Why does Petro Canada get all the attention?

To prove that the blogosphere is more powerful then the bureaucracies. The ability for these bureaucracies to survive does not exist. In an environment where innovation, adaptability, speed and capability are required, who needs bureaucrats.

The need to prove that Petro Canada is run for the betterment of the managers "stock" options. Or as I like to refer to them as "entitlement" options. The management can not expect that anyone is going to overlook their use of the treasury for their own purposes. Do they not recall Enron or Worldcom?

Its not personal, but Petro Canada's staff took the time and effort to make sure that I understood that any of the efforts I made in developing this software would be minimal and unsuccessful. That my time in the oil and gas industry was over and that I should find work in other industries. So its just so much easier to pick my targets after this treatment at the hands of their so called "senior" management. Since they have had the luxury of using their power to make my life miserable, all is fair in love and war.

That these organizations as represented by Petro Canada have failed. In every metric of financial, production and particularly earnings, they will begin to show signs of being severely strained. I believe a company that was successful in the exploitation era, is an abject failure in the exploration era. They can not change their stripes.

These failures are beginning to be evident in some of the companies already. Failure is the most advanced in Petro Canada, and therefore picking targets is easiest when they pretend to continue on for the betterment of their shareholders.

Technorati Tags: Exploration, Genesys, Java, Petro-Canada

Point taken, Chief Java Evangelist

Jonathon Schwartz is the Chief Java Evangelist, President and CEO of Sun Microsystems and in preparation for the Java One conference, he prepared a blog entry to discuss the comparison of the shipping container to Java.

Now I like to joke that Schwartz, McNealy and Gosling are second rate Java evangelists behind myself. Maybe what I should of stated in my comparison of the container and Google is that Google's favorite language is Java.

I am highly recommending that everyone and anyone register for a free web based introductory course on the Java Programming Language. Hosted by Sun employee, Sang Shin, register for the course and learn why most people believe the Java revolution is about to really begin. I'll be registering as well because I understand Mr. Shin so well that I am going to learn much from him.

[Learning] [Container] [Java]

Before Google, the container.

Sarah Murray wrote an interesting article in last weekend's National Post that was brilliant. Entitled "Birthday of the Box" it chronicled the birth, issues, development and effects of the shipping container. Celebrating it's 50th year, the ubiquitous shipping container has lead to many of the innovations and benefits of globalization up to this point. Noting the particular points of interest are as follows.

• 90% of global trade now travels inside them.
• It was the brain child of Mr. Malcom McLean, a North Carolina truck driver.
• Port operators and ship owners were reluctant to put their money into equipment, vessels and port infrastructure, and most importantly the longshoreman and dockworker unions dug their heels in. (Something that I can appreciate from the oil and gas industry.)
• Longshoreman in New York dropped from 30,000 in 1960 to 8,500 in 1986.
• Intermodalism impacted shipping to such an extent that OOCL Shenzhen is the largest vessel. Capable of the following capacity
• Christened on April 30, 2003 in Korea.
• Can travel at 25.2 knots at full load.
• Capacity is more then 8,000 containers.
• 8 million crates of bananas, or
  
• 200 million blouses in a single journey.
• Delivering choice to the global consumer.
  
• Making production of goods to flow to the lowest cost producer. An efficiency that benefits every human on the planet.
  
• Used containers are now converted to housing, schools and such in the developing world.
  

I agree with the author that all aspects of our lives have been impacted and improved as a result of the thinking of this North Carolina truck driver. The author notes that science is also benefiting in many odd ways. In 1992 a container of 29,000 plastic ducks crashed in the middle of the North Pacific. These ducks are helping scientists map and gain a better understanding of ocean currents as these ducks are noted and documented in their travels.

Sarah Murray is the author of an upcoming book called Moveable Feasts: the Incredible Journeys of the Things We Eat, ISBN. Although she mentions that the impact of information technologies on these innovations have also made the container fulfill the promise of its full value, I think she is missing a phenomenal parallel in terms of its impact. And that is Google.

That the container was able to revolutionize the "physical" world is credited to its roots and birth fifty years ago. Google to me provides the same value and impact from the "intellectual" world. As we have automated and "roboticized" much of our production, logistics, shipping and marketing, Google is the same revolutionary thinking. What could be thought today in this world could be implemented and acted upon by Google immediately.

As we pass from the physical to the intellectual worlds, 50 years from now, people will know and say the same things about Google, that we now know and say of the container.

[Google] [Container] [Revolution]

Petro Canada is...

Fill in your own words here, my word is ridiculous. This is the only way that I can describe what the National Post reported in Saturday's edition. Petro Canada was considering partnering with Marathon Petroleum in a Syrian concession that Marathon was granted last week.

So, it's now Monday, the strategy of the 2005 annual report. In which the justification for selling Syrian assets at fire sale prices was.

"The sale of the mature Syrian producing assets aligns with the Company's strategy to increase the proportion of long-life and operated assets in its portfolio."

Is no longer valid.

I can only hope and pray that Petro Canada takes my recommendation to heart. My recommendation noted here was based on Dr. Thomas C. Schelling's "Strategy of Conflict" that I have the right to be sued.

So please I beg of you, sue me, because if you think it's been bad for the last couple of months, you haven't seen anything yet. So do it, and as they say "Lets get ready to rumble".

Technorati Tags: Bureaucracy, Exploration, Genesys, Petro-Canada, Conflict

Petro Canada vs. Talisman and Devon.

I'll let readers determine if Petro Canada made a wise (attempted) purchase in Canada Southern Petroleum Ltd.

The May 13th Calgary Herald reported that Talisman and Devon Energy secured four of six parcels in a bid to secure rights in 1,300 square miles of the North West Territories.

Although the Talisman et al rights were for land, the $53.9 million is for work commitments. So to develop the land in the North West Territories, Talisman et al offer $53.9 million to develop 1,300 square miles. (an average cost of $41,461 per square mile.)

Recall the $113 million Petro Canada is offering to secure land in 52 square miles in the Arctic. The Arctic being somewhat North of the North West Territories. (an average cost of $2,173,076 per square mile.) I don't know, but base on these criteria it looks as though Talisman et al made the right decision here?

The key attribute of management is not to spend to much for an asset. Over time the value of the asset, and the future profitability of the company are directly related to these transactions. A good example is, a few years ago Ms. Carly Fiorina of Hewlett Packard offered $19 billion for PriceWaterhouse Coopers. For some reason the transaction didn't close and not even one year later IBM bought PriceWaterhouse Coopers for just $3 billion. A $16 billion difference.

Fortunately, Hewlett Packard dispatched Carly out of the CEO's office. Given an unlimited amount of money for asset acquisition, a fool, such as Carly or Petro Canada, will over pay for assets every time.

[Petro-Canada] [Talisman] [Devon]

Energy, the one common denominator of life.

Discussions regarding energy and its value are being actively debated around the world. Since the shortages are placing the commodities of energy into the political arena, these discussion are taking on a heightened value.

I thought I would add my two cents in to the discussion, so here goes.

Two things are finite energy and life. No other commodity, or value of anything fits that definition of "finite". There is only so much of it and there is nothing that can be done once either is gone. As time passes, energy and life are irretrievably lost. Nothing can be done to recapture it.

Kind of puts the hole energy discussion into context for me.

[Energy] [Innovation] [Java]

The Petro Canada definition of value and maturity.

Today's papers are full of the hostile bid that our favorite company, Petro Canada, is launching against oil and gas producer Canada Southern Petroleum Ltd. Paying $113 million for approximately 1,000 barrels of oil equivalent and 52 square miles in the Arctic may seem high, because it is. Asigning a value of $113 million per 1,000 bbls /day (raw land is always included in deals). Petro Canada wants to be known as an explorer, and that's all there is to it.

Or are these people even acting rationally? Petro Canada recently sold producing assets in Syria. These assets were deemed as "mature" by the company and therefore were no longer appealing to management. Is it therefore fair to assume that Petro Canada's "hostile" bid for Canada Southern is for immature assets? Lets do a comparison.

Syrian assets were sold for $676 million in late 2005 (including rights acquired in 2003). Syrian properties were producing 70,000 boe / day, or, approximately $10 million / 1,000 bbls per day. Petro Canada disposed of this for the following reason.

"The sale of the mature Syrian producing assets aligns with the Company's strategy to increase the proportion of long-life and operated assets in its portfolio."

So to use the vocabulary of Petro Canada the following values can be determined.

Arctic assets are "good" because they are strategic. (ie. long life and operated.) Syrian assets are "bad" because they are not strategic (ie. short life(?) and non-operated.)

Now I see the theme of this management. Again as with the Syrian sale, the Arctic assets seem to be done from the point of view of pure "panic."

I am going to make a clear recommendation that I hope the management of Petro Canada can understand. Revise your strategy to include the word "producing". You'll feel better for it.

[Petro-Canada] [Strategy] [Java]

Partnership Accounting Part IV, currency and volumes.

In previous entries about partnership accounting, I have discussed the unique nature of accounting for partners in this proposed new networked application environment. In Part I, and Part II, I included how the membership of a producer within the joint operating committee might contribute capital, lands or leases, capability or intellectual property to the table. That these values would need to be identified, quantified and equalized before the partnership accounting was completed. The role of chairman would be somewhat diminished and be more equal to the other participants active participation .

In Part III I raised the issue regarding changes in the working interest shares of a property based on certain criteria or events. Imposing a cutoff in which these changes take place within the month. I also discussed the need to account for both accounting months and production months.

Today in Part IV I want to raise the issue of currencies. The operation of a facility may be in a remote area of the globe and be owned by two or more producers located in other countries. This may be a likely scenario considering today's makeup of producers.

I also want to reiterate how this system is built and its impact on the producer. Genesys software will be the core of the application that does the majority of the processing. Developers that build the core will also have plug-ins of their own that will deal with the unique data, information and regulations of a certain jurisdiction. These interfaces will need to handle the presentation of data in the appropriate accounts at the appropriate values. The core algorithm will calculate the nuances of the data elements and the presentation of these will be done by the partner providing the plugin.

Therefore, a producer in Texas may have partners from Canada and Great Britain involved in a large facility in the capital of Turkey. To represent the involvement of each partner in the currency they are regulated to report in, is up to the Genesys core with data representation in each of the four countries mentioned. A difficult task in this era of large currency fluctuations.

Currency translations can take on two distinct characteristics depending on the type of account. The asset's need to be reported at the lower of cost or market value. How is this impacted on each producer if the currency in use by the partner is the U.S. and the Turkish dollar declines precipitously. What happens to some debt or obligation if your home currency declines and your debt is denominated in U.S. dollars?

The second type of currency translation are those that would be associated with the revenue and expense type of accounts. These could also disrupt the makeup of the partnership accounting particularly if the U.S. dollar were to decline to record levels. Does this make the property represent a disproportionate value to each one of the partners?

Another issue respecting these accounts, what if the firm had paid a cash call at the beginning of the work and their was a large currency adjustment between the time the cash call was paid and the monthly statement of operations or expenditures was issued. How are these going to be handled.

The purpose in raising these points in partnership accounting should be clear. The number and types of transactions are taking on a multitude of exceptions that need to be addressed. To make this system functional and useful in this environment will be a test of the technologies. Difficult at this point, but I am confident that given the right amount of time the Java developers will have made the system able to accommodate all these various data elements. I therefore assign the technical risk as low.

In Partnership Accounting Part V, I will be discussing the difficulties in dealing with production volumes. How they are recorded, balancing, custom fees, custom products etc.

[Partnership-Accounting][Genesys][Java]

The "anti"-Petro Canada.

I have been very quick to point out the failures of our favorite company, Petro Canada (PCZ on the NYSE). I can assure you that the fun will continue, and as I suspect, only get better. Today I want to contrast the failures of Petro Canada with what I think the large international producer should be doing. And here in Canada we have somewhat the prototypical explorationist, Talisman Energy Inc (TLM on the NYSE). So from now on, not only will we be highlighting the systemic failures of Petro Canada, but highlighting the success of Talisman.

Firstly, Petro Canada has failed again in developing its Terra Nova field. What was supposed to be a highlight of their international capabilities is turning out to be a financial and operational disaster. Even the provincial government is recalculating their budgets to accommodate the Petro Canada failures. This time there was a failure in their production platform that will cause their facility to be down for four months. There goes that revenue, up goes those costs, down go our profits. Oops I forgot they were losing money before these failures.

I have to ask of the Petro Canada management, all this for a billion dollars in stock options?

Enough about Petro Canada, for now. Talisman announced their quarterly results and I am pleased to announce that they have discovered another significant gas find in British Columbia, Canada. Talisman is headed by it's CEO, Dr. James Buckee, a geologist, and consider themselves explorers. It is on that basis that they were able to report that oil production was up 27% to 300,000 bbls / day and gas production was the same at 1.338 BCF / day. All in all, a stellar performance in comparison to Petro Canada's diminishing production profile.

Talisman is reporting that in addition to last years find of 55 mcf / day in the Monkman area, an additional 33 mcf / day in the same area went on production last month. Attributing an exploration mindset to the company is explicitly stated by the CEO.

Dr. Buckee also noted an interesting point that Dr. Giovanni Dosi states about innovation. (Click on the title of Dr Dosi's name for that blog entry.) I stated the following based on Dosi's research.

"as any industry continues in a high priced environment the technological changes that are brought about (from innovations discovered) provide "irreversible" advantages to the innovator "at any price level".

Dr. Buckee notes his target is to find gas that is economic around $5.50. By doing so he finds the discoveries from his target of $5.50 are usually profitable at around $2.50 - $3.00! This is exactly what Dosi suggests happens. That when innovations are developed by the innovative firm, it usually has the effect of being profitable throughout the pricing structure.

All in all an interesting day, and one day closer to the Petro Canada second quarter results. I wonder how many stock options it will take them to figure out this latest disaster, I sure hope the management takes it easy from now on.

[Talisman] [Petro-Canada] [Java]

The revolution grows.

The title of this entry will take you to an eloquent revolutionary that accurately captures the opinion of this blog, and the systems that are needed to be developed.

As I stated in my thesis,

"the only requirement for the technical revolution to continue is for the coup to trigger the signal. Metaphorically speaking of course"

Pamela Slim, a business consultant is starting the call to the CEO's and other officer's within the corporate hierarchy. Calling out the staff to give up on the corporate environment and make a difference in the world.

All I have to say is welcome, there's a role for everyone...