We Are the Change

Things are happening quickly now. The faith that our existing producers will be the ones that lead us for the next 25 years doesn’t exist. Change is being forced upon them by those that were betrayed most by the bureaucrats. The oil and gas investor. I’m not soliciting sympathy for them, they wear the big boy pants and can deal with their own difficulties. What we need to concern ourselves with is the long term commercial viability of the oil and gas industry. That consumers have an abundant supply of oil and gas to ensure that we are able to achieve the highest possible levels of our standard of living. This can only happen with a prosperous and profitable oil and gas industry.

The speed in which things will happen now will be exhilarating. Change, when it starts, doesn’t wait for the unprepared. As a potential user community member I trust that you’ve been working to make the necessary changes in your life and have been working on making your application to the user community. We are looking for a large number, approximately 3,000 people, in order to make the Preliminary Specification all that it can be. And to ensure that the user community members are subsequently able to develop the service provider organizations that will provide our software and their services to this new oil and gas industry.

One area that I will stress in the application process is the understanding of the Preliminary Specification. If someone comes to me and I ask them questions about the Preliminary Specification and they are unable to answer them. This may preclude them from joining the user community. I know it's a long, boring and difficult read. It’s important that we’re all singing from the same hymn sheet. The dynamic of the changes introduced by using the Joint Operating Committee are substantial. These must be intimately understood by everyone. Although you will be working in the area where your strengths are, knowing how that fits in the larger picture is necessary.

When we move to using the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer. We see that everything in the industry is changed. That is the reason for the Preliminary Specifications scope and scale. Even I was surprised when Private Equity adopted the use of the Joint Operating Committee to facilitate the transition in ownership of the industry. Well of course it would be. It’s common sense once someone say’s it for the first time. That’s the world that we’re heading into. The full scope of the changes that we’re able to implement are not fully appreciated at this point. And that is why People, Ideas & Objects Preliminary Specification has to be user community based software developments. Having 3,000 people participate in the development will ensure that we capture many of these dynamic changes that are the common sense use of the Joint Operating Committee in the oil and gas industry. This demands that each user community member to have studied the Preliminary Specification extensively.

If you haven’t started your application for user community participation I would suggest you begin soon. Being prepared will be your best strategy as we move through this fundamental change in the industry. And understand the nature of the role the user community will be occupying in oil and gas. This will be part of the process in terms of what will be expected of you and your application to the user community.

Given where we’re at today, and where we’re headed, the journey promises to be one of the most interesting in the history of the oil and gas industry. We have a lot of things to do and there is only one outcome as a result of all of this. Thanks to our friends the bureaucrats we must succeed and do it in a timely manner.

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. 

Brilliant!

I have seen the future of the oil and gas industry. And that future begins today. I’m using the Must-Read label of this blog so that users can aggregate these types of posts, this entry will be part of that. The following is the strategy and tactics that’ll be employed by the existing oil and gas producers, and the ones that will be formed to remove and replace the existing oil and gas firms and their bureaucracies. I have been working on the implementation of our technologies and the means in which we do this difficult task. These strategy and tactics clarify how we will enable the transition in ownership of the industry from the producers who are constrained by the bureaucrats, to the dynamic, innovative, accountable and profitable oil and gas producers.

The news that triggered this blog post came out in the middle of last week. It was from Ernst & Young and is entitled “Capitalizing on opportunities: Private equity investments in oil and gas.” Which state that Private Equity firms have almost $1 trillion in investment that they’re prepared to invest in oil and gas. In a derivative article from WorldOil we have “Private equity set to unleash trillion dollar warchest, EY survey finds.” It is in this article that we find the key piece of evidence in which we can base the future of the oil and gas industries tactics and strategy. They note;

Deal Structures

Due to the debt burden of many PE-backed oil and gas companies, creative capital structures are on the rise. Of the 71% of respondents exploring new capital structures, 62% cite joint ventures (JVs) and drillcos and 59% cite contingent pricing as the most popular options.

Michael Rogers, EY global deputy private equity leader, said, "As oil and gas companies try to raise capital and reduce debt amid the lower-for-longer price outlook, exploring new capital structures and strategies has become almost mandatory for investors. PE-backed companies are looking to joint ventures to help them cut costs"

This is how I see the industry operating and the deployment of the People, Ideas & Objects Preliminary Specification, user community and service providers. For the bureaucrats in the existing producers who have permanent uncompetitive costs and capital structures. In the interim you will be called upon to manage these “Joint Ventures.” For our purpose here, we will subsequently call these Joint Operating Committees to bring clarity to the concept. Bureaucrats will manage the Joint Operating Committee as they do in the normal course of business. Private Equity will be a non-operated working interest participant and bureaucrats will operate these properties on their behalf. This relieves Private Equity of the immediate need and responsibility to manage the day to day. Under the current environment bureaucrats will charge the Joint Operating Committees with the Petroleum Accounting Societies overhead allowances. Private Equity’s investment in Joint Operating Committees on this basis can therefore begin today. These investments and operations will continue for the remaining time in which the Preliminary Specification is not operational.

Additionally Private Equity will be able to immediately and directly participate in the purchase of working interests based on properties that are sold from the existing producers. These will form the basis of the Private Equity holdings and will augmented by the new drilling and completions that are done through the Joint Operating Committees that they establish with other producers. It should be noted that during this initial phase of the transition the Preliminary Specifications price maker strategy will not be implemented or operational. Which is a temporary strategic advantage to Private Equity. Their past investments in oil and gas are currently “sunk costs.” Buying properties at top dollar is not in Private Equities interest. Without the price maker strategy, commodities will remain low until People, Ideas & Objects price maker strategies are operational. Facilitating a time in which the “ownership” of the industry is transferred to Private Equity at “reasonable” prices. It is assumed here that the Joint Operating Committees and the purchased properties of Private Equity will be held 100% in terms of the interest in the properties that Private Equity will have title to. There will be no dilution of Private Equities interest by other equity interest holders or debt from this trillion dollar investment in the first phase of the industry transition. Earning 100% of the unencumbered properties title is contrary to what would happen if Private Equity invested in the existing producers.

People, Ideas & Objects budget will be funded by Private Equity. It will be their best investment in terms of our ability to deliver our value proposition to them. It will also provide them with the administrative and accounting capabilities, which will be industry based in the Preliminary Specification, to be conducted for them. There will be no need for them to spend the time and effort necessary to develop the capabilities to administer and conduct any accounting. The existing producers will do that for them in the beginning phase, and People, Ideas & Objects, our user community and service providers will step in with our industry wide administrative and accounting capabilities when we are operational.

People, Ideas & Objects, our user community and service providers are committed to providing oil and gas producers with the most profitable means of oil and gas operations. I was laughed at for years for stating this. Laughed at by the bureaucrats. Their inability to understand that an industry needs to produce profits, real profits is a necessity, which has lead to their downfall and now they are being transitioned out. They’ve only proven that they’re not committed to anything but their own self interests.

One final note about the earth science and engineering resources of the existing producers. Your future is with Private Equity. The competitive advantages of the dynamic, innovative, accountable and profitable oil and gas producer are their earth science and engineering capabilities, and their land and asset base. You are the current custodians of those capabilities and assets and are assumed to be keeping them safe and will do what is necessary to ensure the industries deliverability is all that it can be. The future of your current employer is limited in its viability and Private Equity will be here for the foreseeable future. Govern yourself accordingly.

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. 

Absolutely Uncompetitive

Bureaucrats should be proud of their accomplishment in destroying the oil and gas industry. Has anyone seen any of them leave the industry in shame with their heads bowed? They don’t care! As long as the money keeps coming in twice a month their lives are fine. Embarrassed? No, proud and feeling quite rejuvenated now that they’ve established that there is nothing that anyone can do about them. They’re permanent, there are no threats to their administration anywhere and at anytime. For the past thirteen years I have fought them and they’ve done nothing to mitigate the issues that are ever present. They knew what was going to happen. The fact that they did nothing about it, and continue to do nothing about it proves that they knew all along.

Commodity prices will only rise from this point forward. That is the only conclusion that the bureaucrats can be operating from. They feel giddy and are set to continue with their personal goals based on the steady uninterrupted cash flow from their jobs. I guess shale too has been eliminated from the scene as it was the precursor to the price declines. They may feel as if they have the upper hand at this time, however, nothing has been resolved and the same old issues are ever present.

We need to remember that these bureaucrats exist in the private business environment. They are not government bureaucrats who are established for life. They are subjected to the forces of the market. Although the bureaucrats may think they have the upper hand, that can only be maintained if they are the lowest cost producer. Which maybe they are? And if so they will remain established for as long as they feel the need and are comfortable. We should all aspire to be oil and gas bureaucrats. Do nothing and get paid well for it.

Creative destruction is going to wipe these people from their perches very quickly. At $200 / barrel in terms of the current producers cost of production. These values are obtained when we add in the cost of capital to produce with the cost of operations, royalties and overhead we come in at around $100 / barrel. Then we need to include, not so much a cost but a commitment to the past legacy of spending and ignoring that spending like it didn’t matter. These costs which are represented in the large balances of bank and bond debt obligations. And also in terms of the huge number of outstanding shares. Add up to make the producer firm very distasteful to any prospective banker or investor. Bureaucrats can’t hide their financial statements from prospective investors.

As we indicated yesterday our good friends the bureaucrats will try to live with a somewhat quasi informal administration by their banks. Bank’s will keep a tight reign on the producer ensuring that all surplus cash is put against any of their outstanding loans. The key though is that the payroll will be paid, and that is the only concern to the fat and happy bureaucrats. When your revenue is $50 and your costs are $200 you're not viable but that’s the bank's problem. Bureaucrats get paid first!

What’s that saying about the best laid plans of mice and men? The false narrative has been that the producers are profitable at $48 / barrel. We are closing out the second quarter with the financial reports due out in the next two months. We’ll see who can stick by those claims. Anyone heard of any financing lately? I wonder why the investors aren’t biting? Maybe it’s like I said all along. You can’t go on for decades kidding yourself that your investors investment is a sunk cost. And expect the investors and bankers not to notice. What generally happens, eventually, is that the investors and bankers see the bureaucrats as a sunk cost.

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. 

The Go It Alone Strategy

Making payroll is the key to the survivability of the North American oil and gas producer. These are the aspirations of the bureaucrats who are in charge and providing us with their strong leadership. If they stick their head in the sand, everything is ok. No bank, or should I say “the banks” won’t take over the industry if everyone is in such a mess. They’ll have to leave it to the current management to operate. Anything and everything that is surplus to payroll, based on the oil and gas price, will be taken by the banks and that is how the industry will operate. Sounds like a plan to me. Seems to be the one in place at the present time. Let's call this their “go it alone strategy.” No support from the investors or banks, but then no accountability either.

Eventually oil and gas prices will reflect the shortages created by the willful destruction of the asset base. And then consumers will be forced to pay the piper. The key to this strategy will be to ensure that the bureaucrats stock options are reinstated on the basis of any dilution that might occur. This will become the number one issue in oil and gas. This could also be an opportunity to establish a greater percentage of the producer that the bureaucrats will undoubtedly have earned as a result of turning around the company. “Rebalancing the markets” finest hour.

What else could be going on. People, Ideas & Objects haven’t heard anything directly from any of the producers. Its as if the worst possible industry news has been distributed to everyone of concern and there’s no more bad news that could ever be issued. And the bureaucrats were never challenged! They cruised through! Not a peep about their efforts to turn the market around other than their narrative which they collectively stuck too. The worst case scenario of the industry's failure has occurred, they survived and are still in control.

No one will be able to touch the bureaucrats now. They are invincible! Who’s going to be able to do anything about the situation? “That blogger that doesn’t like bureaucrats? What’s he up to, all talk and no action.” This attitude would be counting the number of chickens one has, prior to the hatching of any eggs. Users need to stay tuned and committed for a while longer. It certainly seems to be the darkest hours for the development of the Preliminary Specification. And this strategy of the bureaucrats does seem to be successful in getting the upper hand. But with all things, time and ideas don’t necessarily operate in the best interest of the bureaucrats. And those are the two commodities that we have in abundance.

No one is going to aspire to the bureaucrats vision of the same. It’s future is limited and unproductive. We have a job to do in the industry and need to start working towards that today. What happens in the next 25 years is in the hands of the user community that is being organized here at People, Ideas & Objects. The bureaucrats have now proven that they will not being doing anything. It is therefore up to us to do it then. And that begins with you. Your participation in the user community is the beginning of our efforts to build the software that is needed in the industry. We’ll implement that software within the industry. Build the service providers that provide the administrative, accounting and software delivery to the oil and gas producers. And then operate the industry from an administrative and accounting point of view with these service providers. The replacement and elimination of these bureaucrats.

This bureaucratic malaise is the issue that the Preliminary Specification solves. The current oil and gas industries administration is the problem, and to I’m sure everyone’s surprise, they will not do anything to resolve it. They sat for almost two decades like this in the 1980’s and 1990’s. This is nirvana for the oil and gas bureaucrat. With $25.7 to $45.7 trillion in damages to the industry about to be occur in the next 25 years. These damages being in addition to what has already happened in the past few years. Our budget is the deal of the millennium. But more than that these bureaucrats can’t, won’t and will not ever do anything. Today you have more proof of that than you did last year. And next year you’ll have more proof if that is what is required. The future is in our hands. We need to take it, and make it ours. That is what we need to do. Otherwise we will waste away in this bureaucratic malaise that is only going to continue until we put it out of its misery.

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. 

"It's Just a Flesh Wound"

Was one of the Black Night’s arguments in Monty Python’s Holy Grail. This comes to mind as we listen to the narrative of the bureaucrats in oil and gas. Natural gas storage has crossed the 3 tcf level as of June 10, 2016. Something that doesn’t usually occur until late August or early September. Three months early! Last year we came very close to filling the natural gas storage facilities but did not cross that point. Natural gas prices reacted poorly to the situation nonetheless. We are 633 bcf ahead of last years storage levels at this point of the year. The probability that we do fill the storage is close to being a given. The natural gas prices will react poorly at that time. However, for some reason these prices have increased almost 50% from their lows of a few months ago. This is on the anticipation of a hot summer with high demand for electricity. This summer price increase has not been evident in any of the prior years, I question why it would be this year with the storage being so high.

Natural gas is in its sixth year of market rebalancing. The EIA reports that production is fairly constant at 72.9 bcf / day. This number is becoming a constant in the universe. Those that are buying the “market rebalancing” fairly tale should look to the natural gas market to see how truly effective it is. There is no production discipline in the bureaucrats. They may be deliberately letting their assets atrophy under the guise of “market rebalancing.” There are however just as many other producers who are finding new properties to put on the market to offset those assets that are atrophying. This is what passes for intelligence in oil and gas. Why not, as People, Ideas & Objects our user community and service providers suggest that producers only produce profitably? Then nothing is deliberately wasted and everything of a limited resource builds value.

The fact of the matter is there is nothing that’ll stop these bureaucrats from destroying the industry. They don’t care. If they did this wouldn’t be happening. Where is the sense of urgency that something’s wrong? Who’s got an idea on how to fix this? Where do we go from here? Don’t ask a bureaucrat because just like the Black Night everything is fine. There has been a train wreck. A ship wreck. A natural disaster in their industries financial and operational performance. And these people have continued on as if nothing mattered or anything has affected them. It’s utterly amazing.

It’s evident to me now that the narrative of “market rebalancing.” And the myth that producers are profitable at $48 oil prices. Is designed to convince the bureaucrats themselves that all is well. They need to hear these comforting words. They were never meant for public distribution, they are intended to keep the people within the industry from being concerned about their situation. My interactions in downtown Calgary couldn’t be more relaxing and entertaining. It’s like an old folks home. No one hurrying to do anything. No one talking about business. It’s just a passive existence with a paycheck I guess. As long as the oil and gas prices are high enough to meet payroll there really is nothing to worry about.

We see a larger war waging in the western world at this time. The Brits are tired of the decree coming down from the European Union. They will probably vote to leave tomorrow. They are describing it in terms of their 1776. Donald Trump is representing the concern that people have with the size and uncontrolled nature of government today. Uber, an app that everyone loves, still battles the bureaucracy everywhere there are people. And I have been punished for 12 years for standing up to the bureaucracy in oil and gas. It’s the 21st century and Information Technology eliminates the bureaucracies through far more effective and efficient means of organization and processes. It’s only a matter of time until the bureaucrats are eliminated from the scene. But they will never accept that, not until everything is destroyed first.

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. 

I'm Impressed!

On two occasions this past week, I’ve watched on Bloomberg, and seen a report from Deloitte & Touche regarding the capital structures of the oil and gas industry. It would seem the narrative in the industry is changing from what a producer can produce oil for at this very minute. To one that considers all of the costs of the business in the context of the future. Very impressive. Deloitte even went so far as to state that the industry would have a $2 trillion cash shortfall over the next five years. I would like to point out that our value proposition of $25.7 to $45.7 trillion includes this value. It however includes all of the $4 trillion of capital Deloitte notes will need to be spent in the industry, and will hence be returned to the investors under our business model. Bloomberg and Deloittes calculations include the costs of the current operations, capital costs, the debt obligations and dividends that may be expected by the shareholders in determining any shortfall. Excellent work people, keep it up.

The history of the industry has to be taken into consideration. The producers had their hands in the investors pockets “building the business” over the past number of decades. Each and every year feeding at the trough for more capital from the investors. Never recognizing these costs of capital in any of their annual reports to the shareholders. Stating they were “sunk costs.” We still need to deal with this phoney baloney accounting methodology that capitalizes everything for ever. It’s ridiculous and has, as I have stated here many times, led to overproduction of oil and gas in North America. Many of these assets still sit on the balance sheet, however there is no capital structure supporting them. It's all been wiped out by losses and what’s left is all debt. Now “market rebalancing” has starved the production profile into a semi-permanent state of decline that will require massive capital expenditures to turn around, even more capital to achieve growth and so on. Where can I as an investor line up?

It will be a fool that invests in an entity that requires this rehabilitation. Defined by Deloitte as the $2 trillion cash shortage. Even Deloitte recognizes that the prices realized are not going to be over $55 per barrel in the next five years. Investors, according to the Bloomberg analyst, will be making critical choices as to who to invest in. I think the choice is academic. These carcases are toast. Run by bureaucrats who are unwilling to recognize the issues and deceitful about their operations only makes me want to double my bet that they will never turn these ships around. How? The more a rational person analyses the oil and gas industry the faster they run away. If you put your money in, you’ll at best get an extremely small percentage of the company's already deep and wide investor pool of issued stock. Any alleged earnings won’t be supported by cash that’ll be distributed. And even if there was, it would be diluted by those yuge balances of bank and bond debt. Makes the valuations in Silicon Valley look rational and exciting!

Investors interested in oil and gas are going to want to see a commitment to profits. Bureaucrats don’t understand the concept. People, Ideas & Objects, our user community and the service providers are configured to provide the oil and gas producer with the most profitable means of oil and gas operations. That is our competitive advantage. It’s what we’ve been talking about for 12 years now. A decade or so of having the bureaucrats laugh at us “that no one cares about profits, stupid.” We also provide the organization in which the investors can start a new dynamic, innovative, accountable and profitable oil and gas producer with 100% of the equity and no debt. One with the full scope of administrative and accounting capabilities available to them if they have a production profile of 1 bbl of oil per day or 3 million. This industry based administrative and accounting capability, when our service providers are built, will be available to them immediately and on demand.

Buying properties from existing producers that have been willfully damaged by “market rebalancing” will be the opportunity for these investors to poach from these carcases. The ones the investors are now considering their “sunk costs.” With the People, Ideas & Objects Preliminary Specification, our user community and the service providers we are able to implement the price maker strategy and remove the marginal production from the commodity market and have the oil and gas prices reach their marginal costs. For the bureaucrats “marginal costs” include the cost of capital, operating costs, royalties and overhead a.k.a. all of the costs. Oil and gas is a business, not a piggy bank you can raid at your leisure, too bad you never understood that.

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. 

Our Task and Transfer Network

Within the Preliminary Specification we have what we’re calling our Task & Transfer Network. Although there is not a lot of detail contained in the Preliminary Specification it is a simple concept to understand and implement. As producers conduct commercial activities this information is captured in the Task & Transfer Network. Production data is captured, aggregated with all the other production data in the industry and distributed to the appropriate production accounting, revenue accounting and royalty accounting service providers etc. This enables the specialization and division of labor between the service providers. For example, possibly there will be a service provider who reviews just the drilling day work for payment. Ensuring that it is consistent with tour reports etc, and other methods of verification. Then that service provider will generate their invoice for their services based on the information that they receive from the Task & Transfer Network.

I can see the bureaucrats squirming and wincing in their seats. Their concern is the security of the information that they have and the proprietary nature of that data. They are in no way going to allow their data to be processed in this fashion. Have I ever mentioned our $25.7 to $45.7 trillion value proposition? I think I must have at some point along the way. Continue on with the way these bureaucrats are doing things and we will all be out of business. We also have the Security & Access Control module of the Preliminary Specification. If that is incapable of meeting your needs then you’re not getting the point of having user community based software developments. Use the user community to ensure that the security of the Task & Transfer Network is at the level that ensures compliance to all the regulations and ensures that no unauthorized access is enabled.

What a service provider is going to be faced with is a constant flow of data from the Task & Transfer Network. It will be the service providers work that will be able to take that data and process it in the most effective way for the oil and gas industry. Specializing on one process may sound like a redundant and boring approach to accounting and administration. However, if you put your mind to the task you can become quite creative in developing the tools to make the process cost effective, innovative and high quality for the industry. And that is just in the first iteration of the Preliminary Specification. Over the life of the system the process management would evolve in ways that we can’t imagine at this point. The science of data, statistics and information would come into play in a serious way and become part of the value proposition of the service provider, and would also begin to form the basis of competition between service providers.

If there was no production from a property, then no information is delivered through the Task & Transfer Network, no processing conducted and no service providers invoices sent. The decentralized production model is implemented and the producers have the price maker strategy operational on the North American continent. This is how all of the producers costs become variable based on production. Taking the data down to its simplest form, aggregating like data and processing it on a specialized basis by those who have the people and the software development capabilities in hand to deal with the issues and opportunities they see their producer clients having. That is how we reorganize the industry and ensure that we provide the oil and gas producer with the most profitable means of oil and gas operations.

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. 

Third Friday Off

No posting today.

How Our Users Make the Difference

It is our user community members and their service provider organizations that provide the key differences in enabling the producers to achieve the most profitable means of oil and gas operations. They’re the critical infrastructure necessary to enable change in the oil and gas marketplace. They’re the source of quality in the producer firm and the industry. And they enable the dynamic implementation of business models such as the decentralized production model. When a change is needed in the industry today, who do you turn to? In the future there will be no question as to who you will turn too. The user community member that is responsible for that area and has the capabilities to implement the changes on behalf of the producer and industry. They’ll have the power and control over the Intellectual Property that is the operational understanding of the industry. The derivative of the Preliminary Specification. It is theirs to do with as they believe is in the best interests of the producer and industry. The People, Ideas & Objects software developers will only ever look to the user community for what software it is that they will develop.

What we have learned is that software, and ERP software particularly, defines and supports an organization. In order to implement any change it is therefore necessary to make the change in the software first, otherwise the people will regress back to the old ways which are defined and supported by the old software. Bureaucrats have interpreted our breakthrough in this area as; securing their position in the organization by never changing the software. The user community member who is also the principle in the service provider sits in the new sub-industry that we are building. Working with the industries producers to ensure they are the most profitable they can be. Understanding their issues and opportunities. And, having the People, Ideas & Objects software development capability on hand to make the changes that they see necessary to fulfil their requirements of keeping their clients the most profitable that they can be.

Quality is a difficult aspect of an offering to define. Speed has to be an element of quality. Having things done right the first time as well. Affordability also has to be part of a quality offering. Recall that the configuration of the service providers are what provide our price maker strategy possible in the industry. Achieving the lowest cost possible but missing out on opportunities such as the price maker strategy would be foolhardy. The value that we provide the industry is so much more than just an efficient and effective cost. We are able to leverage the value that the oil and gas industry generates by making changes in the business models that we have the power to control. It is here where we become affordable. The service providers are a cost of doing business that is already incurred in the oil and gas industry. The $45 to $65 billion in G&A costs will be transferred and become the revenue streams of the service providers. When you compare the annual cost of the service providers over their value proposition of $25.7 to $45.7 trillion over the next 25 years, it’s a profitable value proposition for the producers.

Now we come to the decentralized production model of the Preliminary Specification. It is the reason that we have configured the service providers in the manner that we have. By restructuring them on this basis we will have done two fundamentally important things. First we will have moved the administrative and accounting capabilities from each individual producer, where they are replicated, redundant and unshareable; to an industry based administrative and accounting capability. Secondly we will have made all of the producers administrative and accounting costs variable, based on production. If a property is shut-in then all of the costs of the producer, except for capital, will not be incurred. The burden for the administrative and accounting cost control has shifted, if there ever was any cost control, to the service providers. Who at anytime might experience a drop of 10% in their revenue. The 10% being the amount of production that might have to be shut-in to maintain oil and gas prices. A budget-able contingency that can easily be handled by the service providers.

It is this kind of flexibility and capability that the dynamic, innovative, accountable and profitable oil and gas producer needs. They have enough to focus on with their competitive advantages of their earth science and engineering capabilities, and land and asset base. Constructing an administrative and accounting organization, which is exactly like each of their neighbors is destroying their profitability. If they had any, that is.

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. 

It's a Business Opportunity

More than anything the People, Ideas & Objects user community is a business opportunity for those that work in the administrative and accounting fields of the oil and gas industry. We are developing and creating a new sub-industry that includes People, Ideas & Objects software developers, our user community and their service providers. It is these people who are working to provide the oil and gas producers with the most profitable means of oil and gas operations. That is their purpose and their focus. Turning the industry around from a bureaucratic slog to a dynamic, innovative, accountable and profitable industry.

The business opportunity comes from the fact that the members of the user community will be independent business people with their own going concerns and two distinct revenue streams. The first will be the fees that are earned when they are resident or are working on the software with the People, Ideas & Objects developers. Working to make the software that they want and need. These user community fees are paid by People, Ideas & Objects and are detailed in our budget. Our budget only deals with the initial phase of the Preliminary Specification. What it will take to implement the software in its first commercial release. The user community member should assume that this revenue stream would continue far off into the future.

We are expecting that we will need to have 3,000 members of the user community in order to acquire the full understanding of the manner in which the oil and gas industry operates. We also expect that at any time 600 of these users will be working directly with our developers. So although this is a cornerstone of the business opportunity for the user community member, these revenues are only for their part-time efforts.

Each of the user community member will be focused on one area within the Preliminary Specification. And will focus and specialize on one process within that area of understanding. The competitive advantage of the user community member is their division of labor, specialization, automation of business process, quality and innovation. This process that they manage will be theirs where the license granted by People, Ideas & Objects gives them exclusive rights to that process. Competition between service providers and users is not on the basis of cost where one steps on another's functional or process domain. It is through their ownership and control of the service provider organization that they will manage the process on behalf of the oil and gas industry. Competing on the basis of specialization and the division of labor, etc. It is in the service provider organization that the second revenue stream of the user community member will be derived. They will have the salary, bonus, dividends and capital gains they earn from their ownership of their own service provider firm.

How big a service provider would need to be in order to manage a process on behalf of the industry is the question that no one can answer at this time. They would be of a moderate size considering they would be replacing the $45 to $65 billion in administrative and accounting costs that are being incurred in the industry today. It would be reasonable therefore to estimate that the service provider's revenues may be in the range of $10 to $30 million per year. This should therefore be considered a substantial business opportunity.

If we are undertaking the replacement of the accounting and administration of the industry. These numbers come into focus. Who knows maybe the bureaucracy will change into the dynamic, innovative, accountable and profitable organizations that we seek! With the costs and prior bank and investor commitments in excess of $200 / barrel, however, with organizations that are stale and choking on paper, there may not be too many investors that are interested in supporting that old model of organization.

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.