Well That Was Quick!

I wonder what the markets will have in store for us today. We know two things that we may not have fully appreciated prior to this past weekend. The first is that, for some reason, oil prices did behave in the manner that we would have expected a commodity that’s subject to price maker characteristics. The second thing we now know is that Vice-President Joe Biden was able to deal forcefully with the gangland activity of local bully “Corn-Pop.” Therefore maybe we know a third thing as well, that both of these facts are not viable and therefore true. The removal of approximately 5 mm boe / day should have been made up with alternatives that would have kept the price at the same value. This assumes the producer bureaucrats price taker characteristics were valid. But their not, it was the story from Joe Biden about Corn-Pop that wasn’t viable or true.

We should note too the behaviour of the oil and gas producers stocks on Monday. Many skyrocketed on the basis of greater days to come. Then the news on Tuesday that things are not as bad as they appeared and half of the suspended production was back on stream, with the remainder being replaced in the next few weeks. Down goes the price of oil and the prices of the shares of the producers. It used to be, in a land far, far away that management provided greater generation of value than the increases / decreases in the underlying commodities. Otherwise why would anyone buy the producers when they can just participate in the commodity markets directly. The takeaway that we should all have learned this weekend is oil and natural gas are subject to price maker characteristics. Small percentage decreases in supply had a disproportionate effect on the price of the commodity. Only the Preliminary Specification with it’s price maker strategy has implemented this logic in our decentralized production model. You can read about these points and why their needed in our white paper, “Profitable, North American Energy Independence - Through the Commercialization of Shale.”

I started mainlining Information Technology back in the 1960’s. My dad worked for Shell and would tell me about the computer that they were installing that took up the whole floor of the building. That was it for me. My pursuit of access was never satisfied until the always on broadband days of the mid 1990’s. That’s when I knew I became dangerous. Two of my favorites were of course Steve Jobs. I am the self declared Apple fan boy # 1. And Larry Ellison. The latter made his keynote address at Oracle OpenWorld in SanFrancisco on Sunday. Oracle’s technology is what mitigates the majority of the technical risk that we’re faced with in delivering the Preliminary Specification. This keynote was not unlike any of the past decade. It had many new ways in which Oracle was configuring their products and making them available. Their enhancements to their products have always been state of the art as well.

The theme of this years conference and the title of the keynote is “Generation 2 Cloud Infrastructure.” The first generation of cloud value is the shared cost that cloud infrastructure provides. Autonomy is the second generation of cloud value being delivered today. Autonomy, is where the elimination of human error comes into play. Human error in terms of configuration issues, security and other common problems plaguing IT. Autonomous Oracle Database will self configure and as a result, Oracle guarantees there will be no loss of data or damage to your organization. Not what AWS does which uses the standard “you configured it, you broke it, its your’s” logic.

Autonomy is now extended to the whole stack as Oracle Linux is autonomous. With the ability to conduct patching while its running. Which includes the full population of all instances. None are missed. Continued shared and dedicated infrastructure available for the Oracle Autonomous Database. One database for all the organizations needs, unlike Amazon configuring different databases for different purposes. A truly untenable exercise. Oracle’s approach here will demand far less costs than Amazon’s and the simplicity of one solution is far superior. Some other news that is of interest to larger producers is that the full configuration of Oracle Cloud Infrastructure software can be brought in house to those that have the wherewithal to manage it. You can therefore have your portions of the People, Ideas & Objects applications, Oracle applications and hardware operated by yourselves and interact with our service providers and user community from there. Oracle had previously configured this state of the art product offering as cloud only. Now you can have the full autonomous database and Linux operational in-house. But they saved the best news for me.

Our user community members and their associated service providers are provided with an IT infrastructure that are necessary for them to do their jobs. This includes the GSuite Enterprise, Google Voice, an account and a monthly allowance for Google Cloud Identity Premium. These are what are necessary to collaborate and interact with the user community and the larger oil and gas industry. None of these have changed as of today. What has changed is we were providing access and an allowance as well to an Oracle account that provides the user community member with an understanding of those technologies and their use. Although this has not changed, it is now provided to everyone by Oracle free of charge. I highly recommend those who are contemplating and are in the process of preparing their application to the user community to acquire one of these accounts.

The always free Oracle Cloud consists of the following configuration.

• Autonomous Database
• 2 x Databases @ 20GB each
• Compute
• 2 x VM’s @ 1GB memory each
• Storage
• 100 GB Block, 10 GB Object, 10Gb Archive
• Networking / Load Balancing 
• 10 MBS LB, 10 TB Outbound data transfer
• Monitoring / Notifications
• 500M Metrics Ingestion, 1B Metrics Retrieval, 1M Notifications, IK emails.

• Oracle Autonomous Database
• Each Database gets 1 OCPU and 20GB Storage
• Free Tools for Application Development
• APEX for low-code, web-based app development
• SQL Developer Web for Database development
• SQL Notebooks for Machine Learning
• Automatic REST for easy access and publishing of DB data
• Drivers for all popular programming languages 

Take it for a spin.

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 profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Deck Chairs on the Titanic

Well there you have it, what we thought would never happen, action from the oil and gas bureaucrats! And not just some oil and gas producers, all the big guys including Chevron, ConocoPhillips, ExxonMobil, Hess, Marathon, Noble Energy, Pioneer, Repsol, Shell and Equinor, formerly known as Statoil. They’ve formed under the Offshore Operators Committee (OOC) which is a not-for-profit organization that has established the Oil & Gas Blockchain Consortium. Which was designed to, from their website…

Blockchain technology is a catalyst for reimagining the way we do business and this consortium represents a collaborative effort to explore the technology’s potential and leverage learning to drive industry adoption.

World Oil announced that the Oil & Gas Blockchain Consortium has selected its first vendor to implement blockchain in the Bakken shale on a pilot basis. Data Gumbo is a startup initiated by “major global energy companies, including Equinor’s venture subsidiary Equinor Technology Fund and Saudi Aramco Energy Ventures.” Data Gumbo being a startup has secured $9.3 million, terms of their contract with the Oil & Gas Blockchain Consortium were not released. My one recommendation to Andrew Bruce, CEO of Data Gumbo is to be sure to have the consortium, or the producers themselves, pay up front. Please review why this is necessary in this blogs September 4, 2019 post and why we demand such notions in our Revenue Model. 

Where do I begin in detailing the issues that I have with this initiative. Although Data Gumbo suggest that producers could save 30% of their costs, I’m assuming that’s only in the administration of water hauling, etc. Which in comparison to the untold costs of this initiative to date, may not be material, I don’t know. To me it sounds as if the producers are attempting to retrofit a new technology into their existing business. Did their Artificial Intelligence initiatives not work out? Which shows a systemic behavior of these bureaucrats, waving around the latest and greatest technology to show that they’re “on the edge.” Another behavior they’re famous for is to pass a 200 page Service Level Agreement (SLA) onto Data Gumbo that details all the ways in which they’ll be held responsible and accountable for any failure. That indeed, expecting any support or participation from any of these producers will be a result of Data Gumbo’s fantastic, determined and skilled efforts at herding cats. The SLA will define that all decisions be made by the producers, all the responsibility and accountability with Data Gumbo, none of the authority and of course there will be no entitlement to what it is Data Gumbo has or will have done. What I mean by that is the Service Level Agreement will dictate that the Intellectual Property for this initiative will reside with the Offshore Operators Committee and once Data Gumbo have the solution implementable, then their competitors will be fully brought up to speed on how to implement the technology just as effectively as Data Gumbo. Producers may even sponsor Data Gumbo’s employees to launch their own enterprise in direct price competition.

On to the other Issues I see as a result of this.

• People, Ideas & Objects stops this foolish game by having the producers paying, in the form of the coin holders levy, prior to the solution being built. Motivating them to participate and collaborate with our user community, but most importantly to act and take responsibility for the success of the Preliminary Specifications development. Writing agreements to ensure that the responsible culprits are identified prior to signing is not effective when seeking successful initiatives.
• When Encana, which is the only specific case we’ve discussed on our blog, doesn’t pay their bills to those who’ve provided services in prior periods. Doing this so that they can manipulate their stock and then shred the share certificates (stock buy-backs), soon the oil and gas industry will have the poor credit and reputation that demands they pay everyone in advance. This will be the long term consequences of not paying the bills!
• It’s 2019, using a methodology of establishing committees and initiatives within the industry seems so 1965 to me. How soon will this be available, what about the other 99.99% of the software and services required for administration and accounting? Who’s leading this initiative? What’s the vision?
• Who’s going to participate in this technology once it’s proven? One of the key advantages of using People, Ideas & Objects is that we’re agnostic, just as Data Gumbo claims. We are providing a standardized and objective software and service based solution. Exxon could use the solution but ours will be built collaboratively by our user community. Not Exxon, Chevron or Shell et al which may seem agnostic to Data Gumbo but I wonder how the intermediates feel about their definition of agnostic?
• Ownership of the Intellectual Property is critical in a development such as ours. Our user community are in complete control of all of the IP and benefit by leveraging it in their own service provider organizations that will have earned exclusive licenses that ensure they are able to focus on their key competitive advantages. Not the producers ability to abuse the price of their service.
• I can’t discern, outside of the fact that this is a technological solution, if Data Gumbo et al is a practical or a political solution? It certainly isn’t a business solution, one that only defers 30% of the administrative costs of water hauling in an industry facing existential threats.
• Again what is the vision, how will this technology drive the industry forward in the most dynamic, innovative, accountable and profitable manner. Which is of course People, Ideas & Objects claim to fame through the use of the Joint Operating Committee, three marketplace modules and a comprehensive business model that defines and supports an innovative and profitable producer and industry based organizations.. 
• Nonetheless it does show the industry is “active,” more so for the sake of being seen to be active, and on the bleeding edge of technology. They’ll ultimately get a solution for their invested $9.3 million. What I personally think is that we have typically large companies with big existential issues applying their small minds somewhat in the necessary general direction. 

People, Ideas & Objects addresses the flow of ownership of Intellectual Property and the subsequent flow of cash. If you don’t address these aspects then the producers will assume that everything defaults to them. In the 21st century, people are not motivated by work for the sake of work. They need to know they’re successfully contributing to something much larger than themselves, but also earning something exceptional for themselves. After all, it won’t be long before anyone can earn $15 / hr at McDonalds. People, Ideas & Objects provide our user community and their service provider organizations with that role and ability to remake the industry, and realize some sustainable financial benefit in the long run. If producers believe that resolving an existential threat with $9.3 million in a circa 1965 committee structure, motivating people by the altruistic joy of work, is that what’s expected to be the solution here? To me it’s more representative of how misguided and confused the management of the oil and gas industry is.

Producers can coble this and the other 2,999 software products together from different vendors to make one cohesive, functioning application. Each producer spending the same time, energy, expertise and money that will be consumed by coordinating these 2,999 software and service providers. To ensure that each of their administrative and accounting overhead costs remain unshared and unshareable within each silo’d producer. As we indicated in our White Paper this is a secondary reason for the chronic unprofitability that is achieved by the industry. Speaking of the White Paper we have a section entitled “A History of ERP Systems Development and Integration in Oil and Gas.” Which documents why there is not a coordinated, integrated product or products on offer to the producers. Generally you get what you pay for. It’s here that producers have paid for mostly nothing and have the market leader P2 Systems issuing their own publication that describes their offering. Recall in our White Paper P2 Systems purchased Qbyte from IBM after it was unable to source any financial support from industry for a much needed rewrite of the application. Review of P2’s document shows how well managed the clerical aspects of oil and gas accounting are handled.

Producers can’t, won’t and will not ever provide People, Ideas & Objects with any resources for the development of the Preliminary Specification. Their approach must continue with misdirection and poor issue identification that has brought them to the point of their demise. Our attempts to work with them for what is twenty eight years at the beginning of 2019, has now diverted our approach to resolving these issues without them. Their future is terminal. If that isn’t clear, or if you think that they’ll rally from here, all I can say is just wait. If a $9.3 million blockchain initiative for water hauling is the first tangible signs of action from the 2010 collapse of natural gas prices, just wait, you’ll need to be patient. In the meantime you may enjoy our White Paper that details our perspective. How the hollowing out of value has been done quietly by these producers bureaucrats over these past four decades.

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 profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Our Plan for the Next Six Months

We’ve settled on a plan for the next six months here at People, Ideas & Objects. It’s pretty simple and involves the desperate financial conditions and issues in the oil and gas marketplace developing further. What I mean by that is there is some optimism back in the producers as the vacations give way for another year of meeting new targets and objectives. Some of this optimism may have seen small amounts of money move back into the stock market which gives the appearance of support to the industry. The issues producers have created for themselves have not disappeared however. Overproduction and oversupply are maybe more severe at this time of the year than at any other point in the past decade. Global inventories of oil are a looming catastrophe as is the natural gas business in North America, which has now destroyed the LNG business by oversupplying natural gas markets globally. What we should look for during these next six months is the shock and surprised expressions painted on the faces of the producer bureaucrats. After ten years of the same story over and over and over and over again, it’s remarkable how well their acting skills have improved.

Speaking of which we should notice how these producers have avoided, once again, any accountability for the situation they’re in. We never hear anything from any of them anymore. They too seem to be getting tired of performing the same script each night. That they had the ability to deal with these issues by implementing the Preliminary Specification as early as 2013 is not what they want to discuss. It’s a topic that I think they can’t engage in without looking bad no matter how the conversation ends. What are you doing to deal with the issues if you’re not adopting the Preliminary Specification? Nothing. What systems are you using to automate and accelerate your ERP performance just as other industries are doing? Nothing. Who are you engaging to assist you in any of these endeavours? Nobody. And so on and so forth. If they could just engage in conversation at that level they’d be happy, but inevitably the difficult questions will come about. What organizational construct will you use to enhance the performance of the industry now that the Preliminary Specification has the Joint Operating Committee as theirs? Don’t know. What method will be used by the industry in order to ensure that the price maker strategy is implemented without violating any of People, Ideas & Objects Intellectual Property? We haven’t thought about it. I don’t know if it’s me that enjoys pounding away at the same message all the time or if it’s the bureaucrats who like to cower in the corner.

The industry has stepped off the cliff. And like the Coyote is at the beginning of realizing the full scope of his dilemma. People, Ideas & Objects are here, and they are there. Anyone that tries to help them now will fail in doing so. It’s time to pick up and start rebuilding the industry in the vision of the Preliminary Specification. We are not exiting the market as we believe we have the solution that makes the difference in oil and gas. We have been patient in our long history of dealing with the producers and we will continue to be patient over the next six months while the last few pieces fall into place. If we look at the five stages of grief we are at the beginning. Denial is the first stage which will soon give way to the second stage of anger. This will be when the bureaucrats start shuffling in an orderly fashion out the back door where no one will see them. Which leads to the third phase, a period of bargaining, does that include People, Ideas & Objects for the development of the Preliminary Specification? I don’t know. We will however be patient for these next six months. Until then we have much to do on our Initial Exchange Offering which is difficult and risky. We’ve chosen to pursue that method of financing due to the fact that we’ve not given up on the industry, only on the existing producers. We have much to do in rebuilding the profitable oil and gas industry.

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 profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Twitter thread regarding Encana Corporation

I am finding that Twitter is satisfying my need to communicate what it is that I want to say. The need to write a complete blog post about the point or concern is not necessary now that the White Paper has been published. It is therefore best to find the majority of our activity on that medium for the time being. The web address is twitter.com/piobiz

Last night I posted two tweet threads, copied below, regarding news from Encana. It is these activities in oil and gas that I find that are not acceptable to me and if they were then it might also be considered acceptable that Encana should not have to pay their staff on a timely basis. After all what's the difference between the staff and the people in the field?

I'll be posting these twitter threads to this post at or around the same time they are posted to twitter. I'll also be posting some time this weekend about our upcoming plans for the next six months.

Twitter thread

Today Encana Corporation announced the completion of their previously announced normal course issuer bid. This information is fascinating and provides a clear look at the objectives and strategies at play in the oil and gas industry. Based on the second quarter report we know…

In the first half of 2019 the company recorded the acquisition of 186.9 million shares for $1.487 billion. The announcement was these programs are now complete and its unknown how many shares were acquired and dollars spent in total. Other interesting facts from f/s...

As of 6/30/19 s/t liabilities = $2.351 B up 21% from 12/31/18, capital expenditures of $1.486 B and annualized cash flow of $2.87 B. All cash flow went to stock purchase or capital expenditures. It was so good of the service industry to provide Encana with the use of their money.

I’ve never been a fan of stock buybacks. More value would have been provided to Encana if they paid down their current liabilities. Spending $1.487 billion on share certificates that will, or have been run through the shredder does little for anyone. Why not just burn the cash?

Some may suggest buying the stock at today’s price of $4.45 vs. $94.35 in May 2008 is smart. However I say Encana’s a lost cause and there is no reason the service industry has to go without being paid. Producers need to understand there’s a depression going on in the industry…

One in which they’re responsible for. Shredding share certificates instead of paying off those who have depended on producers and operated in good faith, who have carried the producer financially through these difficult times deserve better treatment.

Producers need to start thinking outside their own skin. Think of what their doing as a business, not an engineering exercise or stock manipulation. The price of Encana’s shares in 2019 dropped from $5.78 at 12/31/18 to $4.45 today. I wonder what it’ll be in six months?

There is a better way. The Preliminary Specification provides the industry with the most profitable means of oil and gas operations, everywhere and always. Producers could even achieve what would be called responsible corporate citizens. http://short-links.people-ideas-objects.com/WhitePaperDL

If we recall back in one of those five good years of the past thirty four. When members of the service industry were busy working as hard as they could. Companies such as @encana accused them of being lazy and greedy for billing what the market would bare…

That same disrespect and pious attitude is evident in @encana unwillingness to pay the service industry for the work they’ve done, and are rightfully owed. Buying stock to shred the certificates is more important than paying the people who are suffering the most in this downturn?

With $1.486 billion spent on 6 months capital expenditures, the $2.35 billion owed in s/t liabilities equals one full year of capital expenditures. With annualized cash flow of $2.87 billion it also represents what cash will be generated by @encana in the course of one year.

@encana maintains a substantial working capital deficiency, the service industry will / might / won’t see that money in a future far, far from here. Next upswing these drillers and fracers, if they survive, should best deal with reputable firms that honour their commitments.

The sad part of this transaction is that @encana would have been better off on a pro-forma basis to have used that cash to pay off their current liabilities. Their balance sheet would have been healthier than it is today, post normal course issuer bid.

After all it’s about “building balance sheets,” we were told. Any comments @encana, or how about all the other producers who have done the same. Don’t worry, we’ll all believe you next time you blame your despicable management on the next scapegoat.

Profitable oil and gas operations can be conducted through our Preliminary Specification. Leaving this history behind. http://short-links.people-ideas-objects.com/WhitePaperDL

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 profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.