of conflict between People, Ideas & Objects and the producers. It’s never wise to criticize your customers publicly. Based on the producers past behavior towards ERP providers I don’t think I ever saw them as customers. I’ve been told a hundred times that they’ll never get involved in this project, something that I agreed to quietly. I think I always knew the producers weren’t customers but were more the source of the issue and that was how they were treated here. Our customers were the investors in the oil and gas producers who we share a frustration and anger with. They now have the opportunity to participate in the transformation of the industry, and their interests in oil and gas, by participating in the ICO we are preparing. Choosing to invest in the coins as opposed to the producer firms themselves.

What we need to do now is to prove that the oil and gas producers, during a period of rising oil prices, have a flawed business model that is the source of low oil and gas commodity prices. We certainly don’t see any investors or bankers stepping over each other financing any of the producers. This should be relatively easy for us to prove that the overproduction and oversupply is inherent in the business model and nothing has changed since the late 1980’s and 1990’s when I first began to study and resolve why producers don’t just shut-in some of their production to raise prices to the level where their profitable.

That the Preliminary Specifications decentralized production model’s price maker strategy resolves low commodity prices is irrelevant to the producers. They see it as collusion and will not be involved in it. They prefer to spend decades where they lose money as a result of a fundamental change in their business, driven by prolific shale reservoirs. Ending up losing the investors, banks, service industries, their employees and all the others interests instead. Where a common understanding of business would dictate that the market provides one thing and that is the price it is willing to pay. If they as a producer can earn a profit at that price then they should produce, if not they should shut-in their production. That is not collusion as they suggest but good business practice. Producers will allege that this is what they’re doing.

One look at the disjointed nature of their financial statements will find that none of the capital costs of past production has been recognized. And the real costs of oil and gas exploration and production are fundamentally unknown. By capitalizing everything including the receptionists Post-it-Notes and the service charges for the phone they use. Only to be recognized over a twenty year period. One mans profits are another mans accounting fraud. Producers have ignored our commentary about this point. Primarily I think because it’s something that has formed a cornerstone of their legacy of destruction. You can’t profitably retire these balances in the short or mid term, therefore why admit it’s an issue. It is the albatross around their neck that makes investors unwilling to dilute their future investments against past costs of a questionable nature that have never performed. That goes for banks too. And the outsized nature of these balances can only be reduced through long term profitable operations. Something that these organizations were never structured to provide. They were spending machines. The money comes in and then goes out. Only to be replenished next year by newer, more naive investors. As an oil and gas investor it's the continuous, annual dilution of your interests that’s the prize!

We see today that the Saudi’s and Russia are committed to extending their production sharing agreement throughout 2018. This is having upward pressure on the price of oil. This is also good for the Saudi IPO of Saudi Aramco which will also occur in 2018. What happens when that is complete? As the low cost producer they will have a number of different strategies to chose from. Elimination of the high cost producers through low commodity prices is the most probable one that I see them employing. Already in the 12% increase in prices during 2017’s third quarter and the 5% increase in October 2017 producers are found to be racing to get more production on line to secure more cash. The U.S. is projected to be producing over 9.9 million barrels of oil per day in 2018. A record volume that was previously established in 1970, in comparison to the approximately 8.9 million barrels per day when OPEC first put their production sharing agreement into place.

How many times are we to believe the “market rebalancing” story? It is just the cover story for a complacent and satisfied bureaucracy. It also reflects the lack of thinking in the industry as “market rebalancing” has been the only commentary since the decline in natural gas prices in 2008. I am very satisfied that I have a decade or more of critical commentary about the producer's business. Their business is flawed and has no future. That will soon be proven again as they overwhelm the market with surplus production. We now have our customers clearly defined and are able to provide them with substantial business value. And just to show the trend is our friend, the CME Group are experimenting with BitCoin to see if they are able to begin trading in cryptocurrencies. Establishing a possibility that our coin holders could trade on the Chicago Mercantile Exchange.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 01, 2017

Trillions in Free Money, Part IV

The Better Investment?

Nothing has changed in oil and gas since the development of production methods for shale based reservoirs. These developments began in the late 20th century and by 2010 had totally destroyed the natural gas business. That business went through a number of false new beginnings where it was expected that the market would rebalance and prices would recover. Eventually after many iterations of slightly higher prices, leading to a rush of new production, everyone gave up on the natural gas business. No one hears any news about that market anymore. Prices are trading at 18 times the price of oil. Historically natural gas was 6 times. So much damage has occurred as a result of the overproduction and oversupply from shale. Today we remain optimistic that oil prices will recover, just as we did with natural gas almost a decade ago. It’s been a far shorter time that oil prices have been depressed and hope takes time to completely erode. Those that agree with the North American producers that all has been resolved in the commodity markets may be correct. I would ask how many times have we been here before? Then suddenly production increases in North America, and the price collapses again. Nothing has changed in the business to stop the overproduction and oversupply of these commodities. The business model of these producers will continue to overproduce forever.

All that is needed is for each producer to shut-in a small percentage of their properties in order to realize a tripling of the prices and the ability to cover their costs. So simple but it will never happen with the current producers structure. And they can’t, won’t and will not ever change. People, Ideas & Objects have proven that. Producers are giddy with excitement because they have OPEC cutting their production and somewhat supporting the price. Saudi Arabia is planning their IPO of Saudi Aramco in 2018 and when that is complete their desire to have a stable price will no longer exist. Their costs are single digit and in the face of prolific high cost shale they are the low cost producer that will always be able to compete. Therefore they will put all of their production on the market and leave it to others to deal with their costs. Meaning the North American producers have less than a year in which the bottom falls out of the oil market, just as it did so many years ago in the natural gas market. This is not the investment communities nirvana that producers should be giddy about.

It is the inability to address these issues that have concerned the oil and gas investor and banker. They see no discussion or identification of the issue, or resolution being put forward. They now understand that the accounting has been suspect for decades. Where recording every cost as a capital asset has become the art and the science in the industry, and depleting the capital asset over decades has reported false profits that demand the investor's annual cash injection to stem the producers cash shortfall. A few years ago the investors cut the industry off from new capital and have created a severe cash crisis throughout the industry which has motivated no discussion and no change. At the same time People, Ideas & Objects have fought with these same producers over our solution to these issues. Our resolution of this conflict is that we now turn to others to begin the process of turning over the industry through the process of creative destruction.

We have identified a number of groups that we will be targeting in the process of issuing our Initial Coin Offering (ICO). Members of our user community can participate in our ICO and enhance their interests in the ecosystem that is being offered. We have stated that producers may be interested in purchasing adequate coins to have their production profile processed through People, Ideas & Objects software. That however may be a bit of a stretch of logic for them. The one group that would be lucrative for us to recruit for their participation in our ICO would be the overall oil and gas investment and banking communities. We are a proxy to profitable oil and gas production. Therefore it would be in their best interests to participate in the ICO and skip the direct investment in the producer firms. Providing these investors with greater opportunity for returns and a seat at the table in terms of how the oil and gas industry is restructured and reconfigured to ensure real profitability is attained.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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, October 31, 2017

Trillions in Free Money, Part III

Coin Holders Strategy

Owning the oil and gas asset isn’t enough in the 21st century, you’ll also have to have access to the software that makes the asset profitable. Since People, Ideas & Objects will be distributing Permission Rights to coin holders for exclusive access to our software. The profits will be earned by the coin holders and the assets will be held by the producers. That is initially, then these assets will be transferred to the coin holders through the process of creative destruction. Something producers seem to be quite satisfied with. Coin holders will share in the differential that is generated between what producers are satisfied with today, $50 for oil and $3 for natural gas, and the amount that is generated as a result of the use of People, Ideas & Objects Preliminary Specifications decentralized production model’s price maker strategy. As we stated elsewhere in this discussion, it will be the bold producers who have the means in which to tell their shareholders that they will not be participating in the upwards of $67 / boe in free money they would earn by dealing with the coin holders and accessing our software.

It will be necessary for the coin holders to see their role in the oil and gas industry as initially implementing what has commonly been known as disintermediation. The use of Information Technologies to move the industry to a higher level of performance than the status quo. Once that is achieved and their share of the differential in the price of oil and gas natural gas is being generated they can begin the full force of creative destruction within the industry. Producers today have proven that they are unable to change with the dynamic changes introduced through shale based reservoirs. Chronic overproduction and oversupply, in addition to borderline fraudulent accounting methods for the past four decades have left the industry in a state where little is occurring that is productive. Cash flow in this capital intensive industry will always be great enough to pay the bureaucrats. The prolific nature of shale will always ensure they have cash flow. And overproduction and oversupply will continue.

People, Ideas & Objects have proven that the producers can’t, won’t and will not do anything in their business to mitigate the disastrous situation they’re in. We have been pushing the Preliminary Specification in the market since August 2003 and with a proven business model that provides trillions in incremental value, yet we are unable to motivate them to act. Our final efforts to convince the North American producers to act ended September 25, 2017 and we’ve then shifted our business model to granting Permission Rights to coin holders. It is in this way we can use the trillions in value that is being ignored by the producers to build the Preliminary Specification, disintermediate oil and gas and set the forces of creative destruction into play within the industry.

In addition to our efforts to provide ERP systems to oil and gas producers. There have been a long list of failures and false starts. IBM had the leading application in the industry, Qbyte, and were unable to generate any support for incremental development work. In frustration IBM sold Qbyte and left the oil and gas ERP marketplace in 2005. Prior to that Oracle invested their own money in an initiative known as Oracle Energy. From 1997 to 2000 they attempted to create commercial levels of interest in the ERP application and were unsuccessful, subsequently abandoning it in frustration. Producers may be able to turn to these vendors to build them their ERP systems in the future. There is also the SAP application that is popular with the larger producers. However, SAP and Qbyte are the standard entrenched solutions and we have the issues within the producers today. What changes will they implement to remedy these issues and why have they not done so by now? For Oracle and IBM what will their vision of a solution be should they decide to re-enter the market. New technology? It is the Intellectual Property of the Preliminary Specification that is inherent in the Permission Rights being granted to the coin holders. That is what protects the coin holders from any competitive offering. People, Ideas & Objects will not be granting any other solution with access to our IP. It will be through the coin holders control of the producers access that they can compete with the likes of Oracle, IBM, SAP and Qbyte.

People, Ideas & Objects are user community based software developments. As a result of the development of our coin holders this places the user community in a unique and different situation. They are now wholly independent of the producers themselves. They are working toward the future of the industry and remediating the issues that exist in the marketplace today. This unconstrained approach is unique and will provide the means in which the coin holders will be able to exercise their position to turn over the ownership of the oil and gas producers assets.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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