Third Friday Off

No posting today.

Our Plan, Part XIV

People, Ideas & Objects have a product in the form of the Preliminary Specification. And now we have a plan on how we’ll have it built to solve industry's issues. Key to that plan is the participation of our user community. User community based software is usable software with a quality that has been missing in the oil and gas ERP marketplace. Oil and gas producers also need to participate in these developments by funding them. Initially with our $100 million preliminary budget and then follow through with the funding of our full budget by August 2018. Now is not the time to question or second guess the need of the Preliminary Specification in the marketplace. Now is the time for action, and the desire to move on from the disaster that the industry has become.

Producers that choose to sit out these developments run significant risks beyond the costs of development. We have quantified the tangible value of implementing the Preliminary Specification in the industry at $25.7 to $45.7 trillion over the next 25 years. These are the incremental revenues, and hence profits, that would be earned by the industry through the decentralized production model. Revenues above the current cost base. Providing an opportunity for the industry to pay the past investors for their investments that sit as property, plant and equipment on the bloated balance sheets of the producers. Enable the industry to undertake the $20 trillion in capital expenditures that are believed to be required to maintain both the production profile and infrastructure over the next 25 years. And earn real profits as opposed to those false accounting profits that they’ve come so accustomed to reporting. These are the tangible benefits to the industry of proceeding with the development of the Preliminary Specification.

Participation has additional benefits that are intangible in nature and can only be gained by being at the table from the very start. There will be changes to the producers during development. Those producers that are part of our developments will be able to capture and realize the benefits from those changes. The results of these changes may provide significant competitive advantages to the participating producers that can not subsequently be reclaimed by the laggards. Therefore setting up these laggards to be permanently uncompetitive in the marketplace.

Participation by the producer is not passive either. The producer firm is going to have to be actively involved in the developments of the user community in order to gain the benefits of these developments. Assignment of a permanent individual on your staff will be necessary. We see this individual providing a Project Manager capability within your organization. A point of first contact for your employees to contact our user community. And a point of first contact for the user community to access people within your organization. If you want software that is going to accommodate your organization you're going to have to have some skin in the game. No one can define what it is that you want and need other than the producer itself. Our user community needs its constant input.

Producers will need to read. And when I mean producers, I mean your entire staff should review the Preliminary Specification in order to determine who is able to contribute. Everyone reviewing the entire specification will enable them to understand the direction that you’re taking your producer firm and why. There will also be the need for a stronger understanding of the underlying technologies. Java 9 will be released in August 2017 and we will be using that release as part of our solution. That along with the associated technologies around Oracle Database 12c, Oracle Fusion Middleware and Oracle Applications. We have five months before the start of our developments, not a lot of time, certainly not a lot of time to dither. We are in the midst of an Information Technology revolution, it's time for people to step up.

It’s not what People, Ideas & Objects are developing is new to the marketplace. There should be no need to think hard and long about participation. People, Ideas & Objects have been hammering about this issue for more than a decade now. We provided good comic relief when the oil and gas prices were high and the producers could completely disregard it. That’s not the case anymore. The point is, what will the future be in terms of commodity prices as a result of shale based reservoirs? We all know that each oil and gas producer runs a tight ship. There is however a collective issue that can not be addressed by the current “muddle along” business model. That collective issue is the systemic and chronic overproduction of oil and gas leading to severely depressed commodity prices. What does the immediate future hold in terms of resolving this collective issue? How will it be resolved in the mid to long term? Obstinence at this point seems to be a poor strategy.

In addition to being able to compete against those producers that may not participate in these developments. I think there is another distinct advantage to proceeding with your contribution and participation to our plan. What would the response of your bankers and investors be if they saw that you were actively participating in the resolution of the industries issues that have caused such distress? Would that loosen some of the purse strings and enable you to alleviate some of the difficulties that you’re experiencing internally? What do you have to lose?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part XIII

In summary then, our plan is to start software developments of the Preliminary Specification on September 4, 2017. Key to the success of People, Ideas & Objects and the future of the oil and gas industry is our user community. Our user community vision reflects clearly our commitment to user community based software developments. It is there that the power and authority is provided to the user community to enable them to make the necessary changes in the oil and gas industry, producers and associated areas. People who are interested in participating in our user community are encouraged to begin the process of preparing their application. Action on behalf of the user community participants has begun. A reflection that there is a belief that change in the marketplace is needed and the status quo no longer builds any value. People are frustrated to the point of action.

We have established a budget to fund the developments for the first year of operations. We are raising $100 million in revenue from sources that will participate in this solution. Producers,  oil and gas investors, whomever. This will provide us with 108 man years of funding to be divided equally between the user community, our developers and Oracle Corporation. The objective of the user community is to move the Preliminary Specification forward by beginning to fill out the details of what will be required. The Preliminary Specification as it stands today is a vision of what is possible. The user community will take this and in the first year build a strong framework of what is required. Defining what will be required from the user community in the years to come.

We have set the objective that revenues to fund our entire development budget will be raised by the end of this initial phase in September 2018. Continuation of the work being done in this initial phase is a critical requirement of the industry to follow through on. This initial phase enables us to jump start the developments. The danger is that if there is difficulty in raising the remaining budget, people will not recommit after a cut in funding. This is not their issue, if the industry is unwilling to follow through on the resolution of its own issues then why would anyone else? Establishment that this oversupply and overproduction issue as a material, chronic and unresolved issue over the past decade, and in the 1980’s and 1990’s, is evidence enough that action is required. Only the industry generates the revenues necessary to fund our solution and are the key benefactors of our value proposition. Only the user community controls the Intellectual Property involved in that solution.

Recruiting of our leadership team has begun with the objective that they’re in place September 2018. Positions in both the user community and People, Ideas & Objects will form our overall leadership team. These positions include the C class executives of both organizations, the approximately 20 product owners and others.

People who want to have user community based ERP systems to use in oil and gas. Now is the opportunity to act. The opportunity to resolve what can only be considered as the largest issue ever in oil and gas. A decade has been lost in oil and gas already. People can be a critical part of that solution by participating in the user community. Contributing to society by establishing a profitable, productive and prosperous oil and gas industry where the next 25 years could be the most challenging and rewarding. This is that opportunity and now is that time. No one is going to tell us to do it. We have to make this happen ourselves and deliver it to the industry. Rebuilding the industry brick by brick and stick by stick from this point forward.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part XII

Today’s marketplace enables us to stand on the shoulders of giants in all aspects of our lives. At the same time we seem to be constrained in our ability to grow our productivity and quality of life. Is it that the economic statistics don’t capture the value that the Information Technology revolution is providing society? Or is it that we’ve reached the limits of what we can do? I believe that we’re in a fundamental remaking of society as a result of Information Technology. The issue is that we are currently constrained due to the inability of our organizations to deal with the software technologies that define, support but also constrain them. The ability for the oil and gas industry to break out of the current crisis will not happen by what has brought us to this quality of life. Spontaneous order has ceased to function when software impedes the ability of an organization to change. Therefore the industry will remain stuck as it is, as will we, until such time as we deliberately change the software in the manner that is to our benefit.

Change as an element of business will accelerate continually. Ask anyone what has changed in oil and gas and most people will answer shale. Everything else seems to be the same. Yet I can remember when I was affiliated with an oil and gas producer in 1997. The coil tubing suppliers begging us to test their product out on our wells. They could not find anyone in industry willing to risk their assets to test these new technologies. What seems new today really had its origins twenty years ago. Natural gas had their precipitous decline from their record prices almost ten years ago. The business has been in the trash since. No remedial action has been taken. No consideration of any change have been discussed. It’s just business as usual with the principles of the oil and gas producers going to church on Sunday to pray for a cold winter. All throughout this time I’m punished and banished from the industry because I suggest that we get rid of the bureaucrats. A natural consequence of the Preliminary Specification and something that is happening in every industry. Disintermediation will happen in oil and gas, one way or the other, why not be proactive about it.

At the same time the users of the systems that exist in the marketplace today place another ream of paper in the printer. Being forced to do tasks that are better off done by computers they continue to work around technical or accounting interpretations of what oil and gas is. All the while thinking why doesn’t someone do something to replace these systems and bring in ones that would be useful. Systems that would be productive and valuable to the organization. It is this kind of thinking that is once again interrupted by the fact that the printer needs paper.

If you want systems that meet the needs of the people in the industry there is only one way in which you’re going to get your hands on them. By your direct participation in the development of those systems. You might think that the last system had strong user buy-in, as far as the vendor was concerned, and you may be correct. However that user community participation didn’t have two things that the People, Ideas & Objects user community offered. The first being an overall vision of a system based on a fundamental understanding of what an oil and gas system needs to be. And a user community vision that is contained here. A vision that has control of the Intellectual Property of the software and the power to make the necessary changes as the user community sees fit.

The way things are being done in oil and gas isn’t working anymore. The financial statements of the producers are the only evidence you need to review to verify that fact. The way things are being done today are finished, it's over. How things are done in the future, and who does them, is up to us. We’ll be the ones who make the determination. The opportunity for the bureaucrats to be involved in determining what happens in the future is over. They blew it. They have no credibility, no solutions, no vision, nothing but prayers for a cold winter. Are you going to listen to them? It’s up to us and we have to act now. September 4, 2017 is just around the corner and you need to finish your application to the user community. What are you waiting for?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part XI

We now start the second quarter of 2017. Producers will begin the process of publishing first quarter reports, 2016 annual reports and the annual general meetings throughout April and May. It will be interesting to see how things turn out. We know that 2016 was financially more difficult than 2015. What is 2017 shaping up to be? Two companies I’ll be watching closely will be Canadian Natural and Cenovus. They have both announced multi-billion dollar deals that are so far outside of what is reasonable. These transactions may be difficult for their firms to handle. I’ll be surprised if these deals close. At $7.5 and $13.5 billion for primarily heavy oil assets this may be the best reflection that the producers will not, ever, change. They don’t see the issues in front of them and are of the belief that everything is fine.

The one fact that any of the producers can’t ignore is the amount of cash that they have. Literally no one has any. CNRL has a working capital deficiency of $1.6 billion. If I was a vendor that hasn’t been paid for the past two years I would want my money before they did that deal. You can fool some of the people some of the time. And producers have done that for four decades by not recognizing the costs of their past production. Leaving the capital costs, in a capital intensive industry, on the balance sheet in property, plant and equipment for decades. Allowing them to report profits, but in actuality they have been consuming cash by the truck load. Now that investors and bankers have cut them off, they have no source of cash and they’re all suffering. These two monster deals are evidence that the producers are completely out of control.

That these two producers think they can spend $21 billion. Money that they don’t have. On assets that will probably never be profitable under any reasonable accounting. Don’t tell me that they can’t contribute their share of our budget to build the Preliminary Specification. Our value proposition resolves the issues present in the industry and makes all oil and gas production in North America profitable. Instead of mindlessly drilling for more wells producers need to pay attention to their business. What is it that they’re doing? How are they going to make money?

One of the big difficulties producers will be faced with is how do they run a profitable operation when the Preliminary Specification is operational. Living off of other people’s money in the form of annual stock offerings, buffered by ever increasing lines of bank credit do not make for a commercial enterprise. They are far from being commercial in their mindset and operations. It is an engineering exercise oriented towards production at all costs. The key cost is the continual destruction of the commodity markets. Analyze any industry or any company in any other industry and they would not continue to produce more in the face of chronically rising inventories and collapsed prices. Why would you?

So don’t tell me our budget is too high for the producers to deal with. We provide the entire industry with the opportunity to commence profitable operations. We do this by developing software that identifies and supports a fundamental reorganization of the producer firms and industry itself. The producer becomes a stripped down version of itself consisting of the C class executives, earth science and engineering resources, land and legal, with some support staff. The remaining accounting and administration resources are reallocated to service providers who focus on one process and have the entire industries producer population as their client base. This enables what is called the decentralized production model in the Preliminary Specification. Which enables the producers to determine, based on an actual detailed accounting, to shut-in any unprofitable production until such time as the commodity prices rise, the production throughput increases, the costs are reduced or the reserves are expanded. All of the producer's inventory of shut-in production incurs what we call a null operation. No profit but also no loss. There will be no revenues, royalties, operations or overhead costs under the decentralized production model. This is achieved through the service providers billing their administrative and accounting services to the individual Joint Operating Committee, not the producer firm. If the property has no production, there will be no trigger in the Preliminary Specifications task and transfer network to initiate work by the service providers. No work will be conducted by any of the service providers on that property, and hence no billing will be issued. A null operation will be recorded at that property.

Reducing the production profile of the producer firm to only profitable production increases their profits as the producers are no longer diluted by the losses from other properties. The commodity markets find the marginal costs when the unprofitable production is removed from the marketplace. Producers reserves don’t have to carry the additional costs of the losses that they incur year after year. And finally, those reserves can be saved for the time in which they can be produced profitably. Reasonable, rational, independent decisions being made based on the actual detailed accounting of each property.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part X

Bloomberg's Alix Steel has been publishing interviews she conducted of oil and gas CEO’s at a conference in New Orleans. Watching these videos we can see that nothing will change in oil and gas for the foreseeable future. There is a theme to all of Ms. Steel’s questions regarding the costs of production and at what point the producers would change their behavior. Repeatedly asking the producers that when their production increases, which reduces the commodity price “are they not victims of their own success” [in the field]. Continental and Newfield are the most representative of the deer in the headlights response. Upon repeated direct questioning they can’t answer at what point their behavior would change. They don’t know what their cost structures are and repeatedly quote what they’ve been told by suppliers as to what the cost will be to drill new wells, not their historical, actual, accounting costs. Don’t expect anything to happen in the industry for the next few years when you see the CEO’s behaving in a manner such as this. These performances don’t instill any confidence in anyone, particularly the investors and bankers who have concerns about their money. If the CEO’s have no answers, they have no solutions, why are they there? This may be the beginning of the wholesale exit that I predict will happen in 2017.

Once again I can criticize the producers for their inaction for the next several years. Especially based on these CEO’s who continue to fumble about. However, I am no better if I just sit here and criticize, and that is why we will commence the developments of our system on September 4, 2017. Action is required now and that is what we’re doing. People are reviewing our project and their participation in our user community.

Within our first year of developments we need to establish a foundation for a number of larger, overall objectives that need to be attained within People, Ideas & Objects and the user community. As much as we have short term deliverables we also need to look at the larger picture of what it is that we’re doing. We have to set these larger objectives in motion in our first year as well.

Stopping and restarting developments due to a lack of funding I don’t think is possible and may actually be fatal to this project. We therefore need to ensure that the funding for the remainder of the development of the Preliminary Specification, which includes the costs of the user community, is in place by September 2018. This would be an effective way in which the bureaucrats could eliminate us from consideration. Fund the short term and then cut us off at a critical point. This is the additional risk that we are undertaking by funding only the first year of developments. Oil and gas prices may be up 5% on August 1, 2018 and provide the shiny, bright object that draws the producers attention away from us. It’s a risk that we will have to take and one that needs to be more fully researched.

We are a software engineering capability that needs to be developed and supported. This capability is an enhancement to the capabilities of the oil and gas industry. As a result they will be able to deal with the changes in their business in the future in a proactive manner. Software is too important a component in the producer's business to purchase it once every decade and be constrained by its feature set. Producers need to make dynamic, innovative, accountable and profitable decisions and actions based on the ability to change their organizations by changing their software.

This last objective is related to the raising of our budget. It is also stated in our Revenue Model as to how we maintain our overall objectivity and independence. It is that we don’t ever become blind sleepwalking agents of whomever will feed us. Our role in the industry is leadership. Dynamically changing the business model of the producers as necessary. If we are relegated to a hand to mouth existence, much like the software vendors are in oil and gas today, then we will fail in our leadership role and fail in providing the software and services that the industry needs. Raising our budget is therefore critical. It is also critical that we develop the methods and means in which to deal with the changes in the industry, that the money can be secured and the user community go about their business as required. This too is a challenging task that we’ll need to be researched and resolved in the next few years.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part IX

One of the deliverables that we will have in place at the end of this initial year of developments, or on September 2018, will be our leadership team. We are now searching to fill positions in both People, Ideas & Objects and our user community. There are approximately thirty positions that we’ve identified at this time that need to be filled by September 2018. These people will provide leadership and support to these organizations through their proven skills and capabilities. If you find one of these positions of interest to you by all means contact me.

The first group of leaders that we are seeking are what are known as product owners. In the agile development methodology product owners hold a special role between the developers and users. People, Ideas & Objects will have as many as twenty product owners in our development, one for each module of the Preliminary Specification with additional product owners for other areas such as the user interface, data model, Oracle Applications etc.

This definition of product owner is provided by Scaled Agile Framework.

The Product Owners (PO) is the member of the Agile Team who serves as the Customer proxy and is responsible for working with Product Management and other stakeholders — including other Product Owners — to define and prioritize stories in the Team Backlog so that the Solution effectively addresses program priorities (Features/Enablers) while maintaining technical integrity. Ideally, the Product Owner is collocated with the rest of the team, where they typically share management, incentives and culture. But the Product Owner also attends most relevant Product Management meetings about planning and backlog/Vision refinement. 

Our user community will primarily be virtual in terms of the work that they do. Attendance with our team of developers will on occasion be necessary however that will be a very small percentage of the user community members time. The product owner is the proxy for the user community and the work that is done by them. When the user community member needs contact with the development team it will be through the specific modules product owner that this is enabled. The product owner role is a senior position with significant responsibilities in representing the needs of the user community. Recall too that once the Preliminary Specification is operational within the industry the user community member will be primarily involved in the management of their service provider organization managing a process on behalf of their clients, the oil and gas industry. This will involve delivering their services and the People, Ideas & Objects software that they’ve developed to manage that process. As time passes they may want or need to make changes to the software they use and will be able to so as members of the user community.

Additionally we will be filling out the principles and officer positions within People, Ideas & Objects and user community. The user community is a separate organization from People, Ideas & Objects with its own self supporting administration and organization. This provides for their independence and enables their focus on the issues and opportunities that exist in the oil and gas industry, producers and associated areas. The user community will be established based on the Revenue Model which denotes its revenue stream. The user community will be established to provide its services in the development of People, Ideas & Objects Preliminary Specification and will not be authorized to generate revenues outside of that. We will have a dedicated and committed user community that is wholly focused on the issues and opportunities of the oil and gas industry, producers and associated firms.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VIII

A couple of people have asked me why we have such crappy websites. And we most certainly do, don’t we. There are a variety of reasons for that but I think the primary one is as follows. Industry has never put any money into this initiative and have stood in my way at every opportunity. They never made my life easy. These websites are a reflection of that. The only thinking being done on the most critical business issue of our time, in oil and gas, is being distributed on a website made of duct tape and bandages. I hope the producers are adequately humiliated. Secondly this all has to come out of my pocket so review reason number 1.

Every plan has to have a budget. We have our own version of shock and awe and we’re proud to say that we’ve been able to see this issue clearly for years. The scope and scale of the solution is not going to be done on a wing and a prayer. This is a serious problem, with substantial upside for the producers, therefore the solution needs the full scope of our budget. However, we’re not talking about everything at this point. Just enough to start the developments and carry them for the first year. A preliminary budget that will keep the operation moving forward from September 2017 to September 2018. As we’ve made clear here in our last number of posts the emphasis on this spending will be on the user communities development and its support.

The question becomes how much could industry generate from now until September 4, 2017? A nice round number to me comes in at $100 million. This would provide, on the basis of the overall framework of our total budget, with what I feel would be an ambitious plan for our initial year. Understanding that one third of the funds raised would go to our costs we would be able to, based on our standard rate of $190 / hour for our user community members contributions, software developers and Oracle cost estimates, provide us with 108 man years of effort. Which feels appropriate for the task ahead and the ability for us to accomplish as much as humanly possible in our first year of operation.

Investing in more wells at this time will only cause the commodity prices to decline further. Producers need to begin to think about the business that they’re in. Scoring one reasonably profitable year out of each decade is not a business. The determination of that years profit being subject to highly questionable accounting. Owning the reserves of oil and gas is useless if they can’t be produced profitably and consistently. I don’t think anyone is being fooled by the actions of the producers anymore. All of the efforts to remedy the low oil and gas prices, the market rebalancing, the reductions in drilling haven’t worked and as evidenced by today’s low commodity prices, and the more than decade decline in oil prices in the 1980’s and 1990’s, will not work. Continuing to say they will is only being believed by those who have no answers.

What have producers got to lose. Based on their financial statements apparently not a lot. Or do they? By setting the start date of these developments we have set in motion a process that can’t be stopped and then restarted. For all intents and purposes this is it. The issue in the industry is such that the Preliminary Specification is necessary. The solution is now on its way to being developed. The lack of support by the producer, in the manner of not supporting our request for funds would be fatal to this initiative. If the money isn’t there nothing will come about. Alternatively if I’m screaming at the bureaucrats in a year from now I’ll be just as much at fault because I will not have done anything either. This is me ensuring that I’m developing software at this time next year.

What is the future of the industry in the next 25 years. More of what we’ve seen in the past five? Without any changes to the underlying business shale will ensure that our future is a continuation of what we’ve been experiencing. Society needs a prosperous, productive and profitable oil and gas industry. This destructive drain on society that we’re experiencing is a tragedy that is unnecessary and far more damaging to our future than what is realized. We have work to do to build the Preliminary Specification. Reorganize the industry and producer firms. Make the industry profitable. Deal with the resource constraints and the aging infrastructure. Then we can start to develop the capabilities that are necessary for energy independence in North America. Are we just ants running around a sand hill or do we have some control over what it is that we’re doing? I suggest the producers figure out which it is that they are and start acting in their own best interests. I am arguing for enhanced profitability. And why do these arguments cause so much distress in the marketplace?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VII

As I had mentioned before it is the people that work in oil and gas who will make the changes in the oil and gas producers and industry. We are seeing remarkable interest in the numbers of people who are assessing and evaluating our user community. People know that the industry is on a path that leads to their eventual demise, and these people are looking for ways to deal with it. People, Ideas & Objects are resonating with people and as a result they are proceeding with their application for user community membership. Now is the time for action. We have announced that we are beginning the development of our software on September 4, 2017. We won’t have the entire user community in place at that time. Only the beginnings. But it will be our first step in making the Preliminary Specification real and dealing with this chronic, systemic overproduction and oversupply. It is only our user community that can make this happen. No one else has the capabilities, and more specifically, the power to do it. The producers have proven time and again that they are incapable of identifying or dealing with these issues.

What will we be doing when we start? The Preliminary Specification is a vision, a framework, a functioning business model. It’s defining characteristic is that it works. Many ideas run into difficulties when this or that is introduced which causes the model to break down. During the ten years of research I discovered those many areas that didn’t work and resolved them. The first thing we will be doing in development from September onward is expand on this business model and fill in the various processes and methods that the industry will actually operate. The details of how the industry works, based on the vision of the Preliminary Specification. This is why user community developments are such a critical aspect of usable software. If your area of expertise was in gas plant management and knew of the ways and means of how those operated from an accounting and administrative point of view then your skills would be needed in our user community in defining those elements in the software.

Our first deliverable will be an expansion of the Preliminary Specification in textual form. What our software development teams will be based upon is the “agile” software development methodology. Under which the key deliverable from the user community to the software developers is what is called the “user story” and is defined here. Initially these will be “epic” stories and need to be decomposed further down the road. Which of course we will do.

People, Ideas & Objects will begin assembling a software development team and capability on September 4, 2017. This will support the user community and enable them to collaborate and communicate in a preliminary manner. This will sort out some of the initial issues of setting up our environment. At the same time the user community will have access to an Oracle simulation that we will build that is a fully functioning cloud computing environment that consists of the Oracle Fusion Middleware and Applications that are the foundation of their applications. That way the user community will understand the environment they’re building their software within. And this environment will, over time, iteratively reflect the software developments that are the product of the user community and software developers efforts.

We will be talking about the role of product owners in the near future. The point I want to make now is that the user community will assemble somewhat around the Preliminary Specifications modules where their expertise exists. In addition, we will have other teams involved in other aspects of the development outside of oil and gas, and the Preliminary Specifications modules. Areas such as the data models that we will use and the user interface throughout the application. One of these areas that I would ask that we begin to gain some ground on quickly is in the area of just raw data. Consisting of the types of data that exist in the industry and bulk samples of that data so that we could run it through our Oracle simulation.

Note that I’ve not stated anything at this point about real estate. All of this work will initially be done virtually until such time as we have the opportunity to settle in our own location, based on People, Ideas & Objects and the user communities needs. The mindset of the user community will always be virtual. Never constrained by any physical or logistical issues. In the long run this will enable a capability in terms of speed that will be breathtaking.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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 Plan, Part VI

Imagine for a minute if these oil and gas producers were proactive. That they took the time to identify this systemic, chronic oversupply and overproduction issue and clearly acknowledged it. That they began to undertake steps to deal with the issue and correct the ongoing destruction in the industry. I know I almost fell off the chair when I thought of it too. Thoughts in the industry recently turned from a tacit admission of responsibility for the downturn in prices to the demand that OPEC extend its production sharing agreement beyond June. We are dealing with producer attention spans that are difficult to keep up with. News that Saudi Arabia’s reduction in production was to their Chinese customers. That Iran and Iraq made up the difference has the Saudi’s a little upset. Their old strategy was they would deliver to their customers no matter what the price. Having their customer satisfied was the key to a long term relationship and the customers demands for oil would never need to look elsewhere for their supply. In other words, as far as the Saudi’s are concerned, with this news and the fact that the shale based high cost producers have replaced their low cost production, I don’t think there will be an extension of the agreement.

I’m not seeing any support for the oil and gas producers out there. A lot of talk but no money is being advanced to provide the lifeline that these companies need. When I look at the financials of a producer they need wholesale changes and restructuring. Another billion or two in investment is only going to fill the cash drain for a few more quarters. Loaning or investing money into a firm for working capital is a sure sign that you're going to lose it. Production, specifically more of it and right now, is the only answer to the producer's cash shortfall dilemma. Therefore leading into the period from now to September 4, 2017 when we commence our software developments I expect the industry to have its day of reckoning. What we know is that the oil and gas prices are not keeping the producers afloat and I see significant downside, particularly in the price of oil.

People, Ideas & Objects and our user community therefore have the responsibility to undertake the steps necessary to begin to resolve these issues. Working on the mid to long term perspective we can alleviate the industry from these difficulties. This however depends on those people within the industry that our user community appeals to. I know it's not everyone’s cup of tea. We are looking for the future leadership of the oil and gas industry to take up their roles within the user community. It is through the user community vision that these leaders will be able to exercise the necessary power to effect the changes in the oil and gas industry. This is not your grandfather's user community. Review of the vision that makes up the community will provide you with an understanding of how it’s different and why it’s needed today.

The solution to the industries difficulties, based on my review of the financial statements for the fourth quarter, is a tripling of the revenues of the producers. This would not bring the commodities prices to record territory. However, if the accounting were to adopt a more aggressive and reasonable depletion of the property, plant and equipment it would need those revenues to eliminate those outsized balances of past production costs that producers carry, recognize the high costs of shale, pay the higher royalties and taxes on the higher revenues and generate a profit that will fund capital expenditures, pay down debt and pay dividends. Even with a tripling of revenues producers are going to have to sharpen their pencils to ensure that their shareholders are making a competitive return in the industry. Comparing this future environment to the current financial statements makes me wonder what it is that these producer firms are doing? We know that by storing their past production costs as property, plant and equipment they’re making their investors subsidize the energy consumers, but why? What is going on today is not a business in any sense of the term.

It will be the user community that will be able to implement the Preliminary Specifications price maker strategy within the industry and ensure that only profitable properties are produced. Remember when we accelerate the depletion of property, plant and equipment of a profitable producer that producer is generating substantial cash. The cash is being returned to be reinvested over and over again in a timely manner. Shareholders win by not being chronically diluted by successive share issuances. Oil and gas becomes commercial, not a place where cash goes to die for decades as property, plant and equipment. And this will be because the user community in their role as service providers, who are providing the accounting and administrative service and People, Ideas & Objects software to the industry will be doing so on a standard basis. So that when a property is reported to be profitable it is indeed profitable. Not subject to some accounting shenanigans that have been the flavor of the industry for the past four decades.

We now hear the howls of indignation and laughter from the producers once again. And if we listen to them we’ll see that they think they’re stilling running things. The fact is the bureaucrats are about to hightail it out of the industry before things get too bad and their name is somehow associated with the difficulties. That is why the user community has to begin the process of completing their application and prepare for the developments of the Preliminary Specification effective September 4, 2017. This is our responsibility now. We will be as much to blame if we are just screaming at the bureaucrats in a year's time. Now is the time for all of us to act.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. 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.