And One More Thing

Yesterday I suggested that we should develop the Preliminary Specification. A little self serving and all that, however the one recommendation that People, Ideas & Objects has made for the producers to resolve these chronic and unending difficulties. Is the tripling of oil and gas revenues by tripling the price of the commodities. This is the only way in which to move forward as an industry. These higher prices will begin to reduce the capital costs of past production carried on producers balance sheets as property, plant and equipment and account for current depletion. The total of which People, Ideas & Objects have calculated at approximately $76 / barrel. These higher oil and gas revenues will help to remediate the current desperate financial position of the producers and enable them to recapitalize their organizations and develop more appropriate financial positions. Without the support of investors and bankers there is little else that will work to heal the destruction that has occurred in the marketplace and the ongoing damage of low commodity prices. Then we can approach the difficult future we have in terms of providing the energy consumer with affordable energy. This will require substantial investments in all areas of the energy infrastructure and deliverability over the next 25 years. Is it the expectation of the bureaucrats that the investment community will continue to subsidize the energy consumer for these costs over these next 25 years? It would seem so.

To suggest that we triple commodity prices and maintain affordable energy for the consumer seems to be a bit of a contradiction. I’m not so certain. Most of the cost of energy is consumed in taxes, infrastructure and delivery. The commodity itself is not a large component of the energy consumers price. A tripling of the commodity prices may see, I’m not certain of the amount, only 50% increase in the price of gasoline etc. Investors have been burned. The industry is in shambles. And the demands for capital in the next 25 years is historically high. The industry has shown no capacity to identify or deal with the pressing issues that threaten the industry. The bureaucrats are oblivious it would seem to the situation. They point the finger that it’s OPEC’s fault and responsibility, that “market rebalancing” will arrive despite their chronic overproduction and their prayers for cold winters has just not resolved the situation. I’ve seen the bureaucrats playbook, it consists of two pages, one says muddle along the other says do nothing.

The Preliminary Specification enables the producers to achieve the tripling of commodity prices by beginning the appropriate accounting of each property. Where the capital costs are recognized on a timely basis, the operations and actual detailed overhead are accounted for properly. No overhead allowances, actual overhead at each property. Then with the Preliminary Specifications reconfiguration of the producer firm to include only the C class executives, the earth science and engineering resources, some land and legal, and support staff. With the accounting and administrative resources reallocated to service providers who are focused on one specific process and have the entire industry as their client base. Using specialization and the division of labor as their key competitive advantages. Then if a property is reporting that it is profitable it continues to produce. If in the next month it is not producing a profit it is shut-in and enters the producer's inventory of shut-in properties to enable it to innovate by reducing its costs, increasing its deliverability or expanding its reserves and returning it to profitable production. No collusion, just independent business decisions being made at the property level on the basis of actual, detailed accounting information. Bureaucrats will call it collusion only to confuse the situation and avoid the work of building the software.

By using the Preliminary Specification the producer increases their profitability by only producing profitable properties. No unprofitable properties dilute the earnings of profitable properties. The commodity markets have the marginal production removed from the marketplace increasing the commodities prices. The reserves are saved for a day when they can be produced profitably and the reserves costs don’t have to carry the additional costs of successive losses on the property. These attributes are enabled through the Preliminary Specifications task and transfer network where the information that drives the work of the service providers will not have any information for those properties that are shut-in. Therefore no work will be done from an administrative or accounting perspective and as a result no billings from the service providers will be generated on those shut-in properties for that month. Creating a null operation at that property. No profit, but also no loss. Enabling the producer to scale up and down their deliverability based on the prices provided in the commodity markets. One month they may be profitable at full production of 100,000 barrel / day and another month they will be profitable at 25,000 barrels / day. The Preliminary Specification creates dynamic, innovative, accountable and profitable oil and gas producers.

How much production needs to be scaled back and which properties are profitable are unknown at this time. In order to achieve the market equilibrium it will be dynamic and changing at all times. At this point in time none of the producers can tell which property is profitable and which one isn’t due to the overhead being lumped into corporate and then most of that being capitalized to property, plant and equipment. Today properties only have allowances for overhead that are woefully inadequate to capture the real costs of accounting and administration. I understand the bureaucrats argument that these changes will take effort and a lot of hard work. However the only ones who have ever benefited from the industry are those bureaucrats. A tripling of commodity prices will keep these products as the greatest deal ever offered to consumers. And the change to the Preliminary Specification is the only way that this industry is going to move forward. That only way starts September 25, 2017.

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. 

A Contrast in Value

The implication of stuffing the balance sheet full of every conceivable cost, including royalties, has the effect of reducing the amount of cost recognized on the income statement and therefore increasing the profits of the producers. It would therefore be assumed that the producer firms were wildly profitable as a result of not recognizing the capital costs of past production. That isn’t the case. In our sample of 22 producers who produce 7.688 million barrels of oil equivalent per day. Their net property, plant and equipment at the end of the first quarter stood at $459 billion. The amount of their cumulative profits as reported in their retained earnings over the life of these firms stands at $61.9 billion. Looking at this critically from the perspective that the majority of the costs in property, plant and equipment should have been recognized in previous accounting periods. That these balances are disproportionately outsized and obscene as a result of recording everything as a capital asset and depleting those assets over the life of the reserves, in which many cases may be a 25 year lifetime. And limiting our focus to just these points, it will take 7.4 more lifetimes before these companies earn enough to retire these property, plant and equipment balances.

I did not take in consideration dividends and other matters as I find those points to be irrelevant to the argument that I am trying to make here. These producer firms are not performing and have never performed. They have diverted the recognition of their capital costs, which include the costs of the Post-It Notes and telephone service of the receptionist, to make them appear to perform better than they are. As we noted last Friday the SEC has charged Obsidian and three of its accounting people with civil accounting fraud for the extension of this logic to include royalties as property, plant and equipment. That being the final step in the process of including everything in property, plant and equipment. What I guess the SEC sees in the Obsidian case is that the royalties are much more material than Post-It Notes. I am asserting here the materiality of the $459 billion in capital assets that our sample producers continue to hold in contrast to their lifetime earnings of only $61.9 billion. That is a lot of Post-It Notes.

Those in the industry will say that this is all just accounting and numbers, who cares other than the accountants? If we employed a reasonable test to the property, plant and equipment of these producers I would suggest they would probably be in the range of $100 billion as more representative of what “normal” would look like. That would mean that $359 billion would have flowed to the income statement and these 22 producers would have collectively been responsible for $297 billion in cumulative losses. Which is what I feel is a better representation of the bureaucrats performance in this industry. A dismal performance that would have been remediated well before now. Instead what you have is an industry of spendthrift, unaccountable bureaucrats who overproduce in unhinged fashion and think they rule the world.

The destruction of $300 billion by 22 producers is an achievement. Well the world is coming to see that maybe it's not. First there was me, I knew it wasn’t working. Then the investors and bankers caught on. We also have what I can proudly say is the beginnings of a very large user community being generated here at People, Ideas & Objects. Maybe the SEC has caught on as I suggested last Friday. This loss of $300 billion is just accounting when you consider the damage that has been done to the commodity markets. How much pain and suffering, and unnecessarily so, has been incurred by the people who work, and used to work, in the oil and gas, and service industries. Add it all up and these bureaucrats really should recieve my respect and more civil tone.

The sad part of this assessment is that this is the destruction that we can account for today. As the bureaucrats strike up the band to motivate the machinery to kick into gear again. There is an emptiness in these actions. Everyone knows all is not well and saying and doing otherwise is not going to fix the problems that are pretty much obvious to everyone. As bad as it is today I think everyone can see things spinning out of control pretty soon. That is certainly what I’m seeing. The oil price can’t hold up with continued overproduction and oversupply. It took a few years for the natural gas price to precipitously fall and break down but once it did, well we know the story. Then the “cash flow” that this capital intensive industry generates, and the bureaucrats currently count on to compensate themselves, will diminish into thin air. Then the bureaucrats who have a long history of cutting and running in other industries will do as much here. What we’re left with is an industry that has experienced this level of destruction, turning steeply downwards, where management has left, and the only thing I can recommend is that we build the Preliminary Specification starting September 25, 2017.

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. 

To The Bureaucrats, We Say So Long

I’ve read many articles this past week stating that the ball is in the court of the North American producers. Expectations that OPEC and Russia will extend or expand their production cuts doesn’t exist. The focus is clearly on the North American producers to act. With oil prices about to fall precipitously as a result of the oil commodity market fundamentally breaking down from overproduction and oversupply. All the finger pointing that the North American producers have done over these past few years has encouraged others to act. And they have acted in a fashion that is above and beyond what the market expected of them, and then some. That North American producers want to now change the talking points from “market rebalancing” to the “demand side of the equation.” Which is effective in showing the world their ability to all sing in the same key and in perfect harmony to avoid any and all action. What the world really want’s to see is a response, or what is it that they’ll do, when faced with such destruction.

Natural gas prices fundamentally broke down in 2008. Partially I would suggest due to the financial crisis, but also the chronic overproduction and oversupply destroyed the commodities pricing for the short, mid and long terms. It will require extensive rehabilitation of the marketplace to have the natural gas prices return to levels that will earn producers profits. This began nine years ago! Nothing has been done, other than to initially state that the market would rebalance, and to continue operations as if nothing had happened. Bureaucrats have for almost a decade made out like bandits. Just as they are today. No one talks about natural gas markets anymore, primarily because there is no one to blame. There is no question that the decline in the natural gas market is solely as a result of North American producers overproduction. Is this a trend?

The Preliminary Specification wasn’t complete in final edited form until December 2013. There were however many elements of it that were published before then. The Preliminary Specification is 175,000 words and in 2008 I had published the Draft Specification which is for all intents and purposes the same thing. It contained 25,000 words. There was at least the opportunity throughout this period of time of depressed natural gas prices for these bureaucrats to do something about the natural gas business with the Draft Specification. Instead I was subjected to the repeated sessions with the baseball bats outback by the dumpster. I can assure you that there is nothing else in the marketplace today that deals with the issue of producer overproduction and oversupply that contains anywhere close to even 25,000 words. Bureaucrats claim to be innovative, they only punish innovators, they don’t solve problems, they only muddle along and do nothing.

Bureaucrats haven’t figured out that investors and bankers had figured them out a few years ago. They’ve been withholding new investment funds from the industry due to the issues that they see that remain unaddressed. The lack of cash for these past two years did not motivate the bureaucrats to do anything. They seemed to understand intuitively what I only came to understand recently. That a capital intensive industries cash flow will always support the industries overhead costs. Of which includes their compensation. All they had to do was to hang on, keep the paper flowing until the issues became unmanageable and then duck out en masse in a crowd of otherwise unidentifiable bureaucrats.

That is the status of the industry in the summer of 2017. No one likes to hear this type of talk especially when it's vacation time and the Stampede is in full swing. But before they go I thought that it might be worthwhile for us to take the time to thank these bureaucrats while they still occupy known space. Tell them that their efforts are not appreciated and don’t let the door hit them on the way out. These next couple of months may be the only opportunity in which to do so.

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. 

Oil and Gas Accounting Fraud

An interesting thought came to mind last week as I read the news about former PennWest, now Obsidian as they’re called, and three of its accounting employees, including the former CFO Todd Takeyasu, being charged with civil accounting fraud by the Securities and Exchange Commission. There was something that was said by the SEC that reflected to me a different point of view about oil and gas accounting than the one that is operational in the industry. A point of view that is more consistent with the point of view that is expressed here by People, Ideas & Objects and our concern that the industry has over reported their property, plant and equipment and profits by substantial amounts. The quotation is as follows:

The U.S. Securities and Exchange Commission alleged that Penn West Petroleum, which changed its name earlier this week to Obsidian Energy, had moved hundreds of millions of dollars from operating expenses to capital expenditure accounts. That maneuver, the SEC said, artificially reduced the company’s costs by as much as 20 percent at times, and improved metrics of oil extraction efficiency. 

The response by Obsidian to these charges is hilarious.

The law suit is based on certain historic Penn West accounting practices, discovered by the Company and reported to the SEC in July 2014. As a result of the Company’s discovery, investigation, and correction of those practices, Penn West restated its historic financial statements and results on September 18, 2014.

I read this response as saying “accounting is a joke, we overreported by a few hundred million and then fixed it, move on.” Which is typical of the attitude in oil and gas towards the accounting profession. That royalties were capitalized to property, plant and equipment is only a further extension of the “game” that has been played in oil and gas for the past four decades. The culture of capitalizing every possible cost to property, plant and equipment only went to the obscene level of including royalties with PennWest, that we know of. However it is indicative of the level that the “game” is played. The fact that this was done over several reporting periods and was several hundred million dollars worth shows that it was a known practice within the organization. It wasn’t an innocent mistake.

The Post it Notes that the receptionist uses, are they capital or overhead. The phone service that she uses to take the calls, is that capital or overhead. In oil and gas I can say with great certainty that the majority of the companies in the industry would have capitalized 80% of these costs to property, plant and equipment. And hence the “game.” This is done through an entry to take the 80% or whatever percentage of overhead amount from the overhead total and move it to property, plant and equipment on the financial statements working papers. Fifteen seconds and it's done. The history of this is the SEC’s requirement that Full Cost and subsequently Successful Efforts being the only two acceptable methods of accounting for public oil and gas companies. Obsidian being a public company, which they should probably better understand. In the 1980’s interest began to be capitalized and then the inclusion of overhead began when the oil price dropped in the late 1980’s. Since then it has been a competition, more like a race, to capitalize the most overhead and report the most profits as a result. Does anyone think you can operate an oil and gas company on 1.48% of revenues being the total overhead incurred?

To the point regarding the thought that I had earlier. Is the SEC thick and obtuse regarding the methods of oil and gas accounting? Are they unaware of the outsized and obscene balances of property, plant and equipment within the industry? Can they not see the associated value that has eroded through the process of over reporting capital assets and profits? That the inevitable methodology that the industry has employed has distorted the accounting of the industry? That the industry is claiming to “only following the rules” of the SEC and FASB.

If we look at the point of the Obsidian lawsuit the SEC is stating that “That maneuver, the SEC said, artificially reduced the company’s costs by as much as 20 percent at times, and improved metrics of oil extraction efficiency.” It’s clear the SEC do get it. To me this also say’s something that I don’t think has been heard before. That operations are operations and not capital, just as overhead would be overhead and not capital. This capitalization “game” has gone on for a long time and has become obscene by any stretch of the imagination. In answer to my questions regarding the thought processes of the SEC, I think the days are numbered when the producers will be able to continue to get away with this hokus pokus. You can’t fool all the people all the time.

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. 

A Sad State of Affairs

The price of oil exited the second quarter on a rather strong, dead cat bounce. Ending June 2017 at $46.04. Up from its recent low of around $42.50 and down substantially from its price at the end of the first quarter of 2017 of $54. Recall that the secret to the innovations that the bureaucrats were able to employ to bring their first quarter 2017 costs down was the ability to change the rate of depletion per barrel. Going from $26.58 to $20.72 in all of 2016 in comparison to the first quarter of 2017. What has this to do with anything? The valuation of the producer's property, plant and equipment at the end of the second quarter of 2017. The reserves themselves are dependent on the price. If the price times the reserves is less than the amount of property, plant and equipment then the ceiling test will be employed. Leading to losses being reported by these innovative, depletion reducing bureaucrats.

The number of shorts on the oil commodity markets at this time is at record levels. This is after the declines that brought the product into bear market territory. When will that rebalancing take place? Clearly no one is pointing to OPEC for action anymore. Everyone sees that the issue lies with the North American based producers who just will not, for absolutely any reason, curtail production. Losing money is their right, their obligation and their pleasure. Selling out of a short position is probably what caused the rise in the price of oil last week. There is no sense in the commodity markets, with the inventories stuffed full across the planet, that these North American producers have an idea what to do. The Preliminary Specification is going into development on September 25, 2017 but the bureaucrats won’t be part of that, they’ll jump ship before they ever sign on to that. That should be evident to all at this time.

Are the shorts predicting, as I have, a fundamental breakdown in the price of oil? Where the systemic issues remain unsolved and unsolvable by the parties running the business. Therefore the prices have nowhere to go do they? Just as natural gas prices fundamentally broke down in 2008. Hope and optimism is running rampant throughout the industry. You can just feel the energy of the industry ready to break out of its doldrums and reach for its ever broadening future. Well the bureaucrats can! When a capital intensive industry that is as capital intensive as oil and gas is. Finds itself in a situation such as it finds itself today. The proceeds from past investments, that no one questions were invested with the greatest capital discipline and integrity in modern history. Are diverted to support the self serving bureaucracy, said bureaucracy can exist off of that cash flow in peace and harmony, except for one annoying blogger, for infinite periods of time.

This industry needs to be rebuilt through the efforts of People, Ideas & Objects user community. If you haven’t been working on your application I hope today’s commentary provides you with the motivation to do so. We really do have a problem here. The Preliminary Specification is the solution and its timely. There are many people who are preparing their applications now. Our needs in the long run will be substantial, however, we are in need of people to start with our developments on September 25, 2017. If you want user community driven ERP systems in oil and gas you’ll need to build them. And this is your opportunity to do so.

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. 

More Chances?

Bureaucrats love to read the tea leaves and determine the implications of the butterfly flapping its wings on the shoulder of the Saudi King. Bureaucrats jumping to the incorrect conclusion that this is a bullish signal. More time and energy is spent reading the markets and determining what level energy demand will be at, and the price that this will produce. The word on the street is don’t worry about supply, focus on demand. This replacing “market rebalancing” as the talking point. So much time and energy wasted. It’s all part of the game of the bureaucrats to make sure that they’re able to impart their wisdom and reflect their brilliance of how the future will unfold. Why not just look at the commodity market price, if any property can make a profit at that price, considering all of the costs of capital, operations and overhead, then keep the property producing. Otherwise shut the property in until prices rise, or develop an innovation that increases the throughput, reduces the costs or increases the volume of reserves. Predictions that the market will rebalance in the second quarter of 2017 were as wrong as they’ll be for the current predictions that it will rebalance in 2018. So why not just focus on the business at hand? Market rebalancing is bureaucratic, willful destruction of oil and gas deliverability. Deliberate waste.

Last week we discussed a scenario that I thought this lack of focus by the producers might send us. Unlike the producers I have some time and energy to spend prognosticating about the future. The three likely outcomes of the summer months were a fundamental collapse of the price of oil, bureaucrats admitting they don’t have a solution to the problems and as a result leaving the industry, and the producers losses coming back as a result of the decline in prices and continued abuse of the industry by the bureaucrats. I have detailed these points in a series entitled My Argument which is available for those who may not want to spend the unnecessary time and energy projecting when the market will rebalance.

None of the bureaucrats have called me in these past few months since we announced our September 25, 2017 start date of our software development’s. They don’t have a solution to the overproduction or oversupply issue, maybe they don’t feel the personal pain everyone else is and as such don’t see any issue. Nonetheless I want to make it clear to everyone that the opportunity for the bureaucrats to participate in these developments is open to them at any and all times. I may be abusive and in a politically correct world that would be an issue, but I don’t live in a politically correct world. The fact of the matter is that these past couple of months will provide those who are in the know, and are concerned about the oil and gas industry, that the bureaucrats will never do anything to rectify the issues brought about by their self serving ways.

The best business to be in here in Calgary is a Ferrari or other supercar dealership. Home renovations are also not a bad place to be. Calgary had record dollar volume of renovations in the first quarter of 2017. These oil and gas bureaucrats are not only comfortable, but confident. This may be a mistake. A critical look at the business model that the bureaucrats employ and it is clear that the destruction in oil and gas is comprehensive and complete. The destruction of the commodity markets, the destruction of the oil and gas financial markets and the destruction of the producer organizations themselves. All on the altar of muddling along, market rebalancing and doing nothing while bureaucrats stuff their pockets full. This has not gone unnoticed. The difficulties that People, Ideas & Objects, our user community and service providers have had to face in our attempt to remedy this situation were also not unnoticed. These difficulties brought about through the turf war between us and the bureaucrats. Nothing was or has been done. Yet the continuation of the status quo for the next 25 years is all that is implied by these bureaucrats actions. Sorry, I’m not sold on that vision.

The bureaucrats have had their chance and they didn’t take it. Were these last few months the last chance in which they were given to remedy the situation? Will they be given any more chances? There are more important things to be concerned about and the profitability of the producers is the first thing we have to approach. President Donald Trump is opening the frontier areas to oil and gas exploration and production. Setting the U.S. on the course to export oil and gas, as well as other forms of energy. This is worthwhile and appropriate. There is just no way that these bureaucrats are going to be able to take these decrepit producer organizations forward as they stand today. The objective is set, now we need to organize ourselves towards fulfilling that objective and all the promise that this industry can provide. But first we must build the Preliminary Specification beginning September 25, 2017 and organize ourselves to provide the most profitable means of oil and gas operations.

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. 

Independence Day

Canada Day, Part II and Independence Day, Part I

Canada Day

Pointing the Finger, Part III

My understanding of history finds no parallel to the current situation I think we find ourselves in. The point that I cannot find a similar circumstance to is the level of inaction and self dealing that is done by the bureaucrats who are responsible for the industry. Muddling along and doing nothing have always been the strategy and operating procedure in the industry. It is the culture. But in the face of such obvious destruction and without a hint of concern is surprising to me. The best that bureaucrats have been able to muster through this past decade is that the markets will rebalance. No other thought or action has been raised. It’s truly amazing and based on my knowledge, I think without historical precedence.

My opinion regarding the recording of capital costs and the impact that causes is not misunderstood by those in the industry. Accounting is a social science involved in the timing and recognition of costs. The time in which those capital costs should have been moved from property, plant and equipment to depletion has been debated for a billion hours in the industry during the past four decades. It was always understood what the implications were as a result of the different ways that the accounting was conducted. That it took four decades and shale based reservoirs to realize the “liberal” methodologies implications in this industry is the surprise that I’ve had to experience. It’s not rocket science to know that if you defer the recognition of the majority of the costs in your organization. That makes you look rich in assets and prosperous in profit. Just by spending like a drunken sailor. The classic bureaucrats argument is that “the SEC defines the policy,” doesn’t hold water with me when each and every producer goes to the limit of their ceiling test each and every fiscal year.

Nothing is ever said about overhead to investors. Overhead is a game of hide and seek with no one knowing what those layers of people in buildings really cost. Overhead costs vary from 1.5% to 20.86% of revenues of our sample of 22 producers for 2016. Which reflects the anything but standard nature of the treatment for their handling. Another accounting principle. The financial performance of the entire industry is now so poor that I don’t think it can be compared to any other industry. It has assets that are monstrous in size. Yet such a small percentage of those assets are current, most of them being property, plant and equipment. The revenues of the producers are a small percentage of its assets size, 29.6% in our sample producers. A reflection of how long the game has gone on for and how much damage has been realized. The point is that the revenues remain significant enough that the overhead, which includes the compensation to the bureaucrats, is maintained. After that what is there.

Crisis, what crisis. The only person concerned about the situation is that sandwich board toting blogger on the Internet. Every industry has one or two of those, you can ignore them. And that is certainly the situation here. However, if I have a time, it's here and now. I can’t see this going on for much longer. The problems are just too difficult to deal with on a day to day basis and the trend is downward. Straight downwards. Either People, Ideas & Objects, our user community and service providers are funded this summer, or...

No one can tell me that producers have been prudently going about their business. That all of this was unknown and unexpected. That is not the truth and they know it. Go along to get along was the way it was done, here’s a stack for you if you keep your mouth shut. Makes it sound shady doesn’t it. Just search this blog for the word bureaucrat and see how many hits you’ll get. There has been no leadership, or discussion, or action or anything. Pursuing alternatives would have enabled the appropriate course to be taken. Now the only course is the Preliminary Specification and it must be successful as a result of a lack of choice. I am very disappointed knowing what I know about the last few years. It will be this summers marketplace that determines the outcome of People, Ideas & Objects, our user community and service providers. Have I been confused about the situation and unnecessarily proposed a doomsday scenario? Or will those things that I’ve predicted come to pass. The fundamental breakdown of the price of oil. The bureaucracy leaving the industry in a wholesale manner. Losses of the producers once again. I am satisfied that I may be considered foolish as a result. If we’re in for what I think we are, then I’m fully prepared to hang up my sandwich board.

Today President Donald Trump will be announcing the new U.S. energy policy. Suggesting that energy exports in oil and gas are the direction the country should head. Based on shale based reserves this is a worthwhile and possible objective. There is however no way that this industry is ever going to achieve this. There are not enough investors that are willing to give up title to their cash so that bureaucrats can fritter and waste. The Preliminary Specification establishes the industry on the basis of profitable production everywhere and always. It then works to overcome the infrastructure and resource constraints that need to be addressed to handle the increased capabilities and capacities. Only then can we approach the President’s goal of energy independence and exports.

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.