The Dynamic Nature of our Coin Holders

Organizations are defined and supported by the ERP software that they use. Any change in the organization must be made through the software first, before it can be implemented in the organization. Otherwise with the software unchanged any attempt to change the organization will cause it to subsequently regress to its former state. This is the reason that People, Ideas & Objects and our user community provide a software development capability to the oil and gas industry that is so critical for today’s business environment and for the long term. In order to make the changes in the behavior of the producers they’ll need to change the software first. Now as a result of the inability of the producers to support our September 25, 2017 software development start date, issues such as their chronic overproduction and oversupply will continue.

There have been a number of new dynamics introduced into the oil and gas industry. We have indicated the state of affairs in the ERP marketplace in terms of choices the oil and gas producers could make. Without People, Ideas & Objects there are no systems developments being undertaken as a result of the history and past behavior of the producers. Everyone has left. I would seriously question the producers ability to raise the attention of any vendor at this time. The market is small in terms of the number of producers and their habit of abuse in the past is legendary. With People, Ideas & Objects efforts over the past fourteen years of promoting our solution which uses the Joint Operating Committee, who will come up with a more competitive offering that solves today’s issues, in a reasonable period of time and will continue to pursue that solution on behalf of the producers for potentially decades? It would seem that the bureaucrats who run these producer firms would rather run their companies into the ground than solve their problems.

The opportunity for producers to participate in our September 25, 2017 developments would have enabled them to acquire that software development capability and move forward with resolving their issues which include the chronic overproduction and oversupply that plagues them. As a result they will not have this capability made available anytime soon. And therefore the issues and opportunities that the industry faces in the short, mid and long term will not be resolved or realized by any known current method. They will be stuck in this current state until such time as some alternative and unknown ERP software enables the industry to implement the changes that are necessary.

At the same time People, Ideas & Objects are focused on our true customers, the coin holders from the Initial Coin Offering (ICO) that we are preparing. These are the disgruntled oil and gas investors who have been on strike for over two years. We feel we offer a highly competitive offering in terms of return for these investors to consider. Especially in comparison to what the producers have been able to provide these past decades. What our coin holders will do will be to negotiate with the producers for a share of our trillion dollar value proposition that we provide the industry. More can be understood about our free money strategy here. This also provides our coin holders with the means in which to begin the much needed transition of the industry, through creative destruction, into a dynamic, innovative, accountable and profitable industry.

It will be our coin holders that will have the means in which to make the changes to the oil and gas industry that they want and need. They will have the exclusive software development capability of People, Ideas & Objects and user community available to them. They will also have the service providers which provide the administrative and accounting capabilities in which to operate the industry. We have always believed that the level of change that is introduced in the Preliminary Specification is too dramatic for the existing producer organizations to undertake. Rebuilding the industry brick by brick and stick by stick has been what we have stated all along, even as far back as 2007. The financial damage to the current producer firms has been catastrophic. A rebuilding would seem to be necessary. Will these organizations be able to deal with the future of the industry? We do not believe they will ever be able to approach North American energy independence. They will need to establish themselves as profitable organizations before they can expand their throughput. Profits, real substantial profits, not the accounting profits they’ve reported for decades, have never been part of their culture. And as we’ve noted, they won’t have the software development capabilities to reconfigure themselves in order to begin to earn real profits.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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

Oil Prices, Again

People, Ideas & Objects have proven that oil and gas producers can’t, won’t and will not ever develop any ERP systems on their own. After a decade of losses they did not participate in the proposed development of the Preliminary Specification starting September 25, 2017. We use this as evidence, upon the history, culture and behavior of the producers over the past decades in terms of dealing with ERP providers. That our coin holders will not face any competition as a result of any industry sponsored ERP software developments. We can also state that for Oracle and IBM to return to the market would require that same change in behavior of the producers that we know is missing today, and that these vendors identified earlier this century which prompted their exit. We can also assure our coin holders that no alternative ERP software developments will be sponsored based on the Intellectual Property inherent in the Preliminary Specification. The Permission Rights the coin holders earn are exclusive.

I have been highly critical and sarcastic towards the oil and gas producers throughout the last decade on this blog. The tone has been consistent and establishes a level of conflict between People, Ideas & Objects and the producers. It’s never wise to criticize your customers publicly. Based on the producers past behavior towards ERP providers I don’t think I ever saw them as customers. I’ve been told a hundred times that they’ll never get involved in this project, something that I agreed to quietly. I think I always knew the producers weren’t customers but were more the source of the issue and that was how they were treated here. Our customers were the investors in the oil and gas producers who we share a frustration and anger with. They now have the opportunity to participate in the transformation of the industry, and their interests in oil and gas, by participating in the ICO we are preparing. Choosing to invest in the coins as opposed to the producer firms themselves.

What we need to do now is to prove that the oil and gas producers, during a period of rising oil prices, have a flawed business model that is the source of low oil and gas commodity prices. We certainly don’t see any investors or bankers stepping over each other financing any of the producers. This should be relatively easy for us to prove that the overproduction and oversupply is inherent in the business model and nothing has changed since the late 1980’s and 1990’s when I first began to study and resolve why producers don’t just shut-in some of their production to raise prices to the level where their profitable.

That the Preliminary Specifications decentralized production model’s price maker strategy resolves low commodity prices is irrelevant to the producers. They see it as collusion and will not be involved in it. They prefer to spend decades where they lose money as a result of a fundamental change in their business, driven by prolific shale reservoirs. Ending up losing the investors, banks, service industries, their employees and all the others interests instead. Where a common understanding of business would dictate that the market provides one thing and that is the price it is willing to pay. If they as a producer can earn a profit at that price then they should produce, if not they should shut-in their production. That is not collusion as they suggest but good business practice. Producers will allege that this is what they’re doing.

One look at the disjointed nature of their financial statements will find that none of the capital costs of past production has been recognized. And the real costs of oil and gas exploration and production are fundamentally unknown. By capitalizing everything including the receptionists Post-it-Notes and the service charges for the phone they use. Only to be recognized over a twenty year period. One mans profits are another mans accounting fraud. Producers have ignored our commentary about this point. Primarily I think because it’s something that has formed a cornerstone of their legacy of destruction. You can’t profitably retire these balances in the short or mid term, therefore why admit it’s an issue. It is the albatross around their neck that makes investors unwilling to dilute their future investments against past costs of a questionable nature that have never performed. That goes for banks too. And the outsized nature of these balances can only be reduced through long term profitable operations. Something that these organizations were never structured to provide. They were spending machines. The money comes in and then goes out. Only to be replenished next year by newer, more naive investors. As an oil and gas investor it's the continuous, annual dilution of your interests that’s the prize!

We see today that the Saudi’s and Russia are committed to extending their production sharing agreement throughout 2018. This is having upward pressure on the price of oil. This is also good for the Saudi IPO of Saudi Aramco which will also occur in 2018. What happens when that is complete? As the low cost producer they will have a number of different strategies to chose from. Elimination of the high cost producers through low commodity prices is the most probable one that I see them employing. Already in the 12% increase in prices during 2017’s third quarter and the 5% increase in October 2017 producers are found to be racing to get more production on line to secure more cash. The U.S. is projected to be producing over 9.9 million barrels of oil per day in 2018. A record volume that was previously established in 1970, in comparison to the approximately 8.9 million barrels per day when OPEC first put their production sharing agreement into place.

How many times are we to believe the “market rebalancing” story? It is just the cover story for a complacent and satisfied bureaucracy. It also reflects the lack of thinking in the industry as “market rebalancing” has been the only commentary since the decline in natural gas prices in 2008. I am very satisfied that I have a decade or more of critical commentary about the producer's business. Their business is flawed and has no future. That will soon be proven again as they overwhelm the market with surplus production. We now have our customers clearly defined and are able to provide them with substantial business value. And just to show the trend is our friend, the CME Group are experimenting with BitCoin to see if they are able to begin trading in cryptocurrencies. Establishing a possibility that our coin holders could trade on the Chicago Mercantile Exchange.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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. 

Trillions in Free Money, Part IV

The Better Investment?

Nothing has changed in oil and gas since the development of production methods for shale based reservoirs. These developments began in the late 20th century and by 2010 had totally destroyed the natural gas business. That business went through a number of false new beginnings where it was expected that the market would rebalance and prices would recover. Eventually after many iterations of slightly higher prices, leading to a rush of new production, everyone gave up on the natural gas business. No one hears any news about that market anymore. Prices are trading at 18 times the price of oil. Historically natural gas was 6 times. So much damage has occurred as a result of the overproduction and oversupply from shale. Today we remain optimistic that oil prices will recover, just as we did with natural gas almost a decade ago. It’s been a far shorter time that oil prices have been depressed and hope takes time to completely erode. Those that agree with the North American producers that all has been resolved in the commodity markets may be correct. I would ask how many times have we been here before? Then suddenly production increases in North America, and the price collapses again. Nothing has changed in the business to stop the overproduction and oversupply of these commodities. The business model of these producers will continue to overproduce forever.

All that is needed is for each producer to shut-in a small percentage of their properties in order to realize a tripling of the prices and the ability to cover their costs. So simple but it will never happen with the current producers structure. And they can’t, won’t and will not ever change. People, Ideas & Objects have proven that. Producers are giddy with excitement because they have OPEC cutting their production and somewhat supporting the price. Saudi Arabia is planning their IPO of Saudi Aramco in 2018 and when that is complete their desire to have a stable price will no longer exist. Their costs are single digit and in the face of prolific high cost shale they are the low cost producer that will always be able to compete. Therefore they will put all of their production on the market and leave it to others to deal with their costs. Meaning the North American producers have less than a year in which the bottom falls out of the oil market, just as it did so many years ago in the natural gas market. This is not the investment communities nirvana that producers should be giddy about.

It is the inability to address these issues that have concerned the oil and gas investor and banker. They see no discussion or identification of the issue, or resolution being put forward. They now understand that the accounting has been suspect for decades. Where recording every cost as a capital asset has become the art and the science in the industry, and depleting the capital asset over decades has reported false profits that demand the investor's annual cash injection to stem the producers cash shortfall. A few years ago the investors cut the industry off from new capital and have created a severe cash crisis throughout the industry which has motivated no discussion and no change. At the same time People, Ideas & Objects have fought with these same producers over our solution to these issues. Our resolution of this conflict is that we now turn to others to begin the process of turning over the industry through the process of creative destruction.

We have identified a number of groups that we will be targeting in the process of issuing our Initial Coin Offering (ICO). Members of our user community can participate in our ICO and enhance their interests in the ecosystem that is being offered. We have stated that producers may be interested in purchasing adequate coins to have their production profile processed through People, Ideas & Objects software. That however may be a bit of a stretch of logic for them. The one group that would be lucrative for us to recruit for their participation in our ICO would be the overall oil and gas investment and banking communities. We are a proxy to profitable oil and gas production. Therefore it would be in their best interests to participate in the ICO and skip the direct investment in the producer firms. Providing these investors with greater opportunity for returns and a seat at the table in terms of how the oil and gas industry is restructured and reconfigured to ensure real profitability is attained.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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. 

Trillions in Free Money, Part III

Coin Holders Strategy

Owning the oil and gas asset isn’t enough in the 21st century, you’ll also have to have access to the software that makes the asset profitable. Since People, Ideas & Objects will be distributing Permission Rights to coin holders for exclusive access to our software. The profits will be earned by the coin holders and the assets will be held by the producers. That is initially, then these assets will be transferred to the coin holders through the process of creative destruction. Something producers seem to be quite satisfied with. Coin holders will share in the differential that is generated between what producers are satisfied with today, $50 for oil and $3 for natural gas, and the amount that is generated as a result of the use of People, Ideas & Objects Preliminary Specifications decentralized production model’s price maker strategy. As we stated elsewhere in this discussion, it will be the bold producers who have the means in which to tell their shareholders that they will not be participating in the upwards of $67 / boe in free money they would earn by dealing with the coin holders and accessing our software.

It will be necessary for the coin holders to see their role in the oil and gas industry as initially implementing what has commonly been known as disintermediation. The use of Information Technologies to move the industry to a higher level of performance than the status quo. Once that is achieved and their share of the differential in the price of oil and gas natural gas is being generated they can begin the full force of creative destruction within the industry. Producers today have proven that they are unable to change with the dynamic changes introduced through shale based reservoirs. Chronic overproduction and oversupply, in addition to borderline fraudulent accounting methods for the past four decades have left the industry in a state where little is occurring that is productive. Cash flow in this capital intensive industry will always be great enough to pay the bureaucrats. The prolific nature of shale will always ensure they have cash flow. And overproduction and oversupply will continue.

People, Ideas & Objects have proven that the producers can’t, won’t and will not do anything in their business to mitigate the disastrous situation they’re in. We have been pushing the Preliminary Specification in the market since August 2003 and with a proven business model that provides trillions in incremental value, yet we are unable to motivate them to act. Our final efforts to convince the North American producers to act ended September 25, 2017 and we’ve then shifted our business model to granting Permission Rights to coin holders. It is in this way we can use the trillions in value that is being ignored by the producers to build the Preliminary Specification, disintermediate oil and gas and set the forces of creative destruction into play within the industry.

In addition to our efforts to provide ERP systems to oil and gas producers. There have been a long list of failures and false starts. IBM had the leading application in the industry, Qbyte, and were unable to generate any support for incremental development work. In frustration IBM sold Qbyte and left the oil and gas ERP marketplace in 2005. Prior to that Oracle invested their own money in an initiative known as Oracle Energy. From 1997 to 2000 they attempted to create commercial levels of interest in the ERP application and were unsuccessful, subsequently abandoning it in frustration. Producers may be able to turn to these vendors to build them their ERP systems in the future. There is also the SAP application that is popular with the larger producers. However, SAP and Qbyte are the standard entrenched solutions and we have the issues within the producers today. What changes will they implement to remedy these issues and why have they not done so by now? For Oracle and IBM what will their vision of a solution be should they decide to re-enter the market. New technology? It is the Intellectual Property of the Preliminary Specification that is inherent in the Permission Rights being granted to the coin holders. That is what protects the coin holders from any competitive offering. People, Ideas & Objects will not be granting any other solution with access to our IP. It will be through the coin holders control of the producers access that they can compete with the likes of Oracle, IBM, SAP and Qbyte.

People, Ideas & Objects are user community based software developments. As a result of the development of our coin holders this places the user community in a unique and different situation. They are now wholly independent of the producers themselves. They are working toward the future of the industry and remediating the issues that exist in the marketplace today. This unconstrained approach is unique and will provide the means in which the coin holders will be able to exercise their position to turn over the ownership of the oil and gas producers assets.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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. 

Trillions in Free Money, Part II

No Need for an Exit Strategy

One of the key attributes that I see in blockchain technology is that there is no defined need for an “exit strategy.” If you speak to angel investors and venture capital groups they raise this point almost immediately. Trying to determine how it is they’ll get their money out of a private company that they’re investing in. What they want to hear is that the firm will do an Initial Public Offering (IPO) or sell to a large competitor once it reaches scale. In many ways these objectives conflict with the founders of the firm as they weren’t necessarily doing it for the money but that they enjoyed the work and wonder to themselves what they’ll do when the firm is sold.

Each holder of the Permission Rights that we distribute with our coin will have the convenience of trading these coins with others immediately. These transactions are safe and secure without the regulatory burden that is required in the stock market. That safety and security is a feature of the blockchain distributed ledger technology. Redundant duplication of transactions in many ledgers across the Internet provide the security that the transaction can be verified at any time. Therefore the feature of an IPO, the liquidity the angel / venture capital investors seek, is available immediately the coins are issued. That’s just the beginning.

I don’t remember the specific details of the YouTube acquisition by Google however speaking in generalities you can see the real value of blockchain technology. The founders of YouTube used the sale of their company to Google as their exit strategy. They were purchased by Google for around $3 billion. The amount is uncertain and not relevant to this argument. If liquidity was what the founders and venture capitalists wanted they would have had that with blockchain technology without having to sell their company. The coins they would have used would have reflected the value of the company for all concerned. However, they would have also been able to choose to hang on to YouTube and realize the approximate $150 billion in incremental value that YouTube has provided to Google today. This value instead being reflected in the coins value and the original owners would therefore have benefited to a much greater degree.

Much of the entrepreneurial value that is created is now being concentrated in the large Information Technology organizations which have the means in which to pick off the promising startup technologies. The system today enables this, and no one really is complaining about it. However, what if the entrepreneurs who were able to start these firms were able to continue on and develop them for the benefit of themselves and their coin holders? That is the value and the key attraction that blockchain is providing the marketplace today. The ability to aggregate millions of participants for your ICO and raise substantial amounts of capital as the other. The Internet is able to aggregate these like minded people and ensure that their investment is safe and secure in the blockchain distributed ledger. Building value for all concerned for the long term.

The coin itself will be issued by its own separate legal entity. It will have its own board of directors, administration, revenues and expenses. These will make up the intrinsic value of the coin in terms of its trading value. The revenues it earns are its share of the differential of the oil and gas price. Its costs are the costs to use the People, Ideas & Objects software. It should be determined if, and it would be my suggestion that the coin holders undertake to pay for the service providers fees on behalf of the producers. This would, in my opinion, increase the value-add that they provide to the oil and gas producers and increase the amount of their percentage of the differential. The coin holders are providing a service to the oil and gas producers. The broader the scope of that service the more valuable they will be to the producer firms.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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. 

Trillions in Free Money, Part I

Our Free Money Strategy

What follows is documentation of “how” and “what” we are doing to raise the financial resources to fund our budget and develop the Preliminary Specification. An Initial Coin Offering (ICO) is being prepared in which to do so. The coin holders will be provided with exclusive access, known as the Permission Rights, to the software developed from the Preliminary Specification and the associated services of the service providers. Therefore the oil and gas producers will need to secure access to our system through the coin holders Permission Rights. The business model of the coin holders involves the extrinsic value of the oil and gas industry. The differential between the prices realized today, and those that are necessary for a profitable, healthy oil and gas industry. Producers have repeatedly expressed that they’re not interested in this extrinsic value. Something that People, Ideas & Objects have proven to be the case. Therefore this value is available to those that will develop our software and implement the Preliminary Specifications decentralized production model’s price maker strategy.

At this point the glaring error in establishing the coin holders business model is the motivation that the producers have in using People, Ideas & Objects software and service providers and negotiating its access through the coin holders. Our argument regarding oil and gas is that all of the costs associated with exploration and production are generally capitalized in property, plant and equipment. These asset balances are now at obscene levels as a result of annually taking capital from investors and spending it, only to recognize these costs over a ten to twenty seven year horizon. This has “locked up” the investment capital of the industry in the property, plant and equipment account on the balance sheet of the producers and is unproductive as that investment capital is never turned over. Therefore the asset costs of past production, due to the steep decline curves of that production, are represented in those large asset balances. Hence much of the unrecognized asset costs of past production need to be depleted from the producers balance sheets in order to recover the prior investment capital and become a viable, profitable and healthy industry again.

It is our calculations that show the industry needs to be competitive and turn its capital over at a more rapid pace. We are suggesting that those balances be amortized over at least 2.5 years which would lead to the oil and gas costs of production in North America of $151 U.S. for that period. When this effort is complete there would be another two and one half years balance in which to hold as property, plant and equipment for the long term. The only way in which producers are going to exhibit the production discipline in order to attain $151 / boe prices is through the Preliminary Specifications decentralized production model’s price maker strategy. Therefore the differential between what the producers are willing to accept today and these prices from our price maker strategy are about $100 / boe. The motivation for the producers to negotiate with the Permission Rights holders for access to the system is to acquire these prices.

The coin holders will negotiate with the producers and determine a split between what the producer earns and what the coin holder earns of the differential. We would recommend to the coin holders that 33% would be a reasonable amount to be earned for what they are undertaking in developing the Preliminary Specification. The producers motivation would be to either participate with the coin holders for access to the software for their production or alternatively explain to their shareholders why they’re not participating in the $67 / boe of free money that is available to them. This is why we’re calling this the People, Ideas & Objects free money strategy. Our value proposition which has been in the range of $25.7 to $45.7 trillion over the next 25 years would be the extrinsic value of the industry and the amount that coin holders would share with producers. This is an obscene amount of money and I find it ridiculous and embarrassing to be the one who is authoring such an opportunity. If we ask ourselves why are these numbers so ridiculous and embarrassing the answer is that the oil and gas producers have so fundamentally destroyed their business today. We have proven they will do nothing about these issues. And the period of time in which they have conducted themselves this way has extended back as far as 1977. Unless and until they can access the software and services with no upfront time, money or effort will they begin to use them. The fee paid to the coin holders / Permission Rights holders will therefore become part of the producer's ongoing business.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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 Quarter Earnings Performance

Producers started publishing their third quarter financial statements this week, continuing through to early November. Expectations are high that the industry has turned the corner and will be reporting healthy earnings as a result of the 12% increase in the price of oil. OPEC’s production discipline has impressed and it is believed that half of the global surplus of inventories have been eliminated due to their actions. What I find interesting is the relative silence coming out of the producers this past quarter. None of the producers seems to want to mention anything about the industry, market rebalancing or their performance in case the commodity markets tank again.

What we have seen is a lack of investment capital flowing back into the industry. Investors don’t seem convinced that all is well. Recently there was an article entitled “Oil patch gets frugal as investors urge profits over boom.” You can access the article from our twitter feed in the left hand column of this blog. Not long ago producers believed profits were not important. And obviously the profits that are being reported by these companies are not adequate if the investors are expecting more. The deferral of the recognition of the producers costs to as long as 27 years has an effect of scaring investors away. It makes the profits look good, but in reality when the profits are higher than the cash flow of the company, investors generally know that something’s up with the accounting. When you can’t raise equity or debt and your working capital continues to deteriorate quarter after quarter. Something is wrong and a message is being sent to you. If you can’t hear that message or choose to ignore it then you’ll continue to experience that cash crisis for some time.

The investor confidence in the industry over the past year has been fading. After surging from the bottom of the market after the oil price decline in 2014. The oil and gas producers stock performance has been very poor in 2017. All anyone has heard is “market rebalancing” as the solution. That the issue is with OPEC and that North American producers continue to increase rigs and production. There is no way in which you can convince the producers that action is required on their behalf. And we hear, now that oil prices have surged 12%, that plans are being made to increase the rig count of North American producers. Which may be the wise thing to do as it’s the only source of cash.

People, Ideas & Objects attempts to deal with the producers have ceased as of September 26, 2017. They chose not to participate in our deadline to develop the Preliminary Specification. A deadline that we established at least six months ago and promoted heavily. Development of the Preliminary Specification with the decentralized production model’s price maker strategy deals specifically with the overproduction and oversupply issue. Passing of this deadline, which was only the latest over the past decade, proves unquestionably that producers are not interested in the extrinsic value of the industry. Fortunately we have alternative sources of funding for our budget and will be establishing that organization and mechanisms as our priority. This being our Initial Coin Offering (ICO).

Producers will engage the coin holders to have their oil and gas administration and accounting conducted by People, Ideas & Objects, our user community and service providers. Nothing has changed in any of those three organizations. The establishment of a fourth organization, the coin holders, is to secure the realization of the extrinsic value of the oil and gas industry that none of the producers have expressed an interest in. That extrinsic value is the difference in the oil and gas commodity prices which producers feel they’re profitable at today or $50. And the commodity prices that are necessary to be realized for a healthy industry. This differential will be earned by the coin holders as a result of their developing the Preliminary Specification and in turn earning the Permission Rights to access our software and services exclusively. Therefore if oil sells for $150 as a result of implementation of the Preliminary Specification, and as we suggest what the producers costs require. Then the coin holders will share in the $100 differential on a negotiated basis with the producer. I would suggest the coin holder earn 33% of this value which would leave $67 for the producer. What shareholder / investor in an oil and gas producer wants to hear that their producer firm is not participating in that $67 / boe of free money? On a larger scale, over the next 25 years, and based on our value proposition the amount the coin holders would earn would be $8.4 trillion to $15.08 trillion. Free money indeed!

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

The Natural Gas Business

There are some interesting developments taking place in the natural gas business. These developments reflect a long history of neglect regarding the management of the business and most importantly the impact of shale. It’ll be ten years in 2018 since the natural gas price collapsed, just before the financial crisis. For some reason “market rebalancing” has not worked in that commodity market either! I’ll go through a brief history of what has happened since that time and the impact that it’s making in the marketplace today, and what it could mean in the very short term.

The overwhelming and prolific nature of shale gas created an overproduction and oversupply situation in the North American marketplace. This market was isolated and as a result price declines were limited to that region. The differential that could be realized by exporting natural gas to areas such as Japan made Liquified Natural Gas (LNG) a given. The world soon undertook what can only be seen retrospectively as a boom in construction of LNG facilities. The North American marketplace was expected to realize increased demand from LNG, and as a result, natural gas prices would rise. The alternative scenario to that expectation is what eventually did happen. Natural gas prices around the globe now track closely with those depressed prices in North America. The shale gas reserves have overwhelmed not only North American markets but also global markets. What we have now is the rapid cancellation of any LNG facilities that were under construction or consideration as that market is beginning to show that desperate facility owners are having difficulty attracting customers.

The Marcellus field in Pennsylvania is the largest and most prolific natural gas field in North America. It is currently producing well in excess of 15 bcf / day. More than Canada produced in its heyday. Much of this gas is trapped due to pipeline constraints. Marcellus spot prices last week were $0.81 / mmbtu. To remedy this chronic situation, reversals of pipelines that used to bring in Canadian export gas will enable the Marcellus shale gas to service the region of Ontario and Quebec in Canada. Alleviating the price pressure on the gas in the Marcellus. Or alternatively, as in the case of LNG, would this release the downward price pressure contained in the Marcellus region to the larger North American marketplace? If this should happen how long would it take for the global marketplace to be likewise affected?

After ten years “market rebalancing” has not been able to deal with this situation. What’s even more surprising is that the economic texts have not taken up the concept of “market rebalancing” anywhere that I can see. What markets do is one thing and only one thing. They provide information in the form of price. If you can make money at that price then you produce. If you can’t make money at that price then you don’t produce. Markets don’t act or respond. Mindlessly drilling more wells and producing more into an oversaturated market thinking that “rebalancing” will happen soon is foolhardy. After ten years this has to be self-evident. We have so much gas as a result of shale reservoirs. In Canada the geological survey in the 1950’s stated that we had 150 tcf of gas. Before shale gas that survey stated we had consumed about half. For all the years that the entire country of Canada’s consumption and exports to the United States amounted to about 75 tcf. I don’t know the exact amount that the survey states Canada has now, but it’s around 400 - 450 tcf as a result of shale. The number is irrelevant because the survey in the U.S. estimates they have 2,355 tcf of natural gas. An 86 year supply as of 2015. The point of this is that in the hands of the current producers 2,354 tcf is rushing to market as we speak. And the important point to remember is the bad news doesn’t stop there. The bad news being that the United States holds 17% of all shale based reserves. Therefore the world may soon have 13,853 tcf of gas chasing after the market in the hands of these producers.

Market signals, ie price, must form the production discipline of the oil and gas producers. The only manner in which to gain that discipline is through the implementation of the Preliminary Specifications decentralized production model’s price maker strategy. Otherwise we will continue to see the market on a North American basis erode the global marketplace. Then continued overproduction will lead to a complete and total destruction of the global natural gas market. If you doubt me then come back to this website in ten years. This behavior hasn’t changed in almost a decade. It’s the same behavior being displayed in the oil market for the last three years. Shale has changed the business fundamentally however the way the business is managed can’t, won’t and will not ever change. Creative destruction is the mechanism that invokes these high level changes in industry. People, Ideas & Objects are invoking creative destruction through our efforts. Most specifically in our upcoming Initial Coin Offering (ICO) which will fund the development of the Preliminary Specification and earn the coin holders the Permission Rights to exclusively access the software derived from our efforts. That Is how we’ll rehabilitate these markets and establish a healthy oil and gas industry for the decades to come.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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. 

Revenue Model, Part VI

Change Based Software Development Capability

People, Ideas & Objects focus is on our user community. Providing them with the software development capabilities they need in order for them to support the oil and gas business opportunities and issues in the 21st century. This is not a static one time instance. As the oil and gas business changes, the software that is derived from the Preliminary Specification will accommodate those changes through our software development capability and user community. We are therefore providing a change based software development capability to the North American oil and gas industry. We are not providing “new” technology for technology's sake. With respect to our revenue model, technology has a substantial impact on our product delivery. However it is the business of the oil and gas business, and the changes in that business that drive our user community.

Traditional ERP vendors in the oil and gas marketspace have “sold” a solution to the oil and gas producers and then support that application through an annual service contract. Our competitors are selling a product that does not consider changes to the business environment. Contrast that to the People, Ideas & Objects Revenue Model that is dynamic in that we are focused primarily on the changes in the business environment. It is these changes that are the source of our revenue stream. Without changes to the software, there would be no developments and no fees would be assessed in that year by People, Ideas & Objects.

It is a fundamentally different point of view. The traditional ERP vendor is constrained by their code and their customers. Any changes to the code need to be populated to the variety of customers who use their software. Therefore there is resistance to change by the vendor. The more code the software vendor has the more complex the changes will be. And the more customers the vendors have, the more costs and conflicts that arise. People, Ideas & Objects will be using Oracle's cloud computing infrastructure where changes can be populated to the user base quickly and efficiently. We are oriented to the changes in the oil and gas producers business environment through the demands of our user community. It is these changes that drive our revenue. The contrast between the traditional ERP vendor and our change based software development capability could not be greater.

The scope and scale of our applications are to provide a software development capability to the oil and gas industry, service providers and service industries. One that enables the industry to make the changes necessary when the business opportunities and issues arise. We believe that proceeding through the 21st century without a team of committed and capable software developers will unnecessarily constrain the oil and gas industry within the Preliminary Specifications definition. Evolution of that model is necessary in order to eliminate the possibility of systemic and chronic issues such as the current overproduction and oversupply issue is today.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry 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 our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. 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.