In Summary

These next two months we’ll see the difficulties in oil and gas manifest themselves in three events that will set back even the healthiest producer. The first is the natural gas price will be affected by the filling to capacity of the continent's natural gas storage. The EIA was even subtly hinting at this possibility earlier in September. Once the storage hits capacity there will be no place for the surplus gas to go. Expect pricing to be affected adversely. Second the quarterly report will need to be prepared. There are no more hedges providing cover for the low commodity prices. They all expired toward the end of the last quarter. The full scope of the difficulties in the industry will be on display as a result. Expect to see some financial surprises from the majority of the producers. The question will be asked by most, if things were this bad, why didn’t you shut-in production? And lastly, the banks will be completing their review of their loans to the producers. Banks being risk adverse will be wanting to stop the hemorrhaging by ceasing all lending, recalling any outstanding lines of credit and secure any obvious risks through seizure of the property.

Producers need to change their underlying business model from the high throughput production model to the Preliminary Specifications decentralized production model, our user community and the service providers. In that way they can employ the price maker strategy to deal with the abundance brought about by the shale reservoirs. People, Ideas & Objects needs its budget funded in order for the commencement of this new business model to be implemented within the industry. Then the industry can anticipate that the value proposition that we provide will be delivered over the next 25 years.

There is a do nothing bureaucracy that is in place in the industry that refuses to do anything in the face of such devastation to the value, and capabilities of this industry. They therefore put our way of life in jeopardy by standing by and doing nothing. This muddle along strategy has worked for them in the past and they expect that it will continue to work for them. I think we are seeing that their strategy is failing and needs to be replaced by active management of the industry. We have had a year of poor oil prices. Five years of poor natural gas prices. Both commodities unable to provide the producer with positive margins. And with shale reservoirs not much of a chance of any relief. Yet they continue to produce unprofitably. And there is no discussion outside of this blog regarding any of the issues, the solutions or what should be done. There is a lot of commentary from the press and the analyst community but they don’t necessarily fully understand the industry and are only able to grab a headline or two in terms of being accurate. It is miraculous to me that these bureaucrats will pass through this time without saying or doing anything, or being held to account for anything.

It's a comfortable position to be in if all you do is the same thing day in and day out. Nothing ever expected of you, or you having to do anything. These bureaucrats have ceased to act based on market signals such as the price of the commodities that they produce. As time passes things age and deteriorate, are not built or replaced. Then the commodities become in short supply and the prices rise. We have no assurance that the investors have any confidence in the industry or the bureaucrats. We also have no assurance that the bureaucrats will begin to start responding to market signals such as high commodity prices. Instead, understanding their dilemma of a tenuous hold on their position within the company, they might just continue to do nothing and pocket the cash earned from higher prices.

Throw the bums out. Why give them the opportunity to screw it up any worse. Oil and gas is too important of an industry to fool around like this. Unlike the financial community we have no Fed that can flood the market with the commodities if something serious does happen. Let's get the budget for the Preliminary Specification funded and begin the replacement of this muddle along strategy with active management of the industry.

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. 

Where's the Outrage

We have focused on the situation in oil and gas and most particularly its difficulties. As I pointed out the responsibility for this downturn in the industry is fully attributable to the bureaucrats that run the industry. Shale formations have brought about a new dynamic of abundance of the resources. There has been no response to this change in the underlying business. With these bureaucrats being unresponsive to market signals. When prices do go up, what's to say they just don’t sit on the production they have and just pocket the booty? The attributes of one’s character can help to determine what their future actions will be. Therefore, since this is the past character of the bureaucrats, you can take it to the bank that they will use any increase in the price of the commodities to line their own pockets. Leaving the industry to perish and decay as we’ve discussed earlier.

The question I guess we have to ask ourselves then is there anything that these bureaucrats are going to be able to say and do that will convince the investors, any investor, to invest in the oil and gas industry in the next, 5, 10, 15 years? Investors have been on strike, more or less, since 2008. Alternative means to fund the industry have been used since the financial crisis to finance the shale boom. It could be argued that the junk bond market is no longer available. The attitude of the oil and gas investor is consistent with mine, I would think. A general disheartening of the bureaucrats in power. A lack of faith in their capabilities, trust and integrity.

Since the financial crisis governments have taken great steps to intervene in the monetary markets with their over the top stimulus measures. Instituting a zero bound interest rate policy has removed any integrity or discipline in the financial markets anywhere in the world. These oil and gas bureaucrats have had the luxury of being compared to the performance of other industries that are about as capable, trustworthy and of low integrity. Performance has not been the concern of anyone in any industry. It has been about survival, dividends and stock buybacks.

Global market volatility is rising as the world prepares to move away from the zero bound interest rates. That means the oil and gas industry will be expected to perform in order to obtain any investment from anywhere. Compete when interest rates on bonds are paying good returns. Compete when other industries can provide real returns on investment. It was easy for the bureaucrats to get away with the low performance and slack attitude during this zero bound interest rate period. Now it will be expected of them to compete.

I don’t think they care. If interest rates do go up it will affect the value of their stock and that might impair some of their compensation. But not materially. What can be counted on is when oil and gas prices do go down from an abundance of production, they will inevitably go up. That time could come quickly and they, the bureaucrats, would be able to enjoy the lifestyle they grew to enjoy as recent as one year ago. The trick will be not to fall into the same difficulty again by spending on drilling which would lead to overproduction and commodity price declines. If we don’t respond to market signals now, we certainly won’t begin to respond to market signals then, they will say.

All of these ingredients are in place. We are subjecting ourselves to an uncaring and unaccountable group of self interested people who feel they are entitled. Why would they change this situation? Put yourself in their shoes, it's not a bad situation to find yourself in, and who has the wherewithal to do anything about it?

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. 

History Repeats Itself

“The history of every civilization teaches us that those who do not find new means to respond to new challenges will perish or decay.” President Lyndon Johnson 

I’ve read Roberta A. Caro’s four books on Lyndon B. Johnson. These books represent a lifetime of research and detail in the man who became the President of the United States. You will know everything about Lyndon B. Johnson when you have read all four books. There is a fifth that is being written at this time, Caro is uncertain, at 79 years of age, if it will be finished. Knowing Lyndon Johnson through these books I’m not pleased that I find myself quoting him here. However it is such an appropriate quote to the time and situation that we find ourselves in.

Oil and gas has more to do with the quality of our lives than any other “thing” that I can think of. We put in jeopardy that way, that quality of life, when we ignore the challenges that the industry currently finds itself in. It is our history that we are doomed to repeat. The difficulty is that we are travelling at a much higher altitude with much higher velocity than at anytime in our history. I would suggest that the decay will be short lived. Perishing would come quickly.

Maybe I’m being too melodramatic. Industries have transitioned in ways that have appeared seamless to the average consumer. Which is true, no one remembers or even really cares when the record store manager lost his job. The technology was there to provide you with the music that you wanted and you were finally able to use it the way you always knew you should. Our problem with the oil and gas industry is the technology we need to use is right there in front of us. It just doesn’t fit on an iPhone and work within just one app. We need the software development capability and user community to ensure that the software meets our needs and the services to support the software. A big budgetary obstacle that stands in our way.

We used to be able to rely on what the economists called “spontaneous order.” The economy would act dynamically as people and companies would automatically fill in the gaps left between various companies offerings. These gaps, in the past, could be filled by entrepreneurs who were able to see and configure solutions out of their own financial resources and provide these products and services to their community. Now it's a global economy and software demands that it be the first item to be delivered into the marketplace. This is why Apple, a software company, is so successful. Now not only do we have to understand the global scope, the software nuances, but also undertake the battle of the vested interests who are entrenched in the old ways.

I hope I’m wrong about all of this. I think the speed of events, if left unaddressed, will accelerate exponentially. The momentum will move against us and we’ll never get the upper hand again. We stand on the shoulders of many brilliant people and pay no respect to the things that they have brought us. The fact of the matter is that there are 5,000 man hours of labor in every barrel of oil. If we allow the industry to proceed in the manner that it is, it will certainly decay. Who will volunteer to give up the first barrel of oil. The economy that consumes the most oil is also the most powerful economy. That has traditionally been the United States. Therefore it would seem reasonable that they were the first to give up that first barrel. I don’t think so either.

Clearly the market forces are not working. Oil and gas producers have not responded to natural gas prices in over five years. And oil is following down that same path. What we have are self interested bureaucracies. Just as the former Soviet Union was unable to respond to any market, we currently are not much better. If we are not responding to market signals when there is an abundance of oil, should we now assume there would be a response by these bureaucrats to any market signal denoting a shortage? I don’t think so. After all it would only provide them with more cash which they can then divert to the various forms of compensation that they have so richly provided themselves. These are the facts of an uncaring and unaccountable oil and gas industry.

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. 

Swing Producer, Embrace It

Earlier this week Russia and Opec were unable to come to an understanding regarding production cutbacks and broke off talks. It would almost seem like the Saudi’s were serious about maintaining their market share! Recall this is their stated position regarding their continued overproduction. Once they lose the customer, by cutting their production, they’ll never get them back. They feel that the U.S. shale producers, which are the high cost producers in the oil and gas industry. Are the ones who need to assume the role of swing producer. Opec feels they will produce at full production at all times. And the high cost production, or North American production, will fill in to meet the market demand as required. This will enable the swing producer, us, to maintain the prices that will ensure we earn a profit. The high cost shale producers can ensure that the commodities prices are high enough to earn them the profits they need, and Opec who is the low cost producer despite what you might hear otherwise in the North American press, will be profitable as well.

There is a lot of resistance to this logic in the North American oil and gas, and financial communities. Whether it is that they are being dictated to from Opec, or its perceived as a secondary role to be a swing producer, I couldn’t tell. With the devastation that is happening in the North American oil and gas industry, is it wise to continue to argue the point? Why not just accept that the position the industry needs to take is the one of swing producer. After all it's not just oil that is in need of a production allocation methodology. Natural gas is far further along the business decline created by the abundance of shale reservoirs. The current high throughput production model that the industry operates on is bankrupting the entire industry.

For society to rely on an abundant energy supply to make it through this century we are going to need a healthy and profitable oil and gas industry. We haven’t had that for many years, or even decades. What we have is a very sick industry that can’t and won’t change to accommodate the realities on the ground. The industry has appeared healthy for the past decade due to the accounting methodology used to capitalize everything under the sun. This has bloated the balance sheet of all of the producers and recognized almost none of the real costs of exploration and production on the income statements. Inflating the earnings of those producers at the same time. As a result you have what people thought were healthy balance sheets with abundant assets. But that’s all you had. No cash, no working capital or anything else. The industry was never profitable and always relied on other people’s money.

In order for the industry to become healthy, dynamic, innovative, accountable and profitable they need to adopt the Preliminary Specification, our user community and the service providers. By doing so they will be able to employ the decentralized production model as a replacement to the high throughput production model and begin to allocate production within the industry based on profitability. If the property is profitable, it will be produced. And by profitable we will take into consideration the actual costs of capital for that property. If it isn’t profitable then it will sit in the producers shut-in inventory and be subject to their innovative earth science and engineering capabilities that are designed to expand the properties reserve base, increase its production or reduce its costs and return the property to profitable production.

People, Ideas & Objects value proposition is in the region of $45.7 trillion over the next 25 years. It is comprised of the capital that will be invested in the business and returned to the investors over the next 25 years. It is also comprised of the capital that has been invested in the business, that is sitting on all of those balance sheets and will therefore be returned to the investors in the form of dividends. And lastly it reflects the increase in revenues and profits due to the fact that the marginal production will be removed from the commodity marketplace. Increasing the commodity prices. Saving the reserves of the producer for a day when they can be produced profitably. And increasing the producers profitability by ensuring that only profitable operations are produced. Therefore even if the producer has to shut-in half their production, they will still be more profitable using the Preliminary Specifications decentralized production model.

Adopting the swing producer role in the global oil and gas industry should at least be a survival instinct. However, these bureaucrats, it would seem, are hell bent on destruction. As long as they don’t have to work too hard, as is the case today, everything is fine. We are at the beginning stages of this decline. A decline that can not be sustained for very long by these producers based on their poor financial health. This quarter will identify those who the downturn are affecting the most with the trifecta of difficulties being faced by the producers. Those being the bank reviews, the natural gas storage and the third quarter report conspiring to break the story that “all is well.”

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 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.

Labor Day

No posting today.

A New Policy

Implementing a new corporate wide policy of every third Friday off. Since I'm the only one here, I'll see you Tuesday. 

Your Motivation to Join

The probability that our budget is raised in this next quarter is slim, but possible. What we can expect however is that the people who are concerned about the industry. Will continue to stand up and identify themselves as those who are able to represent the producers and investors. And wish to proceed with these software developments, the user community and our service providers. We can certainly engage with these people and proceed with the appropriate discussions. There has to be a fee levied in order for these groups to join the conversation. Otherwise we will never stop talking, and never have the appropriate people in the room.

That should clear the room in the short term. What we also need to be doing in the next three months is focus on our priority regardless of the outcome of our budgets development. Our priority of course is the development of the user community. It seems that we don't discuss the user community specifically in our day to day posts. However, I can assure you that it is our priority and we are working as hard as we can on its development. The reason for this focus is that this is a difficult and time consuming process. One that currently takes very few resources and can therefore be done before we secure our budget. It is also the critical first step in our development of user based ERP software developments. Without the user involved in defining and developing the software that they want and need. Then the software will become just more of what already exists in the marketplace. And what would the purpose of that be. When we secure our budget, our speed and capabilities in terms of our development will be constrained by the size and capabilities of our user community. Therefore it is prudent to eliminate some of these constraints while we can.

Our appeal to our user community is the business opportunity for the user to be affiliated with People, Ideas & Objects. As a user their time and efforts in being involved with our developers and during their research into “what” and “how” the software will do is compensated. This compensation is budgeted at $190 / hour. Secondly, the user community participant is the individual we are looking to, to establish the service providers who will provide the People, Ideas & Objects software, administration and accounting services to the producers. The service providers are established as a result of the changes in the industry configuration to enable the price maker strategy of the decentralized production model. And as a result they are the replacement to the current administrative and accounting personnel of the producers. In terms of a business opportunity, we see many thousands of users and service providers, and they will have the current G&A costs of the producers, estimated to be in the region of $40 to $60 billion, in annual revenue.

Disintermediation is a phenomenon that is occurring in every industry. For oil and gas People, Ideas & Objects are providing these Information Technologies to leverage the old ways out, and to bring in the new. Included in all industries disintermediation is the reduction of bureaucratic methodologies. And hence the industries are able to operate in a smoother manner. This disintermediation also applies to the administrative and accounting areas of an industry. And it is reasonable to assume that the numbers of people currently employed in administration and accounting would be smaller in the People, Ideas & Objects environment we are working on. However, there will also be greater capacities in the oil and gas industry, there will be redundancies that will be eliminated through the process of our development. Not everyone will be able to function in the Information Technology environment that we are creating, in my opinion. I also believe there will be a natural selection by those that have the ability to take these more advanced Information Technologies, individual's comfort level with change, the opportunities that are presented through People, Ideas & Objects and continue to remain employed in the administrative and accounting areas of oil and gas. This will provide for greater efficiency in the administration and accounting of oil and gas, leading to higher profits for oil and gas producers, but also higher profit margins for the service providers.

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.