Our Plan, Part XX

A lot of the arguments against the Preliminary Specification and the commentary made here. Is that they’re accounting related arguments and therefore not really relevant to the real world of oil and gas production. I understand that point of view and would assert that it’s a point of view derived from the earth science and engineering perspective of accounting being the efficient and effective paying of bills. Accounting is about performance and our last two blog posts show that there is more than just drilling wells and paying bills to be considered in the oil and gas business. If we contrast our last two posts, with the performance opportunities detailed as a result of the Preliminary Specification, with the desperate situation that the industry is in today, we see that my critics could stand to reconcile these two perspectives. If on an accounting basis I had lost all the money that I had ever raised in the debt and equity markets I too would demean the People, Ideas & Objects arguments.

What I see in the industry are a lot of people who are the walking dead. They may have had the good life in oil and gas a few years ago. But were laid off recently. Now on one income, a small family and a mortgage the size of King Kong their standard and quality of living has eroded to third world status. With interest rates on the rise they have the added risk of becoming beholden to the banks for eternity and in death. The need to move off of this poor standard of expectation of economic performance in oil and gas is now necessary. Why has this third world status ever come to be considered acceptable for the people who had committed their careers to oil and gas? The additional frustration is that there has been a solution to what ails the industry for over three years. It however challenges the status quo and that is not acceptable as far as the handful of bureaucrats that are still benefiting from the industry are concerned.

It bothers me too that we continue to hear the bold faced lies of how costs have been reduced in the industry. Nothing of the sort has or could ever happen. Drilling operators can be raked over the coals and told to sign the deal offered at half the price it was last year, or walk away. This is not a sustainable cost reduction. And don’t let anyone tell you that this is evidence of the producer’s being innovative. Any cost reductions from the current downturn are not attributable to producer innovation. And can only apply to future projects in an abnormal environment. The rest of the producers production has to deal with the historical costs that were incurred to develop those assets. How can a producer, who developed 95% of their production profile over the last 20 years suddenly see the cost of all of that production drop? Producers said their costs were $85 / barrel when oil was over $100. The only difference is that oil is barely over $50. The costs to produce are the same, no one can go back and change the historical accounting costs that they’ve incurred on a property. They’re historical, it's a myth that they could and an outright lie that they have.

What producers are quoting are not historical costs but recycle costs. The costs that they’ve been quoted over the phone by suppliers as to what it will cost to complete an operation. These numbers are completely inconsistent with the financial statements of the producers. There the historical costs have to come into play and it is there that we see none of the producers are making any money. And that is on the basis of accounting for the capital over a period of ten to fifteen years!

On a somewhat related note when we begin developments on September 4, 2017 producers can't sit back and point fingers if we fail, they don't have that option, they have to participate in the developments of the Preliminary Specification and be the ones responsible for this project's success. What other options do they have. Coming in and holding People, Ideas & Objects and the user community accountable to the success or failure of this software development are not going to be effective. It will ensure failure. What is needed is a commitment to the success of this initiative by the producers to ensure that they have a future. Otherwise producers don’t have one.

The oil and gas industry will tell you that all is well and the future looks bright. I’m not seeing that, of course that is based on me looking at the financial statements of these producers. Something that I think the engineers and earth scientists don’t understand or appreciate. There is a myopic level of thinking going on in the industry these days. It's more along the lines of see no evil, speak no evil, hear no evil. Anything to avoid dealing with the truth. It's been many years that the industry has been stuck in this malaise. Nothing has been done. And all we ever here is that things are great and the future looks bright. One thing we can count on for certain is that the Saudi’s will continue to reduce their production to nothing so that shale can make up the difference. Delusion reigns supreme.

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 XIX

Keeping with the topic of performance. The capabilities of People, Ideas & Objects Preliminary Specification from a systems performance point of view might have been an issue in the past. If we were required to purchase all of our hardware and manage it then the producers would have had to define what kind of performance it was that they would expect from us. Build that capability and support that infrastructure. Providing the industry with a fixed cost and a fixed capability. We are a cloud computing user and provider. We are using Oracle’s cloud offerings for both our development environment and our production systems. If we need to provide better performance, then we’ll just need to define those requirements and provide for them. Cloud computing enables us to acquire variable capabilities with fixed costs.

If you haven’t had the opportunity to use a cloud computing offering I would suggest that you sign up for one and try them out. Both Amazon and Google have very good starter programs where the initial upfront costs are discounted. In the case of Google Cloud Platform they provide you with $300 U.S. in initial free use. Which is a lot of power. The capabilities of these systems is realized the first time you use them. What might have taken fifteen hours for your computer to process can be done in a matter of a few minutes for very few dollars. That is the power of cloud computing. Massive power available when it's required and at extremely low costs.

These services will provide real value to the industry when we need to process the month end for the producers. For example it may have taken 72 hours in order to conduct all of the processing on hardware that we would have had to purchased. And with cloud computing capabilities we may be able to turn that around in as little as 30 minutes, or even 30 seconds for essentially the same cost as the 30 minutes.

People, Ideas & Objects have always focused on people doing the things that people are good at and leaving the storage and processing to the computers. The things that people do well are the leadership, issue resolution, decision making, creativity, collaboration, research, idea generation, design, planning, thinking, negotiating, compromising, innovating and financing to name a few. By allowing people to do the work that we’re best oriented to then we will be more productive and I would think happier than we are with the work that we are doing now. In a related note Michael Milken, the former junk bond king and now head of the Milken Institute had an article in the opinion pages of the Wall Street Journal last week. Entitled “How Technology Liberates Human Capital” he raises an interesting point.

Through People, Ideas & Objects and our user community the oil and gas industry is being disintermediated. The positions and the types of work that will be done in the future, particularly in the accounting and administrative areas, will change significantly. Leading inevitably to some job displacement and outright losses. In the WSJ article Mr. Milken points to a McKinsey Global Institute report “that almost half of paid work can be automated with current technologies.” The knee jerk reaction to this news is one of concern and protection of one's turf. Mr. Milken suggests otherwise and has historical references to back up his opinion. That same McKinsey article notes that only 5% of any specific job could be completely automated.

But the very technologies eliminating jobs can be part of the solution for disrupted workers. To see what pessimists are missing, go back 40 years when powerful financial technology first started being used on Wall Street. The combination of mainframe computers with new types of securities and trading processes increased access to capital, especially for small and medium companies. Pioneers in the cellular telephone industry, for example, previously had a hard time convincing lenders that they could revolutionize how people communicate. There were only a handful of capital providers -- primarily banks and insurers -- that most companies could turn to. 

This changed beginning in the 1970’s when capital markets began a long process of displacing the established financial institutions as the leading sources of funding for corporate growth. Innovative fixed income and equity linked instruments helped create more than 60 million net new jobs in the U.S. over the last third of the 20th century. This proved an important formula: Prosperity comes when financial technologies multiply the sum of human capital, social capital and real assets. 

This liberation of human capital is what is the promise that our future holds. Instead of being preoccupied with the tedious and mostly irrelevant we as people can focus on the value added components of our society and do the work that we are best oriented to do. Leaving the tedious and irrelevant to the computers. That is the promise and the opportunity that stands in front of us. The performance that we can generate as a result of the user community and the service providers reconfigured in the way defined in the Preliminary Specification can open these benefits to the industry.

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. 

Easter Monday

Good Friday

Our Plan, Part XVIII

People, Ideas & Objects and our user community want to establish a new basis of performance in the oil and gas industry. A level of performance that has everyone in society participating profitably. We have to provide the rest of the industry, the people who work in the producer firms, the service industry and others the opportunity to also participate profitably. Energy is a valuable resource, should we be consuming it and losing money? We owe our future to at least produce our oil and gas profitably, always. Today only bureaucrats are satisfied with the compensation of their performance. In Calgary we see exotic car dealerships opening every other day. Ferrari’s and Lambo’s are heard throughout the city, throughout the week. Now I am not against Ferrari’s and Lambo’s or the trappings of wealth. I too hope to have a stable of fine cars on the day that I die. The point that I’m making is that the oil and gas industry should be expected to perform better than just providing the trappings of power for a handful of bureaucrats.

The current situation in oil and gas is that cashflow is king. And I have been told that, and that profits don’t matter one thousand times. However, and most particularly in a capital intensive industry, cash flow is predominantly the business returning the capital that has been invested into it. This is by way of depletion of property, plant and equipment. Now the investors and banks money that is invested in oil and gas is judiciously and effectively invested in productive assets. There is no question about that and there never has been. The point that I’m making is the cash flow from these investments is the return of the invested capital. That hypothetically, as a result of earning profits the cash flow numbers of a producer should provide the ability to fund future capital expenditures, pay investors dividends and pay down debt. Today, oil and gas cashflow is the source that keeps the exotic car dealerships doors open, and continuing to open, during the worst downturn in the history of the business. So although the money that is raised is effectively invested in property, plant and equipment, the returns from those investments support the bureaucrats car collections. The industry has devolved to generate cash flow that barely supports production and overhead costs. And I would not suggest that this is a scam, that is, it doesn’t qualify as one directly, it being mostly an indirect diversion of cash from the properly made investments. Calling it a direct scam would be inconsistent with those that wear white shoes and drive Cadillac’s. Oil and gas producers are more subtle and sophisticated.

We need to challenge our producers to achieve a level of performance based on the money that is invested in the producer and the proper accounting of those dollars. Where the accounting assessment has some basis in reality and the producers can be assessed against each other in terms of their performance. Where the oil and gas producers are clearly differentiated from the lost causes. Not like the situation today where the chance event of a Libyan field outage or a Syrian missile strike provides the investor with their only upside opportunities. Oil and gas should be a business, not a lottery where only the bureaucrats win.

Just got word I’ll be participating in another session with the baseball bats today at 3:00 PM. If bureaucrats are so unhappy with this situation why don’t they fix it? The performance of the industry has been a fraud for a long time. If the producer firm was generating real profitable operations they would have substantial cash flows as a result of the capital that has been invested being generated back to the producer in rapid fashion for reinvestment. This being due to the fact that it’s a capital intensive business. The judicial and appropriate management of the cash flow is what has been missing. Although the flows have been high, they have never been high enough to pay back the capital that has been invested, or ever achieve any real basis of profitability for the producers. And that is why each producer is choking on vast sums of property, plant and equipment. There was never enough cash flow or earnings to write those assets down. And they were permitted to let these balances bloat ever higher with the unrecognized capital costs of past production.

It's time for a new basis of performance in the industry. One based on reality. One where the investors and bankers money is treated with respect. That is if they ever come back. I don’t think they will until such time as profitable operations are established. Producers have two things working against them at this time. Their stock prices are stratospheric. And the amount of debt outstanding is large with large numbers of shareholders outstanding. If I had $100 million to invest in an intermediate producer I’m never going to see that money. Not only because they don’t have the old time religion of profits. $100 million wouldn’t buy any kind of position in the firm. And that long line up of investors starts after the long line up of creditors. All I see is the risk that the stock prices will collapse. All that money invested and you're nobody. Maybe if you're lucky though, you might get a ride in a Ferrari.

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 XVII

When it comes to funding People, Ideas & Object and our user communities budget. There will be the laggard oil and gas companies that are, for whatever reason, unable to participate and carry their share of our budget. The same could be said for startup oil and gas producers. This should not be an impediment to progressing with software developments on September 4, 2017. It should also not be a situation where People, Ideas & Objects and the user community do not realize the full extent of their revenues.

Oil and gas producers have significant value that is not being captured by today’s organizations. This value is seeping out of the industry into the energy consumers pockets by way of low commodity prices. At the same time investors who have provided the financial resources for the capital in the industry are waiting for the day when they may see a return on that investment. This is all within the producer's control if they began using the Preliminary Specifications decentralized production model with its price maker strategy. With so much value to be gained by the oil and gas producers why is it always someone else that has to pay for the producers benefit. And as such I am unwilling to discount our budget for the makeup of any of the producers in the industry. Other producers who are set to gain, and gain consistently, should contribute more in order to compensate for the laggards and startups.

Last Thursday the World Energy Council published their 2017 report. Stating the following regarding North America.

While natural gas and oil continue to trade near historic lows (albeit creeping higher in the last year), energy infrastructure investments require long-term confidence in pricing. There remains a degree of doubt that the stability in commodity pricing will continue for the duration of those investments. The abundance of natural gas in the United States and Canada, however, has assuaged fears about energy security and commodity price risk based on foreign policy. 

Talent acquisition and retention will continue to be a focus for our industry in 2017. Like many industries that are transforming, the demand for top talent is critical as new opportunities and technologies continue to reshape the energy industry. Combined with generational turnover, energy leaders will continue to monitor this risk and be concerned about how to build the right teams required to achieve the transformational goals they have set for their organisations and the industry as a whole. 

Market design continues to be one of the critical uncertainties in the FELs [Future Energy Leaders] agendas with a lesser impact than the prior year but with a higher impact than the global monitor. In the FEL’s vision, to embrace new frontiers, FELs urge the need to adopt new business models by means of modern technology and innovation, implementation of the right policies and greater collaboration and engagement with customers. 

“Welcome to the party pal,” John McClain.

I find it interesting that these people have tied the low commodity prices with concern for the ability of the industry to provide a financial return to its investors. All throughout the time I’ve been doing this I’ve constantly been told by industry “leaders” that profits don’t matter, its cash flow. And I’ve argued that the accounting treatment of storing past production costs as property, plant and equipment on the balance sheet is a scam. In the World Energy Council’s report itself they state that half the costs of the energy infrastructure is attributable to oil and gas. Think about that for a minute and also understand that that infrastructure is aging rapidly and needs to be replaced or refurbished in the next 25 years. Where, or which investors will be scammed for that money?

The seriousness of this issue is captured by the World Energy Council. They state that commodity prices are the critical issue that the industry faces. The Preliminary Specification and our user community enable the price maker strategy that will allow the producers to return to profitable operations. To real profitable operations. Storing costs on the balance sheet is a fool's game played by fool’s. It doesn’t make you a better producer to have outsized balances of property, plant and equipment. It may, in this new environment that we are heading into, show that you don’t know what you're doing. Chevron is the worst culprit here. They have more than a quarter of a trillion dollars in property, plant and equipment, or 13 years worth of depletion. Why? How does this make them a better company? This only represents the amount that they’ve subsidized consumers for their energy costs. By not charging enough. If they treated those capital costs appropriately they would have written these costs off by this point. And in Chevron’s case, with only $145 billion in shareholders equity, that would have created massive losses for the past four decades. And hence why the producers use the accounting treatment that they do. The situation now is how do they reduce those balances of property, plant and equipment? And as an investor how should I assess a company's performance when they never made any money?

The scope of the problem is far worse than what the World Energy Council intimates in their report. We have a long and difficult road to travel in oil and gas. It’s not going to be good times. Only an extension of the bad times that we’ve experienced over the past few years. That is until we can fix this problem on an industry wide basis by implementing the Preliminary Specification, these difficulties will be the constant state of affairs. We can listen to the bureaucrats who assure us that it’s all under control, or realize in the mid to long run, changes need to be made.

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 XVI

The scope and scale of People, Ideas & Objects and our user communities Preliminary Specification is as broad as could possibly be considered. When we move to the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable producer everything changes. Therefore the Preliminary Specification has had to design solutions for the necessary changes as a result of moving to that organizational construct. Why are we moving to the Joint Operating Committee? To achieve the alignment of the hierarchies compliance and governance frameworks with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee. When we do this we achieve a speed, innovativeness, accountability and profitability in our producer firms.

It would be my suggestion that when computers were being introduced in the 1960’s into oil and gas. The question became what will we do with them? Accounting became one of the natural uses for computers. Then taxes and the regulatory environment that exists to ensure overall compliance of the producer joined in. As people began their work with computers in oil and gas, the Joint Operating Committee faded into obscurity in terms of the accounting approach. Use of SAP today doesn’t even recognize the purpose behind having partners. The Joint Operating Committee is not in existence in any of the administrative or accounting applications that I’ve used in oil and gas. By adopting the Joint Operating Committee the Preliminary Specification requires that we approach the scope and scale of our application in the manner that we are.

Let's assume for a moment that I’ve convinced you that a move to the Joint Operating Committee is the necessary requirement to put the administrative and accounting functions in line with the rest of the oil and gas producer. This implies that the development of software to meet the needs of the industry is necessary. People, Ideas & Objects are promoting the Preliminary Specification as an inherent part of our Intellectual Property. Other ERP software vendors, therefore, need to come up with their own organizational construct to deal with the issues and opportunities that that software provider wanted to resolve. If an oil and gas producer is looking at the market for oil and gas ERP systems they know they’re going to have to review a certain number of specific items regarding each software provider, and I would hope that they would consider People, Ideas & Objects and our user community as part of their review.

The first item a producer is going to want to see is the underlying technologies and the base of the offering. There really are only two solutions in the market, Oracle and SAP. In oil and gas SAP has the majority of the oil and gas producers operating on their technology. Notice how it hasn’t had the positive effect in helping them profitably. Nonetheless People, Ideas & Objects are using Java, Oracle Database 12c and Oracle Fusion Middleware and Applications as the base of our application. These are the more robust technologies available in the marketplace with Oracle being a leader in their ownership of Java, the database and the recent writing of Fusion Middleware and Applications in Java from the ground up. Check for People, Ideas & Objects.

Next the producer is going to have to evaluate the ERP provider on the basis of their overall vision of the ERP systems offering. People, Ideas & Objects conducted the ten years of research that was necessary to determine what was required to use the Joint Operating Committee. The Preliminary Specification is the codification of that research and expression of that vision. I am not aware of any other vendor in the ERP marketspace that is selling any vision of a system that deals with the overproduction and oversupply issues. Nor do I know of any vendor offering a system that deals with the unique nature of the oil and gas industry. Most if not all of the others are all selling their products on the basis of a technology whiz bang feature that will make your eyeballs melt. If that were perceived to be a good thing. Check People, Ideas & Objects.

Next on the checklist of boxes to check is the user community involvement in the applications further development to meet the oil and gas industries requirements. It is here where People, Ideas & Objects have a substantial competitive advantage. Once the Preliminary Specification was published in final form in December of 2013 we commenced developments of our user community. Our user community vision and commitment is unparalleled and is represented in the three years that we’ve consistently developed our user community. Others may suggest that they’re user community based, however the timelines in which it takes to develop the user community will not be in their court. People have to see a consistent and constant commitment in act and deed before they will commit to participate in a user community. Check for People, Ideas & Objects.

These are the strengths of the Preliminary Specification in the oil and gas ERP marketplace. Producers might believe that they can more easily develop a solution for themselves that meets their needs and that our industry wide scope and scale is too broad. I disagree. If they can approach the development of software that deals with the administrative and accounting requirements of their organization. Cobble that together with their minimal budgeted resources. Minimal from the point of view they’re one producer with one budget. Think of how easily I could do the same job on behalf of the industry with our aggregated budget of all the producers. Check for People, Ideas & Objects.

The last question that we have to ask is what is the producers back-up plan? And of course that is the tired and well used, do nothing, alternative. It wouldn’t be a “muddle along” strategy without “do nothing” tagging along with it. My question is, how is it that an industry that is considered, and promotes itself as innovative, can also pride itself on its muddle along strategy and do nothing approach? What we see is nothing. There is no action for years and even decades. It's all part of the business to lose money for nine or more of the next ten years. Check for internally generated software.

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 XV

In addition to action by the oil and gas producers towards actively participating in the People, Ideas & Objects Preliminary Specification. We also need the service industry representatives to participate in these developments in order to gain the benefits for their organizations, industry and the oil and gas producers. They have just as much to gain by actively participating in these developments. Specifically, these benefits are spelled out in the Resource Marketplace and Research & Capabilities modules. It’s in these modules that the role of the service industry is fully recognized and the full capabilities of those in the field are brought to the dynamic, innovative, accountable and profitable oil and gas producers.

The role that the service industry provides the oil and gas industry is of course the field operations. If every producer had to provide for every operation that they needed, conducted at every location they operate in, the world would be congested with the producers oil and gas equipment. There is however a much more important role for the service industry identified and supported in the Preliminary Specification. And that is they have traditionally been the key innovators of oil and gas technologies. Many producers claim that they’re innovative and that they’ve moved the industry forward with the development of shale. A development that we recently noted is now twenty years in the making. Producers are not the ones that innovated and brought about these changes, it was those representatives of the service industry that are the ones that developed the technologies for the exploitation of shale. As I’ve mentioned before, the coiled tubing vendors were looking for a producer that would test their product in one of their wells for years, back in the late 1990’s. Packers Plus was forced to relocate in order to gain any traction in the industry. And now do most of their research in Argentina. I can assure you, that the only thing someone with an innovative idea in oil and gas will receive from oil and gas producers is repeated treatment with the baseball bats. The myth that oil and gas producers are innovative is about as rich as saying oil and gas producers generate real profits.

The situation is aggravated by the fact that these producers treat the service industry with disrespect and disdain. The producer, as part of a primary industry, receives revenues from the sale of oil and gas. They don’t understand that they’re not the sole earner of those funds. The service industry has been a critical part in generating those revenues and are entitled to their share. What the service industry receives from the producers however is the name calling that they’re being greedy and lazy, like what we heard when commodity prices were high. One look at the makeup of the service industry and you see that producers will only work with large established service industry representatives. They don’t work with small startups and such. As a result there are only a few companies that they’ll work with and when they scale up their drilling operations the service industry only has price as a means to deal with the higher costs of trying to complete the work. There are no opportunities for new market entrants when the producers will only work with established vendors. Then in the inevitable and unnecessary downturns, such as we’re in today, the service industry can watch their accounts receivable balloon to two years of work outstanding. If only there was a better way.

The Resource Marketplace and Research & Capabilities modules provide the producer and service industry with the opportunity to collaborate on a number of fronts. Enabling them to innovate on a much faster cycle, but more importantly for the producers, to be part of that innovation cycle. If we are to undertake the greater than $20 trillion in capital expenditures in development and infrastructure over the next 25 years we could establish ways of doing it innovatively, or we could go back and copy what they did in the former Soviet Union. Either one of those methods would appear to be a better choice than what has gone in oil and gas in the past few decades.

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. 

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.