"Petro Canada was forced to make a hostile bid."

Its 1982 and Canada has just passed its new "Liberal" governments budget. Petro Canada, being the product of the Canadian government's attempt to emulate the rash of 1970's style third world countries. Commenced the nationalization of petroleum assets. Venezuela, Mexico's Pemex and Libya were the prototypical examples that the Canadian government used to nationalize the Canadian oil and gas industry under Petro Canada's "management". Under the premis of a "back-in" Petro Canada was handed many of the most handsome oil and gas properties in the country. The fact that they were owned by other companies was not an issue. And as is the case with other third world nations, why would Petro Canada assume things are different in 2006.

With the Federal treasury in tow, Petro Canada went on a spirited acquisition trail. Foreign energy producers like Shell, Texaco, Chevron and BP soon learned that Canada was not hospitable towards foreign investment, and hence found little market value for their assets. Having adopted discriminatory tax policies that favored Petro Canada, foreign companies sold at distressed prices to Petro Canada. So when Petro Canada used these two methods to acquire assets, we see the attitudinal reason for their lack of patience with Canada Southern Petroleum and their Arctic assets. (Remember Petro Canada must be known an explorer.) Or as I have stated before, Petro Canada and its management are entitled to their entitlements.

Petro Canada in today's Calgary Herald indicates that it has not necessarily given up on Canada Southern Petroleum Ltd. (Recall its "Wednesday's corporate strategy" today). However as they are quoted as saying,

"It was toward the end of the process that Canada Southern came back to us with their estimate of value, which was significantly different than what our's is."

Kinda reflects an un-constructive point of view. You want to buy, the vendor does not want to sell. These "bargaining" positions that others may take towards Petro Canada's offer are not typical in the third world, and are particularly inconvenient for the management of Petro Canada. If you listen carefully you can just about hear the management of Petro Canada, "if you don't sell then we'll nationalize your interests". And "if we can't nationalize you, we'll impose discriminatory taxes on you to force you to sell at prices we deem reasonable".

Just as this Tiger (Petro Canada) can't change its stripes, either can it's management. The pen may be mightier then the sword, however, I would say the WebLog is mightier then the pen!

Technorati Tags: Adaptability, Bureaucracy, Energy, Exploration, Genesys, Petro-Canada

To Kyoto, or not Kyoto, that is the question.

Firstly I don't think there is a sane person that believes the influence of Kyoto protocols was a positive or reasonable solution to the environment. When politicians and bureaucrats come up with solutions, they have a tendency to be the wrong solution to the wrong problem at the wrong time. The science not being fully established, yet, many fear that the need for action is now, just in case. Not an unreasonable or irresponsible point of view.

Is this the time for energy industry to take this initiative and make it theirs? What if they were able to establish reasonable targets, commercial frameworks and dare I suggest environmental improvements. The point I want to make here is I think this can be done "profitably".

The environment and energy industries are now one in the same. How the energy industry can stick its head in the sand until the environmentalists go home is as unreasonable as the Kyoto protocol itself. Its time for the energy industry to get in front on this issue and make it their problem. In Canada the unjust method of allocating Kyoto penalties would have had serious detrimental outcomes with respect to our industries performance, commercial viability, and unquestionably a decline in the environment.

The sad part of this entire debate is that it appears the solution to the problem is what the energy industry needs anyway. As the oil reserves decline in pressure, and hence their drive, secondary forms of pressure maintenance, such as water injection are introduced. To enhance these secondary methods many miscible and / or tertiary methods and agents are added to maintain the reservoir pressure, and influence the oil from the rock. These methods are successful in capturing as much as 40% of the oil in place. Natural gas, propane and butane are injected into the formation sustaining production deliverability and increasing the life of the field, something that is desperately needed.

CO2 or Carbon Dioxide the chemical that Kyoto has deemed as evil is one of the most effective miscible agents. Not only would CO2 maintain the formation pressure, the CO2 works to loosen the grip of the rock on the oil, freeing it to be captured in the production. How big are miscible floods in Canada? Very large with over 30 fields that are actively being flooded with these miscible agents. I think there are more then 3 CO2 floods in the province of Alberta as well. Miscible floods that are driven by CO2 gas that is sucked out of the earth's atmosphere.

This is hardly a failure of the energy industry to deal with the problem. So why have they left the issue to the politicians? I think this is symptomatic of the inability of the structured hierarchy to deal with the problems of today. The Alberta Government has had a significant influence in the development of miscible floods in Alberta for over 3 decades. Funding 100's of millions of dollars in royalty holidays and incentives to maintain long term oil deliverability for the province. They and the energy industry have done a fantastic job in making this engineering understood and productive for the companies and the citizens of Alberta. The Alberta Research Council has been able to develop the leadership on this initiative. They have even developed a handsome software application PRize 3.0 to evaluate reservoirs for the effectiveness of miscible flooding. No one who is familiar with these initiatives would argue the level of their success.

It is therefore, in my opinion, the failure of the hierarchy to deploy the necessary resources in the Kyoto debate, and the failure of the hierarchy to use what it knows to mitigate the environmental risks. I want this blog to include the environmental components of the earth's atmosphere as a critical part of its role. I am therefore adding the topic of the environment as a point of the discussion on an ongoing basis. After all what we are doing in building this software is to define the innovative high performing oil and gas organization. A key component of these high performing organizations must include a solution to the environmental problems we face. If we are building the software and design the solution in the software, then we can solve the problem.

Technorati Tags: Accountability, CAPP, Energy, Environment, Genesys, Leadership, Kyoto

When were Petro Canada's options granted?

A story in today's Wall Street Journal asks if there is any correlation between the time that stock options are granted and their pricing. Steve Stecklow asks of Dr. Erik Lie (pronounced Lee) in "Options Study Becomes Required Reading"

"it's uncanny how good these executives must be at predicting what will happen with future stock prices"

After considering the situation, and writing his doctoral thesis, Dr. Lie raised a very interesting point regarding the use of stock options. He asked if the companies that were under his study to provide the dates of the stock option grants.

"Dr. Lie says he tried to contact a few companies to ask about the dates they granted options but he couldn't get past their secretaries, and gave up. His paper concludes, "Although I show aggregate evidence that retroactive timing occurs, it is difficult, if not impossible, to prove that such timing takes place in individual cases".

Now I think that Dr. Lie has valuable theories here. So in the interest of science and better accountability we should help Dr. Lie in his quest. Does Petro Canada back date stock option grants? Lets have a call in and determine if we can find out. Petro Canada's phone number is 403-296-7691 and ask for Gordon Ritchie, Senior Director, Investors relations.

Please report any findings to this blog through the comments field of this entry.

Technorati Tags: Accountability, Bureaucracy, Conflict, Genesys, Petro-Canada, Thesis

Petro Canada news management.

I am sorry to report that Petro Canada have pulled their press release about the acquisition of Business Inteligence Software. Fortunately the press release can still be sourced through Google Finance.

Technorati Tags: Bureaucracy, Genesys, Petro-Canada

Organization, the key.

This blog is dedicated to ensuring the optimal organizational structure is provided for oil and gas. I have noted that information systems need to support and define the organization, how a technical vision can fulfill this promise, and some of the accounting related issues. I think that we have found some important issues that need to be debated and discussed on an ongoing basis.

One critical area that we have not discussed so far is how the organizational command and control is achieved. This being a particularly important element and one that touches on the technical vision, accounting and management related issues and joint operating committees 5 frameworks. (The five frameworks being legal, financial, operational decision making, cultural and accountability.)

Without the hierarchy to define who is responsible, accountable and authorized, little if anything will be achieved. Individuals are how organizations achieve their tasks. Who represents the organization, their validity, their security and authorization can all be encapsulated in the software and have much of these interactions operate seamlessly. But how do the people organize themselves?

Simple military styled command and control. By layering a matrix of military structure, from General's to Privates, over the joint operating committee, the how and who is sourced, tasked and completed.

There are many aspects of this new issue that need to be discussed. Today I am starting a new series on how this layering of the human, physical and tangible resources can be deployed in a military styled fashion under the tag Military Command. Enough said for today and much to think about.

Technorati Tags: Dosi, Energy, Genesys, Military Command

Competition vs. coopetition.

A very good friend noted the nature of the oil and gas business is not one for the sharing of intelectual property. Competition is the predominate culture of the industry. When anyone talks about culture and change we know that in any organization the two traditionally have not mixed. How cultural change occurs is usually by extreme forces that compel the culture to be dealt with. So how are these ideas of Brown and Hagels "Creation Net" able to function in the competitive culture of the oil and gas industry. Please don't hesitate to comment. This issue needs a vigourous debate to get to the ultimate solution. Here are a few thoughts of mine.

Here in Calgary we are on a two week supply of concrete. Monstrous trucks used to mine coal and heavy oil are having difficulty in sourcing the volume of rubber necessary to meet their tire wear demands. Caterpillar is selling most of its production into Asia which is creating shortages of adequate industrial equipment. And please don't even ask for a Waukesha Engine. This is not an environment that competition can prosper in. Just as President Ronald Reagan revolutionized economics with policies that define and support what globalization is, new economic forces are beginning to grow and redefine the supply / demand trajectories. These new economic forces, in my opinion, are not linear, but logarithmic and possibly even exponential to yesterday's performance.

Company's that want to participate in this new economic reality have to address their sphere of influence and increase their capacity through the "Creation Nets" that Hagel and Brown define. Their three key components for effective creation nets were defined as;

Uncertain demand for goods and services.
When your customers are down the block, servicing their demands was relatively easy. Today your customers are global and their demands unknown and unpredictable. Your ability to secure methods to control production, demand management and inventories are tools that are unable to deal with the real issues in this very near future.

A need for the participation of many different specialists if creation and innovation are to occur.
Expanding your sphere of influence to include groups that would have previously been considered your competition provides two benefits.

• Increase the volume and quality of brains towards the problems at hand, facilitating and spreading innovation.
• Allocate the finite resources to optimize the most efficient production on a global basis.

Rapidly changing performance requirements in the marketplace.
As I suspect, starting with the second quarter of 2006 Petro Canada's financial performance will shock everyone. How could a firm in this energy environment do the things that they have done, to have caused so much destruction? The evaluation criteria for success and failure will need to be redefined. That Petro Canada and Enron have both reported "earnings" has nothing to do with reality, or the future.

Conclusion:
If we don't align ourselves to solve these problems and address these cultural issues, then we are destined to suffer unnecessarily. The hierarchy and bureaucracy are in complete control. They are the most self serving and destructive forces in this new business environment. They exist to serve the powerful few and must be stopped.

In my plurality thesis I have defined that the software is either a constraint or facilitator to organizational performance. The culture of the oil and gas industry is derived from the joint operating committee. Its key value creators, the engineers and earth scientists are born of a sharing and collaborative academic culture. I don't want to change the culture of the industry, I want to realign it to where it belongs.

However, after a century of big business models. Models that enabled substantial organizational performance, those models have failed. Its now time to say goodbye to the bureaucratic culture and re-align the oil and gas industry to its more natural cultural influences of the joint operating committee and scientific roots. To meet the customers energy needs for the long term requires we build the software to support these "Creation Nets".

Unfortunately the financial resources necessary to build these applications are firmly held in the tight fist of the bureaucracy, so lets start cooperating.

Technorati Tags: Adaptability, Bureaucracy, Creation-Nets, Genesys, Hagel-Brown, Intelectual-Property, Petro-Canada, Plurality, Thesis

Petro Canada announces new, software?

Just a couple of days ago I ran a series of how a firm like HSBC in 1982 set out to become one of the world's largest financial institutions on the basis of its Information Technology strategy. Here we have Petro Canada announcing that it has purchased a "new" software application. Next we'll see announcements when the company has turned on the lights. I mean, why are they announcing that they purchased a new software application?

Maybe there's something exciting like the HSBC findings. That Petro Canada will be providing the world with a bold new strategy! I some how doubt it. The company that sold them the software, Information Builders and their oil and gas software offering can be seen here. They like Petro Canada have a unique vision regarding entitlements that I find best reflected in IBI's statement;

"That's why industry leaders such as Gulf Canada Resources Limited, Northwest Natural Gas, and Westcoast Energy, Inc. have turned to Information Builders to deliver crucial business information to managers, employees, customers, and partners."

Now if I am not mistaken Gulf Canada Resources Ltd. being purchased by Conoco Phillips in 2001. Westcoast Energy being purchased by Duke around the same time. Here we have Petro Canada making a press statement about the purchase of a software application that is so well utilized in oil and gas, that the vendor company cannot even bother to update its customer list from five years ago?

The accountability charges that I have made here are beginning to stick in Petro Canada's back side. The management being as progressive as they are, by selecting and making the acquisition of new software are directly responding to the charges that I have made in this blog. Petro Canada's attitude that the selection of the alternative "Information Builders" accountability framework is the preferred model to what I and SEC Chairman Christopher Cox are talking about. It is also evidence that they understand my thesis that the software defines the organization. By selecting a second rate vendor that has no real offering and making hay about it in the press is the best this bunch of half wits can generate.

However, like so much of their past activity, the transaction only fuels the concern that they are lost and should be dealt with promptly by the Petro Canada shareholders. I will leave it to my readers to determine if the charges that I have made in this blog are valid.

Technorati Tags: Accountability, Christopher-Cox, Conflict, Genesys, HSBC, Petro-Canada, Technical Vision, Thesis

To me Petro Canada is more disturbing then Enron.

There seems to be an attitude at Petro Canada that the company is involved in the oil and gas industry. If it is seen to be "active" for the sake of "activity", then the fleecing of the investors, based on the Enron model, can continue. Yesterday it was learned that the Board of Canada Southern Petroleum Ltd. rejected the Petro Canada offer, and in their response to the press, Petro Canada reflected that they thought the offer was fair and would not be amending it. Petro Canada is not attempting to be successful, its not attempting to be a failure, it is just involved in diversionary activities.

Lots of press that makes it "appear" that they are a progressive and prudent company. Recall that my prediction is that Petro Canada's second quarter will be an abysmal performance. How they report the validity of their "Panic" business model, and "hourly" strategy sessions will have a deep and compelling reflection of the firms character.

So in the activity column, Petro Canada is looking to augment their capability through the acquisition of some land in the Arctic. When the offer is rejected, they turtle and go home. The objective, to look as if they are an active explorer, being achieved in their minds, they can then turn to the stage producer to commence with the next show.

I found some pertinent analysis in Saturdays New York Times regarding the Enron trial. The quote was;

"The Enron case will forever stand as the ultimate reflection of an era of near madness in finance, a time in the late 1990's when self-certitude and spin became a substitute for financial analysis and coherent business models. Controls broke down and management deteriorated as arrogance overrode careful judgment, allowing senior executives to blithely push aside their critics."

Yesterday I promised my readers that I would summarize the Petro Canada story for them. In selecting the tag on this blog "Petro-Canada" will aggregate all my "Petro Canada" stories for the readers. This is why Chairman Christopher Cox's use of tags in the SEC's accountability framework is so powerful, its so damned simple.

It appears to me in the case of Petro Canada, they have added new elements to the Enron styled rule book, however, to me, this is only proof that history does repeat itself.

Technorati Tags: Accountability, Bureaucracy, Christopher-Cox, Compensation, Conflict, Energy, Genesys, Petro-Canada

Petro Canada, the series.

Well the word is out that both Ken Lay and Jeffrey Skilling are now convicted felons. The attainment of this key event in my marketing plan has finally come true, and I can now commence phase II. I will proceed with the analysis regarding Petro Canada, and determine why it is they have not been charged, yet.

In today's coverage of the Enron story, the Calgary Herald wrote;

"Meanwhile, Canadian Experts said that had Lay and Skilling run their company in this country the two would likely still be "walking free"".

And I can assure you, if Petro Canada were operating in Texas, they too would have been in prison by now.

I have prepared a long list of stories that I will be writing in the next few weeks about Petro Canada. These stories will focus on a systemic inability to account for their actions. When confronted with the facts, the company has skirted the questioning adeptly through obtuse reporting and what is best described as a shell game. I will start tomorrow with a summary of the accusations that I have made in this blog to-date and continue on with my reasoning why Petro Canada should be made to account to their shareholders and several other interest groups.

It is my opinion that all firms in their right minds would have assessed the risks and opportunities of the criminal charges and legislative environment created in the U.S. since Lay and Skilling were first discovered. It is my opinion that Petro Canada did that assessment and determined that it would somehow not affect them. It is clear now that they have a made a critical error in judgment and will now need to account for the $1 billion + in stock options ($199 million of which is in the money) along with a series of actions that have permanently crippled the company. But when you are asked to manage the nationalized oil and gas assets the Canadian Federal Government confiscated from the international producers, a pervasive mindset of being entitled to your entitlements begins to penetrate the minds of management and as we shall see, certainly not a commercial mindset at that.

I can assure you this blog has caught the attention of the management of Petro Canada. With Google Analytics there is not much of who and what your readership is interested in, Petro Canada as a topic scores highly on this blog. With the stated strategy that I am employing in this conflict as "I have a right to be sued" I can guarantee my readership the next ten days or so will be very entertaining. The first thing that may stand out is that Petro Canada is / was substantially smaller then Enron. But the scope of the executive compensation and cover up at Petro Canada is not only larger in monetary terms but far more serious. After all they knew what Lay and Skilling were up to. How do they propose to explain that they were not aware?

Finally I will tie in the actions of Petro Canada's management in making sure their continued entitlement's to their entitlements were not challenged by the thesis of this blog. This thesis being that the Joint Operating Committee was the natural form of organizational structure of oil and gas firms. That the bureaucracies were redundant is a given that is tacitly understood by everyone, but to define the Joint Operating Committee as the key organizational focus required the software to be built before the changes would occur.

Petro Canada's exclusive and lucrative party was being threatened by this thinking. They realized if the software wasn't built, then the risk would be eliminated and through their selfish and un-constructive thinking, have taken these concepts to make their party continue on indefinitely.

As custodians of the investors resources Petro Canada will be held to this higher standard of expectation.

Technorati Tags: Accountability, Bureaucracy, Conflict, Energy, Exploration, Genesys, Intelectual-Property, Petro-Canada, Plurality, Thesis

Number 9.

The number of calls to action increases by one more. This one more local. Mr. Murray Edwards is sort Calgary's version of the local boy done well. At 46 years of age he has amassed a fortune of several billion dollars and is currently holding down the following roles.

• President, Edco Financial Holdings Ltd.
• Vice-Chair, Canadian Natural Resources Ltd.
• Chair, Ensign Energy Services Inc.
• Chair, Magellan Aerospace.
• Owner, Resort of the Canadian Rockies Inc.
• Co-Owner, Calgary Flames.

Mr. Edwards is quoted in the May 2006 issue of Alberta Venture, in which he is the cover story "Who Cares About Respect"

"We're really big proponents of flat organizations where people have a sense of ownership."

So lets mark this down as number nine in a long lists of calls to action and welcome Mr. Edward's to the party, maybe one of his energy related firms will be the first to donate to these software developments.

Technorati Tags: Accountability, Adaptability, Bureaucracy, Call-to-action, Energy, Genesys, Plurality, Thesis