Leadership's Goals and Objectives
Our last number of posts have discussed leadership in the oil and gas industry. Leadership which will be needed to guide it through the difficulties that it’s in. We see in the current administration no initiative to address the problems that are systemic and critical to the survival of the industry. Continuing on as we are is not an option when we consider the next 25 years and the demands that will be placed on us by energy consumers. It will be a progressively more difficult era than at any time in the history of the industry. That is a given. We’ll need to focus on North America as the exclusive region of our concern. We’ll have to turn the industry over to the basis of profitable operations in terms of all of its production. And we may have to consider the objective of energy self sufficiency as an overall goal. This latter goal only attainable once we have all of North American production being produced profitably. Now we begin to see the breadth and depth of leadership that is needed to make the oil and gas industry fulfill its promise.
We certainly won’t be meeting these goals and objectives on the basis of the producer organizations that exist today. We are far short of meeting North America’s demand for oil. All of oil and gas production in North America is unprofitable. The producers themselves have destroyed the faith the investors and bankers have in the industry. It will be those investors and bankers that will be needed to make the investments to achieve these goals. And it is these producers who are in such dire financial condition as to need at least a decade in rehabilitation before they can approach the dynamic, innovative, accountable and profitable demands of these goals and objectives. Are we suggesting that we will approach this industry's future, with these organizations, when we discuss our capital needs with future investors? Or should we get our act together by implementing the Preliminary Specification first?
When we extend these current difficulties over the next 25 years and compare that to what we are able to provide in the Preliminary Specification. We are assessing our value proposition. It has been our critique of the industry that the costs of capital and overhead are almost never considered in the accounting by the producers. We would change that basis of accounting and begin to calculate the costs of production that include all of the costs that are incurred. Capital, operating, royalties and overhead. As a result, the producer would need to be generating much higher revenues to cover the cost of capital from the prices that are realized when they sell their production. Under the Preliminary Specifications decentralized production model we use the price maker strategy for all the producers. Only profitable production that considers all of these costs will be produced. The remainder will be shut-in until the prices rise or innovations are found to produce the property profitably.
As a result of this price maker strategy the future oil and gas investor will be able to safely invest in oil and gas with an understanding that the producer will only be producing profitable production. However, also understanding that those producers that don’t know what they are doing may still be reporting losses as a result of unsuccessful drilling and completion operations. That they however, will not be destroying the commodity markets with overproduction which is the propensity of them to do for the past number of decades under the current bureaucracy. In addition, since the cost of capital is considered in the calculation of profitability their capital will be returned to the investors through profitable operations. Unlike today where producers have had their hand out at least annually for additional capital. Diluting previous investors interests as bureaucrats spend themselves blindly into overproduction.
Therefore there are two basic elements of our value proposition. One is our price maker strategy that provides producers with the most profitable means of oil and gas operations. Lifting the price of the commodities in the marketplace to the marginal cost. This will move the prices of oil and gas to substantially higher values than what have been realized over the past two years in oil, and past six years in natural gas. The second element is that return of capital in the form of dividends that will be possible when the producers recognize the cost of capital by passing them through to the income statement in order to recapture that invested capital. It is these two elements that have put our value proposition in the range of $25.7 to $45.7 trillion over these next 25 years. $5.7 trillion is attributable to the increase in the commodity prices as a result of our price maker strategy. This portion of our value proposition is significantly below what a calculation would generate based on today’s prices. The second element is based on the estimate of what is necessary in terms of capital investment in the industry over the next 25 years. Which includes the return of the capital that is sitting on the bloated balance sheets of the producers today, which the bureaucrats have never thought of ever returning.
Leadership from stem to stern, everywhere and within everyone will be necessary. One of the things that People, Ideas & Objects is doing is making a change in the work that people in the industry will be doing. We will be leaving the work that computers do to the computers. And that includes the processing and storage of information. Too much time and effort of good people are spent in these mindless tasks today. And we will instead spend our time on the things that people are good at. The leadership, unstructured problem solving, decisions, creativity, collaboration, research, ideas, design, planning, thinking, negotiating, compromising and innovating. What exactly are the bureaucrats offering over these next 25 years.
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.
We certainly won’t be meeting these goals and objectives on the basis of the producer organizations that exist today. We are far short of meeting North America’s demand for oil. All of oil and gas production in North America is unprofitable. The producers themselves have destroyed the faith the investors and bankers have in the industry. It will be those investors and bankers that will be needed to make the investments to achieve these goals. And it is these producers who are in such dire financial condition as to need at least a decade in rehabilitation before they can approach the dynamic, innovative, accountable and profitable demands of these goals and objectives. Are we suggesting that we will approach this industry's future, with these organizations, when we discuss our capital needs with future investors? Or should we get our act together by implementing the Preliminary Specification first?
When we extend these current difficulties over the next 25 years and compare that to what we are able to provide in the Preliminary Specification. We are assessing our value proposition. It has been our critique of the industry that the costs of capital and overhead are almost never considered in the accounting by the producers. We would change that basis of accounting and begin to calculate the costs of production that include all of the costs that are incurred. Capital, operating, royalties and overhead. As a result, the producer would need to be generating much higher revenues to cover the cost of capital from the prices that are realized when they sell their production. Under the Preliminary Specifications decentralized production model we use the price maker strategy for all the producers. Only profitable production that considers all of these costs will be produced. The remainder will be shut-in until the prices rise or innovations are found to produce the property profitably.
As a result of this price maker strategy the future oil and gas investor will be able to safely invest in oil and gas with an understanding that the producer will only be producing profitable production. However, also understanding that those producers that don’t know what they are doing may still be reporting losses as a result of unsuccessful drilling and completion operations. That they however, will not be destroying the commodity markets with overproduction which is the propensity of them to do for the past number of decades under the current bureaucracy. In addition, since the cost of capital is considered in the calculation of profitability their capital will be returned to the investors through profitable operations. Unlike today where producers have had their hand out at least annually for additional capital. Diluting previous investors interests as bureaucrats spend themselves blindly into overproduction.
Therefore there are two basic elements of our value proposition. One is our price maker strategy that provides producers with the most profitable means of oil and gas operations. Lifting the price of the commodities in the marketplace to the marginal cost. This will move the prices of oil and gas to substantially higher values than what have been realized over the past two years in oil, and past six years in natural gas. The second element is that return of capital in the form of dividends that will be possible when the producers recognize the cost of capital by passing them through to the income statement in order to recapture that invested capital. It is these two elements that have put our value proposition in the range of $25.7 to $45.7 trillion over these next 25 years. $5.7 trillion is attributable to the increase in the commodity prices as a result of our price maker strategy. This portion of our value proposition is significantly below what a calculation would generate based on today’s prices. The second element is based on the estimate of what is necessary in terms of capital investment in the industry over the next 25 years. Which includes the return of the capital that is sitting on the bloated balance sheets of the producers today, which the bureaucrats have never thought of ever returning.
Leadership from stem to stern, everywhere and within everyone will be necessary. One of the things that People, Ideas & Objects is doing is making a change in the work that people in the industry will be doing. We will be leaving the work that computers do to the computers. And that includes the processing and storage of information. Too much time and effort of good people are spent in these mindless tasks today. And we will instead spend our time on the things that people are good at. The leadership, unstructured problem solving, decisions, creativity, collaboration, research, ideas, design, planning, thinking, negotiating, compromising and innovating. What exactly are the bureaucrats offering over these next 25 years.
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.
