An Olive Branch, Part III

The last two blog posts have painted a rather dire situation transpiring in the oil and gas industry this quarter. The assumption could be made that we make it through this period without too much disruption. Let's assume that for just a minute. We’ve heard nothing from the bureaucrats regarding these difficulties. And we have that trifecta of issues which we identified that include the bank reviews, the natural gas storage and third quarter report. Which do play out as they are scheduled to do. We would then face the year end process and the reporting of the past year. Maybe the markets will turn around and be positive for a change. Maybe all that has happened will be solved through the muddling along of the producers. And maybe things will get better in 2016.

As far as the bureaucrats were concerned they were going to phone-it-in from the cabin over the summer months and return to business as usual in September. But as we have detailed here, things are not as they had planned. The other aspect of this past summer is the fact that they did blow past their personal budget for what they thought they would be spending on the cabin renovation and that new boat. The fact is that the whole state of affairs of their personal budget needs a bit of tightening and it is not in the condition where it's able to sustain the chosen life of retirement, yet. They need to be working for a few more years in order to crystallize those retirement plans. What these bureaucrats will soon realize is that if, and we can debate the probabilities, but if the confidence in the industries management is lost then these bureaucrats will be out of a job. And it will be difficult for them to find their type of work in other industries as long as they carry that albatross of oil and gas experience on their resumes. No one will be interested in picking up these, fill in the blanks here.

Continuing on with our assumption that all is fine. That the banks didn’t seize any of the company’s properties during their review. That the global market changes, based on the need to accommodate higher interest rates. That natural gas prices will be enough to still pay the overhead. And after all Opec is scheduled to meet in December and maybe just maybe it’ll be a cold winter. Hope springs eternal. The ability to sustain a few more years of employment in oil and gas will be easy. Just the same as before.

You can debate who is the crazier one in the various scenarios that have played out in the last three days. Is it me with the dire consequences of the last five years coming to fruition and demanding attention in the third quarter? Or is it the do nothing bureaucrats expecting to cruise through another quarter or two, or even a few more years, phoning it in as it were with no expectation that change will be forced upon them.

I think this is a crisis. A crisis in confidence in the bureaucrats that run the industry. Similar in scope to the financial crisis in 2008. The difference of course is that the government has to step in when people become concerned that there is no integrity or value contained in the “paper” financial systems. Without it the whole shebang falls apart. A crisis in confidence in the oil and gas industry will be a really bad thing for the bureaucrats, but not much else. They will be out, permanently. The lot of them. Maybe not today, or even this next year. But it will be a wholesale change in the people who are running the show.

So maybe I’m being dramatic and over the top. Or I’ve got myself too far ahead of the game. I however have a record on this blog over the past ten years that is actively critical of the bureaucrats and their self serving and unprofitable manner in which they have operated the industry. My prospects, and those of the user community and service providers look good. If the bureaucrats do survive and thrive for another year that’s fine. Then we’ll be here pointing out the differences in how we’ll do things. This olive branch is provided as a means to secure our budget and accelerate our time to market. It has a high probability of not working, but we’ll keep trying. And one day we will replace these bureaucrats, just as every other industry is being disintermediated, and that day is much sooner than we can predict.

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

An Olive Branch, Part II

We continue on with details of our “option” program to provide producers with a solution to the issues that they face in the short term. The mid to long term solutions that we provide are the development of the Preliminary Specification, our user community and the service providers. Our current option program for the short term enables the producers to attain the $700 billion stock market capitalization gains that were lost in the last year as a result of the decline in commodity prices. Their stock prices are languishing due to the inability for them to provide a solution to the issues that they face to the marketplace. If the producers were able to provide a viable, credible solution, then they would be able to reclaim their prior losses on behalf of their shareholders.

This can be done by entering into a subscription to the Preliminary Specification. This subscription denotes that the producer is engaging in the necessary steps that are required for them to participate in funding our budget and the activities involved in developing the Preliminary Specification of People, Ideas & Objects. Subscriptions are calculated monthly and paid annually on each producer entering the program. Once the producer subscribes, their name will be published in the wiki with the other producers who have subscribed. Subscriptions for 2015 are open until December 31, 2015. Warning, any producer that subscribes, however does not participate in the funding of the budget in the long term, may be deemed to be manipulating their stocks value.

The situation as we detailed yesterday is that these producers have no solution to the issues that are seriously affecting their survivability. In the next month they will be faced with three detrimental actions that will put producers in further jeopardy. The first is the natural gas volumes being produced are about to exceed the continents storage volumes capacity. This will have long term and negative impacts on the natural gas prices. These prices are barely able to cover the cash costs of a producer as it is. Any further declines in natural gas prices will further cannibalize the producer organization. Secondly bank reviews of their loans to the producers will be undertaken to see if they are performing, or in breach of any of their covenants. The past review in April was of minimal disruption, however, that was primarily due to the hedging of the commodities that were still in place. Third, the third quarter report will have to be published. The third quarter will be particularly difficult as we mentioned in the second quarter. The hedging has now for all intents and purposes expired. The producers are fully exposed to the depths of the commodity price declines. We should expect to see some significant and serious destruction.

The bureaucrats have managed the industry well. There is no good news to go along with this trifecta of difficulties. If only they could quickly and easily find a solution to the deep seeded issues to these problems. One that would inspire confidence in the producer that all will be well, in time, and that there is a plan of action. (I feel like I’m selling moonshine out the back of an old Ford truck.) This is possible if the producer does subscribe to our option. The means to do so is to call me at the number that can be found on this blogpost. Then we can calculate your rate and arrange payment. It will be at that time that the producers name will be posted on the wiki, and we will promote the company as a participant in the development of the Preliminary Specification.

Without this olive branch I don’t know what the producers are going to do. Confidence is a difficult thing to lose. It’s an even more difficult thing to earn. I think though that that is what we will be talking about. The confidence in the bureaucrats who are running the oil and gas industry. There has been a lot of support that things would be o.k., that things were under control, to only see things continually get worse and much worse isn’t confidence inspiring. This quarter may be the point where the confidence in the industry is lost. It may not. I don’t have any horses in that race so it makes no difference to me. This is an olive branch, pure and simple. If the bureaucrats want to ignore this opportunity then that is their choice and their risk. I only know that in time, the confidence will be lost in them and the solutions that we are working on here at People, Ideas & Objects will provide for the answers one day. The question is where will the bureaucrats be. In this “option” scenario they get to stick around until we build our software. This would make things easier for us by taking some of the pressure off in terms of our delivery date. And that is my motivation in extending this olive branch.

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

An Olive Branch, Part I

I can only assume the range of emotions that the commodity prices put our friends the bureaucrats through last week. One minute they're at their lowest, the next moving into bull market territory, only to fade into a more peaceful range. These are the kind of emotions they put everyone through as a result of their inaction and overproduction. It's good to see them sweat a bit. Other than watch the commodity price ticker, because they know they can’t look out the window until the afternoon. For if they did, they would have nothing to do that afternoon. Old British joke. They seem to be frozen in time and in place and absolutely petrified. We saw a few layoffs, but those will soon be as common as the weather forecast. The question remains, what exactly are these bureaucrats doing?

It is the bureaucrats that the world will be looking to for a solution to the losses and disastrous consequences of their actions and inactions. They will be asked “what is the plan.” “What do you need to do to get out of this mess and do it as soon as you can.” There isn’t much in the way of a scenario where an industry is on fire, such as the oil and gas industry currently is. How will the powers that be put that fire out, and how soon will it resume normal operations. Standing at attention on the bridge of the ship, blinking in response to the question, with your pants on fire, isn’t going to inspire anyone.

Best to think quickly what your options are. The classic management excuse in the development of all scenarios is a) to do nothing. And they have been relying on this one for six or seven decades now. Clearly this won’t work, so we need new ideas. It’s at this point in time that I would point out that I had a vision in 1991 of how the industry could operate. One in which Information Technology would be the key enabler. It's now 24 years since that “idea” permeated my head and it has taken me this long to develop the Preliminary Specification. So coming up with a new idea on the bridge of the ship while your pants are on fire is the appropriate time and the appropriate place. Still the question has to be asked, what are our options?

Have I ever mentioned that we provide a $45.7 trillion (with a T) value proposition. Or that by funding our budget the producers could state that they have a solution to this issue and would be able to reclaim some of the past years $700 billion damage done to their stock market capitalizations. I’d be surprised if I hadn’t mentioned our value proposition. Anyway these are the values that should motivate the bureaucrats to act. Sure it would be the end of their reign of power. But what is it that they think they have?

We have our budget here at People, Ideas & Objects which will take some mental preparation for those that need to fund it. Think value proposition! One thing that can be done in the short term is that we can offer the producers an option. Our olive branch. The Preliminary Specification as a solution to the difficulties they face. This however will cost the producers a monthly fee, paid annually, in order to be part of the group of producers that are participating in this solution. It will be in this way that People, Ideas & Objects can begin the process of generating revenues, something we know absolutely nothing of. In exchange for this fee, producers will be able to state they have this option, and they are moving forward with this option as a solution to the problem. It’ll make the bureaucrats look like geniuses, and maybe even stop a round or two of layoffs.

Bureaucrats have a record, over the 24 years that I have been doing this, that stinks. The performance of the stocks of oil and gas producers has mapped closely to the commodity prices. Commodity prices go up, producers stocks go up. What is it that the bureaucrats are doing. How have they provided value to their shareholders, society and most importantly to the people who work in the industry. It is clear they’re only trading on the commodities. Why not just set up shop in Chicago and trade commodities then. This is a terrible record, however, it gets much worse. The times when commodity prices were high, bureaucrats were the ones found to be in the trough crowding out everyone else before anyone got their share. If they want to mitigate the sting of this record, rectify the problem in the industry, and keep their options open. This can be done by subscribing to this “option” of People, Ideas & Objects. We will publish the names of the producers that subscribe and you too may enjoy some stock price increases based on the potential value producers can earn in the future. Their incentive is to show the world they have a solution to the problem. Then with the efficient market hypothesis, their stocks will reclaim some of their lost stock market values.

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