Something for Everyone, Part VI

As we noted yesterday, the North American based producer is locked in a fight for its survival. One that they appear to be winning. They believe they’ve won the battle with OPEC over who’s right it is to produce. I believe this thinking would be a mistake. Some consider Saudi Arabia is only playing along until such time as the IPO of Saudi Aramco is complete. Then they’ll produce whatever they want, at whatever price. Being the lowest cost producer that is their prerogative. The North American producer has accepted that they are now the swing producer, which means they must be the first to curtail production to support the commodity prices. If the marketplace until 2050 is as the Chief Economist of BP has suggested, that there is enough oil to supply the world twice over, then his conclusion that the low cost producers will produce at whatever price is offered, to generate at least some cash, as opposed to leaving it in the ground, will be OPEC’s strategy. In that scenario the North American producer must establish their operation in a commercial enterprise. Something that they’re not doing today, and would therefore not be able to compete in a market where deliverability was as abundant as the BP Chief Economist suggests may be one scenario.

The North American producer has therefore as little as a year to get their house in order before the IPO of Saudi Aramco. If North American producers can establish to the markets satisfaction that they’ve caught that old time religion of real profitability, then OPEC may not see the need to flood the market with deliverability post IPO. North American producers would be able to provide the market with this information by developing the Preliminary Specification. This would ensure that all North American production would be profitable. And, as the highest cost producers, would define the global commodity prices realized in the oil and gas marketplace. This would also bring back their investors and bankers who are unable to support the industry in its current, unprofitable configuration.

This does not preclude North America from becoming energy independent. It only precludes North America from becoming unprofitably energy independent. The false hope that drives the market bravado today. It should be clear to any independent thinker that the investors are unwilling to pay the additional capital costs of increased deliverability in North America with no expectation of any return. They have subsidized the consumers of energy for four decades. With the amount of the subsidy being clearly advertised as property, plant and equipment on the producers balance sheets. These actual capital costs of past production are never realized and therefore are stored there to represent the subsidy the producers have granted to the energy consumer. Never recognizing the costs of capital in a capital intensive business is ludicrous. Producers today report that their profitable only after they deduct overhead and oilfield operations such as pump jacks etc. The costs of drilling, completion and equipping are stored on the balance sheet for decades at a time. Demanding that each producer issue more stock each year to stem the chronic cash shortfall. Diluting existing shareholders holdings, only to do the same in each subsequent year. What the Soviets did in their economy in the 1960’s was more productive then this economic system.

Establishing the oil and gas producer as a spender, like a drunken sailor, is how the oil and gas industry is currently configured. Can they become profitable? Traditionally the power of creative destruction steps in and wipes the garbage away. That’s not happening. The producers are being supported due to the high intensity of capital requirements in the industry. The prior investments are returning enough cash to the organizations to pay the overhead and keep the operation performing at the bare minimum. Probably for a few more decades. Therefore how do People, Ideas & Objects, the user community and service providers obtain the financial resources to institute the necessary changes in the industry to enable profitability? Certainly the producers are able to survive in today's environment. The question we need to ask is, will they be able to survive in the environment where the post Saudi Aramco IPO, low cost producers will accept any price?

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. 

Something for Everyone, Part V

Success is imminent! At least as far as People, Ideas & Objects, our user community and service providers are concerned. If only that was enough. We need producers to jump on the bus and start pulling their weight too. And not just funding our budget, although that is a critical element of all of our future success. The need for the direct participation of the producers is also necessary. They cannot pay the bill and sit back and expect us to solve this without their active involvement. Ideally they would like to attach their check to a service level agreement, sit back with their feet on their desk and hold us to the literal interpretation of the service level agreement. Any failure in that scenario would be our collective failure and we would be dispatched to the sidelines. It needs to be asked if the producers can afford to do this? What options would they have in the event of our collective failure? Does the scope and scale of this issue demand that they take a different posture and different tact? There’s no doubt that People, Ideas & Objects, our user community and service providers are on the right path in terms of the solution, if there is a failure in these developments it will unquestionably be the producers who realize the greatest cost of that failure. What would the producers do then? What should the producer do? What happens if developments don’t begin September 25, 2017?

People, Ideas & Objects determined that we would not play the service level agreement game with the producers. It has been an interesting game that has had our competitors occupied meeting the detailed terms and conditions set out in those agreements. We feel the producers should ask themselves what have they’ve truly gained? And in a dynamic marketplace where the unknowns are as substantial as what we collectively face, do they want to stick to the static definition in a service level agreement, one that is unchanging and may have no bearing on the success of the initiative? Our software developments will most certainly require some skin in the game by each and every producer firm that endeavours to be successful in the future.

Shale is not a commercial operation. Oil and gas is not a commercial business. As a result investors have left until the industry can prove otherwise. Reporting profits, as the producers are today, are hollow, transparent and false when the capital costs of these operations are left on the balance sheet of the producers for a decade or more. Never recognizing the capital costs of past production. In what world would you want your capital returned over a ten year time line? Only a fool would invest in such a ludicrous proposition. Particularly with the flush production of shale on a steeper decline curve than conventional reservoirs. Producers need to turn their capital over quickly, repeatedly and efficiently if they expect to call themselves businesses. Watching it glow as property, plant and equipment on their “well defended” balance sheets has been the key financial criteria that producers want to be evaluated on. This represents the very low level of business understanding currently resident in the industry. Investors see oil and gas as non-commercial as a result and will sit on their hands until producers can prove a viable commercial business model exists in the industry.

Continuation of the ongoing argument with People, Ideas & Objects et al is also a foolish proposition. Disintermediation is extracting bureaucrats from every industry and putting them out to pasture. However, for bureaucrats to continue to hang on to this failed business model is a viable opportunity. This is due to the fact that oil and gas is a capital intensive industry. The return of capital from the prior investments is adequate to cover the overhead of the producers for the next decade or more. The bureaucrats are safe. Which they have been throughout this downturn. It's everyone else that sees the difficulties as a result of living them. The industry is therefore the walking dead. How this deadlock is broken is unknown. People, Ideas & Objects needs the financial resources of the producers to be provided to us prior to our start date of September 25, 2017. The point being bureaucrats sign the checks.

Our value proposition has $25.7 to $45.7 trillion in incremental revenues to the producer firms over the next 25 years. That hasn’t been enough for the bureaucrats to fall on their sword, yet. Who can make the decision to proceed in the industry? It’s no longer just a handful of people who see the industry in the dire scenarios that I paint on this blog. It's becoming common knowledge that there is more to the downturn in prices than what the current producers business model can handle. That shale is not commercial. Many are rallying around the Preliminary Specification as the solution. It’s coming down to the point in time when individual decisions need to be made. The kind of decisions I’m referring too that make the big difference in your life and those around you. The ones that benefit society and move us all forward in ways that we don’t fully understand at this point. We stand at a crucial point right now. You’re either frightened or exhilarated. What’s your decision going to be? How will you be successful?

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.

Something for Everyone, Part IV

A quick update on the status of our fund raising for our first year's budget of $100 million. The total number of cold calls that I've made stands at zero. I therefore have doubled my quota for the entire fund raising period. As I've mentioned the producers will be waiting a long time for this one individual to do all this work. Producers need to move quickly and organise themselves to raise these funds collectively. No one else can do it in the short time frame that we have. Who’s issue is the lack of profitability and cash in the industry? Producers need to act to resolve their problems. I don’t think anyone else is going to rush to save them!

I would think the dynamic, innovative, accountable and profitable oil and gas producer would be appreciative of not having the burden of developing the accounting and administrative expertise necessary in the industry. The Preliminary Specification moves away from the fixed producer based accounting and administrative capability to the variable industry based accounting and administrative capability. Where the producer accesses the industry based capabilities that they need to operate. This eliminates the redundant duplication of administrative and accounting capabilities that are currently resident in each producer firm. These capabilities are essentially the same in each producer firm except that they’re a fixed cost and unshareable between producers. The costs of duplicating this overhead burden in each and every producer firm is one of the reasons the industry is not profitable.

Therefore we have chosen not to replicate this redundancy in the Preliminary Specification with the user community and service providers. The service providers will be provided with an exclusive license to operate their process for the entire oil and gas industry. (Some exceptions may apply.) These licenses will be granted through the Intellectual Property that is what holds this community together. Service providers will know that they will not have another service provider set up shop in the adjacent office space and begin undercutting the service providers price or service offerings. That is not the basis of competitive advantage that will be used in this sub-industry and we’ve detailed the basis of competition between the service providers two days ago.

Earning a service provider license will be based on the processes that People, Ideas & Objects software manages and the performance of the user community members during our initial development. If you’ve been an active participant in the area of the lease rental payment process, developed some innovative solutions to the issues in that area, and provided overall leadership qualities that make you stand out in that area, then our assessment would consider those and determine who was the appropriate candidate(s). Note we are looking ultimately for 3,000 members of our user community. These are the leaders in their areas of expertise. We will be managing, we believe, approximately 3,000 processes and will be issuing 3,000 service provider licenses. It is these elements that should also stand out in your application for user community participation.

One of the benefits of the service providers configuration is that they provide the industry with an objective and independent resource dedicated to the quality of the information in the Joint Operating Committee. Under the Preliminary Specification the concept of operator is somewhat expired. Participation by all of the producers in the Joint Operating Committee is required due to the reasons documented in the various modules of the Preliminary Specification. Having this objective and independent accounting and administrative resource provide these processes management will assure the industry that no favorites are being provided for. There will be some processes that are producer specific however the majority of the processes will be charged directly to the Joint Operating Committee.

The key attribute of the service providers is that they make the producers administrative and accounting overhead costs variable, based on production. With shale being as prolific as it is, and the costs being as high as they are, not all of the well bores can be exposed to the commodity markets at once. That is a losing proposition. Therefore People, Ideas & Objects Preliminary Specification, our user community and service providers turn all of the producers costs into variable costs. That way they can always achieve the most profitable means of oil and gas operations no matter what level of their production profile they produce at. This is how businesses and industries are operated. No one who owns a donut shop continues to produce donuts until the parking lot is full of donuts. And then, the only remedial action taken by the management of the donut shop is to buy more advanced, faster donut making equipment. Filling the neighbors parking lot. That wouldn’t work would it. And it certainly doesn’t work in oil and gas. Producers, like the donut manager, will lose all their money waiting for the “market to rebalance.” And shy away from the alleged manipulation of the market the Preliminary Specification recommends in our decentralized production model. Shale requires that supply be managed to stop overwhelming demand. That’s not collusion, it's operating a profitable business. The Preliminary Specification does this by providing the actual, factual accounting of the property to determine if it's profitable. If it’s unprofitable then it is shut-in. No collusion, no market manipulation just business decisions being made independently based on actual factual data. Why is this not common sense in oil and gas, as it is in every other 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. 

Something for Everyone, Part III

As a service provider you will be the key to the oil and gas producers profitability. While the Preliminary Specification is operational in the industry, as it is today, it will no longer be enough to just own the oil and gas assets. It will also be necessary to have access to the software and services that make those assets profitable. People, Ideas & Objects, through our user community vision have no direct contact with the producer firms other than to collect the fees for their use of our software. We look only to the principles of the service providers who are our user community members that direct what software we develop. It is here where the producers will engage the user community to have their issues and opportunities addressed in terms of their needs from the software and services that producers need to be provided.

In our user community vision we clearly define that the user community is funded by the financial resources that People, Ideas & Objects source from the producers. These part-time user community participation revenues will be a small percentage of the funds that are necessary to drive this new sub-industry. Review of the methods of how and why those funds are expended are detailed in that vision. Where do the service providers revenues come from? We’ve indicated that the service providers are replacements to the current accounting and administrative resources of the producers. The resources funds that are being incurred today at each of the producers would also shift to support the service provider sub-industry. This would include all of the costs of these resources. The salary and benefits, office space, support personnel, power etc.  Each of the service providers will have a service level agreement with each of the producer firms in the industry. These service level agreements may seem onerous and unnecessarily administratively inefficient, however, standardization and other tools could make this administratively efficient for both service providers and producers. Understand that much of the work that industry does with the user community is what would be captured in a service level agreement, although much more detailed, and that Microsoft has end user license agreements with any and all Microsoft product users and the simplicity of this comes into focus.

Making these changes to the industry structure and the structure of the dynamic, innovative, accountable and profitable oil and gas producers enables their overhead, and therefore all of their cost structures, to become variable. I believe that once producers fully understand this implication they will hold to the strictest interpretation of this model and turn over all of their accounting and administrative processes to the service providers for management. These tasks are not key competitive advantages of a producer firm and to turn a fixed cost into a variable cost brings about significant structural flexibility and profitability. Producers that understand this will move quickly to exploit this advantage.

The advantage to the producers is that it will relieve them of their overhead cost concerns. If they produce 100,000 boe / day this month, and as a result of some phenomenon, the oil price declines precipitously the next month to where they can only profitably produce 50,000 boe / day. They will immediately shut-in the unprofitable 50,000 boe / day in order to maintain their maximum profitability. The overhead costs of the 50,000 boe / day of shut-in production under the Preliminary Specification are not charged by the individual service providers as no work comes through to the service providers through our task and transfer network and hence no billings from the service providers will be issued to those Joint Operating Committees. However, that does not eliminate the service providers overhead costs associated with the 50,000 boe / day of shut-in production. These costs remain fixed for the service providers. And the cost control of the overhead costs of the oil and gas industry have indeed been shifted from the oil and gas industry on to the sub-industry of the service providers.

As a service provider you will understand that at anytime during the year you may be faced with up to 15% of your revenues declining as a result of industry shutting-in production. Or whatever percentage of the industries deliverability is shut-in at that time. I believe, this can be managed within the scope of a service provider operation with revenues of $6.67 to $10 million per year through the budgeting process. Enabling for the first time true overhead cost control capabilities for the oil and gas industries overhead costs.

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. 

Something for Everyone, Part II

As a service provider you would have in the range of $6.67 to $10 million in annual revenues. These revenues would be generated by providing People, Ideas & Objects software and your services to the oil and gas industry as a whole. You would also have the incidental, part-time, income from the work that you would do with the People, Ideas & Objects software developers as a user community member. This part-time income would also be a permanent source of revenue as we are a change based software development capability provided to the dynamic, innovative, accountable and profitable oil and gas producers. Therefore you would have a team of 20 to 30 individuals, on average, who would be managing the process that you were responsible for. It will be your focus on the specific process that you manage that provides the quality service to the oil and gas producers. You will have the ability, as a member of the user community, to make the changes to how and what that process is, and the way that it is managed by the People, Ideas & Objects software. Therefore you will be able to continually iterate the way in which your process is managed and the services and software that you deliver to your industry clients.

Your field of competitive advantages are many and far more diverse than what are available today. Certainly technical capabilities and industry understanding will be features of your service provider offering. However there will be much more. Automation will be a key part of your tool set. Through your work as a user community member you will be able to move more of the process to an automated process. This may concern people that jobs will be lost in the industry as a result, just as this concern was raised when computers were introduced in the 1960’s. We are focusing on the work that humans do best in these processes, the leadership, issue identification and resolution, decision making, creativity, collaboration, research, idea generation, design, planning, thinking, negotiating, compromising and innovating. And leaving the storage and processing to the computers. This will open new areas of opportunity to build value for the oil and gas producers and increase the quality of your service provider offering.

All economic development is a result of the expansion of specialization and the division of labor. For the industry to achieve energy independence we will need to increase our capacity and capabilities from the same resource base. Therefore to achieve that higher level of industry throughput, service providers will have to develop ways to increase their throughput through the application of specialization and the division of labor. It will be these tools that will become the competitive environment that exists between the service providers. If for example you are licensed for the lease rental payment process, you will be the exclusive provider of lease rental payments. There will be no other service provider that comes in and undercuts your pricing or offering as a result of the manner in which the Intellectual Property is developed and distributed in the user community and service providers. That process that you manage will be your domain exclusively and the means in which you will compete with other service providers is through iterative levels of automation, specialization and the division of labor.

Review of our user community vision is a worthwhile reread at this time. The combination of user community member and service provider is the means in which the industry moves forward. Each service provider actively moving their process forward into areas where we can’t imagine at this point in time. This won’t be a mindless application of going through a mountain of data each month. The processes that will be managed by the service providers will become highly scientific and determine new and quality information that is otherwise unknown today. All the while enabling the dynamic, innovative, accountable and profitable oil and gas producer to produce only profitable production through our decentralized production model. Only as a result of the service providers existence.

Granting of the service provider licenses will be based on the performance of the individual user community members. In some cases service providers may have multiple user community members. And user community members may have multiple interests in several service providers. These will be assessed based on the outcome of the software’s process management requirements and the participation of the user community members during our initial developments. The key at this point is to submit your application for the user community.

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. 

Something for Everyone, Part I

How People, Ideas & Objects and our user community propose that we rebuild, refurbish and develop the oil and gas industry to achieve energy independence is through profitability. That is the key part of our 25 year plan and our $25.7 to $45.7 trillion value proposition. If the oil and gas reserves in the ground are as valuable as they’re represented to be, then they should be leveraged profitably to fund these needs. The investors in the oil and gas producers have had enough with the dismal performance to date. Expecting investors to now generate the additional $20 to $40 trillion in future capital investment is beyond their capabilities and capacities, and most certainly beyond their desires. If the investors did fund these capital requirements, and based on the producer's current and past performance, how would these investors prosper?

As a practical matter then the Preliminary Specification is the industry's first step to move down this road where profitability fuels the industry. We can then organise ourselves in a manner in which only profitable production is produced in North America at anytime in the next 25 years. Leveraging the investors installed base of investment in the existing reservoirs profitably. Providing them with the long awaited return on that investment, payoff the debts of the producer firms, and fund the capital expenditures that we noted in the first part of this post. That is our plan.

Our plan involves the development of our software that we’ve defined as the Preliminary Specification. People, Ideas & Objects, our user community and service providers are commencing developments of our software on September 25, 2017. What we need from industry is our first years development budget of $100 million and the securing of our complete budget by September 2018. We also need their active participation with our user community. Expressing to the user community what and how it is they do their work. Software developments only provide value to those who actively participate. You only get out what you put in. This by necessity will have to be an industry wide initiative.

Producer firms who may consider letting others do the heavy lifting are mistaken. Coming in to use the software and services after the software has been built will be too late for your firm to benefit. By then those that will have participated in our development will be on a different performance trajectory and I would seriously question the producers ability to bridge the ever growing gap in their performance. Did the record store manager ever respond to iTunes, or Nokia to the iPhone? What makes you think that deferring your participation in the development of the Preliminary Specification will enhance your position?

The reality is that Information Technology is changing every industry on the planet. New business models are replacing ones that no longer perform. Software defines and supports the organisation and the industry. To make any change in the makeup of the industry will require that we develop the software first. Why wouldn't you need to be a part of that?

And for the community of people who would be interested in participation in our user community. We believe at this time that this community will number about 3,000 individuals. Subsequent to our initial developments these user community participants will form the service providers organisations that deliver our software and their services to the dynamic, innovative, accountable and profitable oil and gas producers. These will be replacements to the existing producers accounting and administrative capabilities. These are therefore substantial business opportunities for that community. I expect this newly defined sub-industry will have annual revenues in the region of $20 to $30 billion per year. An average of $6.67 to $10 million to each service provider. Each user community participant / service provider will focus on one process and manage that process for the entire industry based on the vision of the Preliminary Specification. Please proceed quickly with your applications for consideration for our September 25, 2017 start date.

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. 

Battle Lines Being Drawn

Al-Falih, in a clear message to the U.S. industry, said it would be "wishful thinking" to expect that Saudi Arabia and OPEC "will underwrite the investments of others at our own expense" through production cuts.

Clearly, in the mind of the North American producer, OPEC exists to accommodate them. The precision planning undertaken by these producers to make OPEC do exactly what they wanted them to do is impressive. So what’s the plan now? Maybe they could exert this mind control over the Chinese and have their people consume twice as much energy. The sky's the limit really. People say I should cut these producers a break and maybe they’ll fund the project. If the producers only deal with people who kiss their feet we may have identified another critical issue in the industry. Kissing the bureaucrats feet only generates an industry full of blind sleepwalking agents of whomever would feed them. My aim is at the bureaucrats who in a self serving manner have destroyed the producers and the industry.

Oil prices fell on news of the renewed OPEC agreement. Primarily as a result of the phenomenon of “buy on the rumor, sell on the news” and the reduction of the OPEC production doesn’t deal with the real overproduction and oversupply issue, the North American shale producers. Of course with producers only mirroring the commodity prices, all of their stocks were down too. Leading one to ask if investors might be better off just trading in the commodity? It used to be the belief in management that managers added value in up and down markets. But these rules don’t apply to oil and gas bureaucrats.

The reason producers are able to survive in such a difficult financial environment is because oil and gas is a capital intensive industry. Where the return of capital from operations is being diverted to fuel the bureaucrats pocket book and keep the lights on. That may be the primary point that the investors are trying to express to the producers. That although they have capital discipline and judiciously spend the money that is raised through stock issuances and banking, the return of that capital from operations are directed towards lining the pockets of the bureaucrats. Now that the investors and bankers don’t support the industry with new capital, there is a critical cash crisis. Producers should ask themselves why in the world would this happen?

I used to believe that our appeal to the oil and gas investors would have them direct their oil and gas producer firms to develop the Preliminary Specification. I’ve changed my thinking on that. I now think that the oil and gas producers are going to have to deal with their problems constructively before they receive the focus and attention of their investors again. Their investors continue to own the producer firms, and as noted here earlier, with the diversion of cash flow to the bureaucrats, these producers are not going to go out of business, they are the walking dead. Therefore investors will continue to hold their financial interest and not invest any more cash into the industry. Putting more money in will only waste financial resources, dilute their current interests, and provide no one, other than bureaucrats, with any upside. Therefore it’s up to the producers to act to develop the Preliminary Specification in order to set the industry right before any investors show any interest.

Information Technology is disintermediating every industry on the planet. Oil and gas is not immune. The Preliminary Specification eliminates the bureaucracy from the scene and they chose in 2004 to begin our sessions with the baseball bats. Things were really good in the industry in 2004. When I began saying that we provided the most profitable means of oil and gas operations these bureaucrats laughed and said no one in the industry is concerned about profits, its cash flow. It would seem in 2017 that profits have become the issue. The producer's problem is that they may be profitable, but they’re fake profits as they don’t have any cash and their companies are consuming cash at phenomenal rates. So much for cash flow too. With investors on strike, the only source of cash is new production and they can’t get enough. Which of course leads to more of the overall problem.

People, Ideas & Objects, our user community and service providers have chosen to do something about all of this. I find it great sport pointing out the deficiencies of the bureaucrats. However, if we’re sitting here complaining about the bureaucrats a year from now then we’re no better than them because we won’t have done anything either. We have a plan to solve this through the Preliminary Specification and a start date for our software developments of September 25, 2017. As we’ve noted above, the producers are going to continue as the walking dead and as a result the bureaucrats know that their franchise is safe for the next few decades. Therefore it will be interesting to see how this log jam gets broken. Someone needs to fund our first years development costs of $100 million. With follow on financing of our entire budget. I’ve drawn the battle lines, which side are you on?

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. 

Memorial Day

No posting today.

What's in a Name

People, Ideas & Objects is a bit different in terms of a name for a company. The explanation of how I came about this name might provide you with some insight into our priorities and focus. In 2001 Professor Paul Romer published his economic New Growth Theory. It suggests that economic growth in the future will not occur as a result of the traditional increases in capital and labor, but through People, Ideas and Things. We as object based software developers made the change from Things to Objects to reflect that our focus was on economic growth through People, Ideas & Objects. In the abstract of Professor Romer’s paper he notes a particularly interesting point that we should take into consideration regarding our development start date.

Societies that generate and tolerate new ideas, and that continuously adapt to changing economic and technological circumstances are a precondition to sustained economic growth.

This makes People, Ideas & Objects user community, the way that it is constructed, critical to the success of the oil and gas industry. And why our September 25, 2017 start date is important for those potential user community members to be working on their applications. This point is also the basis of my commitment to user community ERP systems development in oil and gas. We will not build software without the involvement and direction of the user community. Our software and services quality is represented in the ability of the user community to provide the oil and gas producer with the most profitables means of oil and gas operations. And to do so by moving producers forward economically. There is no more important role, in my opinion, than what the user community will hold in both our software developments and the oil and gas industry.

It is the user communities strategic competitive advantages that come to mind. The producer firms are currently burdened with developing accounting and administrative capabilities. None of these capabilities provide any incremental value to the producer. They are necessary as a result of compliance and governance, and mostly regulations. Whereas our user community will be able to provide a replacement to these capabilities as part of their strategic competitive advantages. That will be their business offering and they will be able to provide these in the most innovative and valuable way that they can. And as a result of the configuration of the user community, and the configuration of their service provider organizations, they will enable the price maker strategy of the Preliminary Specification for the oil and gas industry. A substantial value proposition for the oil and gas industry.

When was the last time that accounting and administration was discussed from the point of view of strategic competitive advantage, value propositions, economic growth and dynamic change. That is what we are able to provide the dynamic, innovative, accountable and profitable oil and gas producer. With your participation in the user community this will be our future in the oil and gas industry. The process of completing your application is the beginning of that future. It’s that simple.

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. 

T Minus Four Months and Counting

We began our 26th year earlier this month, now we look forward to the developments of the Preliminary Specification on September 25, 2017. Potential members of our user community should complete their applications and submit them before this date in order to be considered in this first years development. We are looking for a total of 100 people to make up 33 man years of effort in this first year. User community participation is always a part-time paid position. However the majority of the time spent and revenue that a user community member will generate will be through the service provider organizations that they develop to meet the needs of the oil and gas industry. These are substantial business opportunities, in my opinion. As the service providers are the replacements to the current accounting and administrative capabilities of the individual producers. Producers will have limited if any accounting or administrative resources employed within each of their firms under the Preliminary Specification. Instead they will engage with the service providers to manage their processes. Service providers in turn will use specialization and the division of labor, automation, innovation based on administrative or accounting expertise, making computers work for us and quality as their key competitive advantages. Managing one process, and only one process, service providers will administer that process across the entire industries data set.

In none of the annual reports or quarterlies that I’ve reviewed over the past decades, has any producer mentioned that accounting or administration were their key competitive advantages. The dynamic, innovative, accountable and profitable oil and gas producers key competitive advantages are their land and asset base, and their earth science and engineering capabilities. The closer they move to a strict interpretation of this division of labor the more focused they’ll be, and the more variable their cost base will be. The Preliminary Specifications takes all of the producers overhead costs and makes them variable costs that are accessed from an industry wide capability. No longer will each producer have to generate accounting and administrative capabilities in-house that are fixed in terms of costs, unshareable and replicated within each individual producer firm. This reorganization under the Preliminary Specification allows for an enhanced profitability across the industry.

This industry based, variable accounting and administrative capability of the service providers enables the price maker strategy of the Preliminary Specification. Each service provider assesses the Joint Operating Committee for their service fee. Not the producer itself. Therefore when the producer finds that a property is unprofitable and shuts in that property no information will be generated as a result in our task and transfer system, our system that drives the service providers. As a result no work will be done by any of the service providers and as a result no invoices will be sent to the Joint Operating Committee. Enabling that property to record a null operation. No revenues, royalties, operations or overheads. No profit but also no loss, a null operation. Therefore the producers profitability is maximized due to the losses on operations are no longer diluting the profitable properties, as they do today. The marginal production has been removed from the commodity markets, enabling the oil and gas prices to increase. The reserves are saved for the day in which they can be produced profitably and those reserves costs will remain constant as none of the losses that otherwise would of occurred would be added to the reserves cost base.

People, Ideas & Objects user community is the critical source of quality for our offering. The user community is endowed with significant and substantial power to affect change within the oil and gas industry. This is not your grandfather's user community. They will be the ones that our software developers work for. We are blind, deaf and dumb to anything and everyone else. The user community is also in complete control of the Intellectual Property that makes up the Preliminary Specification and its derivative works. As a result of these two key components, significant power is attained by them to ensure that they are not blind sleeping walking agents of whomever will feed them. And are able to develop and direct the changes that the oil and gas producers need in order to ensure that their future issues and opportunities are addressed. We do not want to lock the industry into the Preliminary Specifications business model permanently if there are better ways in which to manage the industry. Review of People, Ideas & Objects Revenue Model shows that we are change oriented software developers. That is how we generate our revenues. Through the changes that are initiated by the user community. If you want change based, user community driven ERP systems in the oil and gas industry, what are 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.