Societies Cost

During the Christmas Holidays it became quite evident the extent of the costs that people are paying as a result of the downturn in oil and gas. Calgary may be unique in that we are a one industry town with a population of 1.26 million people. Dallas, Houston and Oklahoma City may have other industries that help to mitigate the effect of the downturn in oil and gas. The cash crisis that oil and gas producers choose to continue to operate under is being felt throughout the city and the province. Extending payment of a firm's accounts payable to unreasonable periods seems to have been a lesson that everyone has learned. Companies of all types are closing their doors and everyone is at a standstill. Companies such as Cenovus Energy, who are reporting those oil and gas styled “record profits,” are slashing their staff by 15% once again.

Throughout the Preliminary Specification, and specifically in the Resource Marketplace and Revenue Model, we discuss the impact of oil and gas on the economy as a whole and address who it is that we are developing systems for. Noting that oil and gas is a primary industry that uses the service industry to conduct most of their field operations. As a primary industry oil and gas producers generate their revenues from the sale of oil and gas commodities. The attitude of the producers is that this is their money and the service industry is a leach on that resource. Encana repeatedly stated that the service industry were greedy and lazy during the times when oil and gas prices were at their peak. Now not paying them for a year or eighteen months is the reasonable thing to do.

Society as a whole benefits as a result of the exploration and development of oil and gas. Not much argument there. Producers have considered what falls within their four walls as their only concern and assume everyone else is involved in a primary industry where their revenues are generated through the initial sale of some commodity. The service industry is not so lucky. They are wholly dependent on a healthy and profitable oil and gas industry and it is incumbent on the producers to ensure that they attain that. If they don’t attain a profitable or healthy outcome, then too bad so sad say the oil and gas bureaucrats, at least they have cash and will get paid. The results of this attitude is having serious consequences on the service industry for the past two years, which is now beginning to affect the general economy where the service industry and oil and gas producers rely on to support their activities. When producers do decide to get their act together, what capabilities will be available to them from the general economy? Or will they just shell out double or triple the amount of money necessary to get the people to migrate back to work in the remaining prehistoric conditions and live through the abundance of shortages in their lives. Which would be ok because the bureaucrats will still be paid their cash and they’ll be ok. Bureaucrats never lose.

Our focus here at People, Ideas & Objects has been to point the finger at the bureaucrats as the responsible party for these difficulties, the continuation of this downturn and the associated pain and suffering. They are not motivated to make the changes through adoption of the Preliminary Specification as we eliminate them from the scene through disintermediation. Another area of our focus is on the oil and gas investor as part of the solution to how this downturn and the People, Ideas & Objects Preliminary Specification ultimately gets built. Investors are key in the health and prosperity of any society. They’re the ones who can and will act to make the changes to avoid these kinds of conditions. No one else has the authority, responsibility or tools in which to do so. So how come this downturn has happened in oil and gas?

Investors, as has everybody, have been deceived by the accounting mythology that the oil and gas producers have been spinning for the last four decades. Capitalizing every cost possible, including most of the overheads, to the point where the only costs that are recognized are the costs to run the pump jack and the royalties. In a capital intensive industry this leads to distortions where the assets bloat to ridiculous sizes, and hence why producers are so enamoured with them. What producers need to learn is that accounting is not about reflecting the value of the company, accounting is about how the firm is performing. And oil and gas profits have been spectacular because the real cost, the capital consumed by the company, is never recognized. The capital is raised from an investor, spent and will then sit for decades in property, plant and equipment before it’s returned to the producer for reinvestment, retirement of debt or redistribution to shareholders. Oil and gas is the place where money goes to die and it has been that way for four decades. Investors were deceived by the accounting during this period, being told that their producer firms were smart and successful. When in reality the industry has been hollowed out of any value and is worthless from the point of view that it requires tens of billions in new cash each year to sustain itself.

In May 2004 we published our Preliminary Research report in which we hypothesised that if industry didn’t change their ways, conditions would deteriorate. Equating the situation to the fall of the Former Soviet Union where the economy ceased to function, when everyone was lined up at the bakery waiting for bread. Asserting that the oil and gas bureaucracy would become too slow and too cumbersome to deal with the speed and changes within the industry. Unable to keep up with the needs of those that depended upon it. We have that situation today with the added feature of a complacent and satisfied bureaucracy. The costs of that are now beginning to be evident to everyone. It’s time for action.

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. 

Martin Luther King Jr. Day

No posting today.

Holiday Schedule

I've decided to move forward by one week the time that I take off for Christmas. I'll be returning on January 15, 2018. Merry Christmas everyone.

Two More Days

Can't' shake this flu / cold.

It's Just Not Working Is It

I am yet to see any evidence of the oil and gas investors buying the renewed profitability and discipline story being parroted by the producers. Since the third quarter there doesn’t appear to have been any change in the mindset of investors wanting to participate in the industry. It’s not that the investors don’t believe the producers renewed talking points, regarding profitability and discipline. Its that they would like to see some concrete actions in that direction. The other glaring aspect of the producer's business that frustrate the investors is the inability to address the commercialization of shale. Is shale a viable business? As it stands today it’s not, and the producers won’t address this point. Promoting the upside of shale is easy, everyone understands there’s lots of it. What investors want to know is how can they make money?

People, Ideas & Objects focus on profits has been discussed from the point of view of the investor on this blog. However, if you read the Preliminary Specification it is society in general that we are seeking to build value for. If the investors are satisfied with the profits they’re earning from the oil and gas industry it would be reasonable to assume that all elements of society would be satisfied too. And the counter argument is certainly valid today. The only ones benefiting from the current downturn are the bureaucrats. Their fine and appreciate your concern. The people who work in oil and gas, the people who work in the service industry, the service industry vendors, the royalty holders, the governments that collect the taxes on profits, the people who will need to work in oil and gas in the future and the overall prosperity usually associated with a healthy oil and gas industry in the communities where they operate have all suffered substantially for many years now. If the investors were satisfied these people would not be living such miserable lives and our focus on the investors is more representative of how the system works then it does on one specific group at the expense of all the others.

People, Ideas & Objects plans for 2018 continue to gain focus over these last few months. Our plans seeking to source our financial needs through the issuance of an Initial Coin Offering (ICO) remain fluid however. What was clear on September 26, 2017 was the bureaucrats had no interest in developing the Preliminary Specification. These bureaucrats are too conflicted to do what’s in the best interests of everyone else. Our pursuit of the producers as a source of revenues ceased at that time and we are proceeding with our alternative plans. These include appealing to the oil and gas investor, our user community and others to participate in our ICO. The extrinsic value of our coin will be the differential between the commodity prices realized today and those prices that will be realized through use of the Preliminary Specifications software when operational. Value that the producers have proven to be uninterested in and otherwise available for the taking.

The Preliminary Specification is now four years old and more valid than at any time before. Proving its business model is appropriate for the oil and gas industry. Not only is the Preliminary Specification still valid but the bureaucracy is still failing at a substantial pace. The test of time is a strong advocate for the work that People, Ideas & Objects are doing. And should provide strong support to the oil and gas community at large in terms of continuing to provide that value. The issue for the bureaucracy is they just can’t make the changes to the business model in the Preliminary Specification without the software being developed first. Any attempt by them to only produce profitable properties will only keep all of their properties producing because they have no means of assessing profitability on a property by property basis. Their overheads are all corporate and fixed, whereas the Preliminary Specifications overheads are charged to the property and variable. Therefore the property will always record at least miniscule profits when you capitalize all of the costs under the sun, including on average 80% of overhead, recognize that capital over a 27 year period in some cases and not recognize any of the costs of Houston, Dallas, Oklahoma or Calgary and their overheads. What property wouldn’t make a “profit” in that case?

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. 

Parallels to the Industrial Revolution

I read an interesting analysis regarding the lead up to the industrial revolution that may have direct application to the Information Technology revolution that we seem to be going through. It was from  voxeu.org  and I recommend everyone have a look at the article in order to appreciate the implications in today’s marketplace. Although it could be argued that the IT revolution has provided much promise, outside of automated emoji’s and Facebook we have gained very little. I think this article addresses that point with a discussion of the proceeding years and their impact on society that in essence enabled the industrial revolution to begin. It would be my opinion that many of these foundational aspects of the industrial revolution are currently missing in the IT revolution. Which might be the cause of its poor uptake.

What the article states is that in 1534 Henry VIII had a spat with the Pope and broke off from the Catholic Church. Henry then acquired the taxes that were being forwarded to the Catholic Church for his own purposes and when that was not enough, seized the land of the monasteries in England. This turned out to be approximately ⅓ of all of the land in England and when the administration of such was too much, Henry decided to sell the land. The articles authors hypothesis that the creation of these land markets “can be linked to local differences in subsequent development and, ultimately, industrialisation.” Fostering the entrepreneurial spirit. The authors conclusion is as follows.

The Dissolution created a land market and started the modernisation of land tenure relationships. This led to division of labour, innovation, greater productivity, rationalisation of property rights, and changes in social structure. Ultimately, these factors coalesced into industrialisation in those places where the monasteries held lands centuries before the Industrial Revolution. The institutional change driven by the Dissolution is a more important driver of local industrialisation than commonly used explanations – such as local abundance of coal.

My argument would be consistent with today’s bureaucracy having the same effect on development as the Pope did in 1534. Although we have no need to dump the Catholic Church we should dump the bureaucracy as I’ve described in the Preliminary Specification. The development of markets is the impediment to the full development of the Information Technology revolution. To People, Ideas & Objects the now mature Information Technologies are lying dormant as a result of the bureaucrats unwillingness to let go of the past. The implementation of the Preliminary Specification would establish within the industry and producers the use of the Joint Operating Committee as the key organizational construct. It would also provide the Resource, Petroleum Lease and Financial Marketplace modules. In the administrative and accounting areas markets would be established for the user community and, most importantly of all, the service providers, the means in which we can provide oil and gas producers with the most profitable means of oil and gas operations.

People are locked up in their cubicles and offices unable to exercise their entrepreneurial spirit. Constrained by their lifestyle and the ease that the bureaucracy provides for that. But also itching to want to do something more than count the days. They too can see the IT resources developing around them and understand the impact they could have if they could only… Such is the nature of work today. People need to see these markets forming in a somewhat concrete manner in order to make the transition. The real impetus to change will be the investment capital resources have to lead. That is their role in society and although withholding capital from the producers is the first phase of these changes. We need them to transition to the second phase and begin to support these markets and methods of organization that will provide them with real value in the long run.

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. 

Energy Independence in North America

Energy independence in North America is the objective that everyone can agree on. It is understood by most everyone to be a win, win, win situation for society. With the development of shale based reserves this objective isn’t just a dream but a highly desired and obtainable possibility. What this post will detail is the means in which energy independence is proposed to be obtained by both the current administration and People, Ideas & Objects Preliminary Specification.

The Preliminary Specification reorganizes the producer and industry to accommodate variable production volumes. This is done so that producers can ensure that they only ever produce from profitable properties. Unprofitable properties are shut-in until such time as innovations can be found to reduce costs, increase production or enhance the reserves. This is enabled through our decentralized production model and its price maker strategy. Which seeks to match costs more accurately with the revenues that are generated. Under the Preliminary Specification any shut-in properties will incur a null operation, no profit but also no loss. This is done as all of the costs of the producers are converted into variable costs based on production.

This conversion of all of the producers costs into variable costs is through the reorganization of the producer and industry. By moving the administrative and accounting resources of the producers to individual service providers that are focused and specialized on one individual process. Where each service provider has the entire industry as their client base. Then processing of their administrative or accounting process is completed and the associated overhead fees of the service provider are charged directly to the Joint Operating Committee. If there is no production for the month then nothing will be processed for that property through our task and transfer network and the service provider will not be conducting any work or charging the Joint Operating Committee any of the fees for their service. This has moved the burden of cost control in the area of administration and accounting from the producer firm to the service providers themselves. In which they will be able to budget and plan on an annual basis for the contingency that they may have upwards of 15% of their revenues decline due to the volume of industry wide shut-in production.

Establishing all of the industries production on the basis of earning a profit will substantially enhance the profitability of each producer. No longer will they be diluted by the unprofitable properties that continue to be produced in today’s current environment. The reserves that would otherwise have been produced unprofitably can therefore be saved for a time when they can be produced profitably. Reducing the cost of the remaining reserves by not adding each year's incremental losses to the costs of the reserves. Forcing the property to recover the chronic losses in subsequent years. And most importantly, the commodity markets will be able to find the marginal cost of those commodities and enhance the profitability of the industry through higher commodity prices.

By establishing the industry on the basis of profitable operations oil and gas can be managed as a mature industry. The belief that growth in the industry is the objective may have been an appropriate posture in the 1940’s. Today it is time that the industry began to perform from a financial perspective. It has used the investors money in the past four decades to subsidize the consumers of energy. The amount of the consumer subsidy being equal to the outsized property, plant and equipment accounts that the bureaucrats cherish so much. These account balances are nothing more than the unrecognized capital costs associated with past production. These capital balances should have been repeatedly turned over to generate the cash to operate the business. Instead the investment remains dormant for up to 27 years in property, plant and equipment while the producers continually issue new stock offerings to spend and build their capital asset balances ever higher. Oil and gas hasn’t been a business, it’s an engineering and geological science experiment.

Once the Preliminary Specification has established the industry on a profitable footing then the deliverability can be increased profitably in order to attain the objective of energy independence in North America. Producers today are just waiting for the investors to return. The Investors that went on strike when they finally learned what their role in the industry was. Just as soon as producers can begin issuing more stock the quicker energy independence will be achieved. That investors maybe on the hook for many trillions of further investment, which would glow radioactive in the property, plant and equipment accounts for the next few decades, has to be encouraging. After oil and gas experienced an existential threat over the last decade. And the only actions of the bureaucrats during this time appears to have been a recent “striking up of the band” for another round of the same. What investor doesn’t want to be part of that energy independence in North America shindig!

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. 

Manic Times

Today we hit the high water mark in terms of the manic - depressive cycle that North American producers have put themselves on. With a fresh extension of the OPEC agreement, prices close to $60 / bbl, things haven’t looked so good in the industry for years. Ever get that feeling of deja vu all over again. Buoyed by a compliant and cheerleading media the producers have world dominance at their fingertips. There’s just nothing that can’t be done by them. Their costs are down and they’ve learned to believe in profits which is what they believe their investors are asking for. From my point of view there is only one major difficulty. It’s not working.

The nature of this overproduction and oversupply issue is not something that can be ignored and assumed to fade as OPEC clears up any global inventory overhang and consumers demand more energy. There will always be consumers and there will always be inventories. There will also always be the other shale producers who are responsible for the overproduction. Each and every producer will ensure anyone that will listen that they are not the source of the overproduction issue. Each of the North American producers believe they have it within their domain to control themselves. Clearly they don’t, they need the cash.

What surprises me is the number of producers who have stated that their costs have been reduced. Nothing could be more incorrect. Almost all of the producers have increased the number of years in which they are depleting their property, plant and equipment accounts. Increasing the number of years by 30% since the end of 2016 for our sample of 23 producers. That will make an impact on the income statement and the appearance of reduced costs, and higher profits however this is accounting shenanigans. The probability that any of the producers actually reduced their historical costs is zero. Once you pay $1 to drill and complete a well that is what it costs. Any attempts to reduce the costs in the current period would have to be fraudulent. You can’t change historical facts. It is possible that the field operations are more refined and downhole work more efficient which has brought about some cost reductions. These would only apply to the current work in progress which may account for all of 5% of the producers properties.

Which brings up the rationale of why are the high cost North American producers crowding out the low cost OPEC producers? The logic doesn’t exist for this to continue in a market economy and it is therefore reasonable to assume that OPEC won’t be the one to always withhold production. Shale producers are proving to be resilient in terms of production growth and for lack of a better word aggressive in terms of their entitlement to first priority in the marketplace. Can this continue? What if the belief is true that the Saudi’s are only playing nice for now until they complete their Saudi Aramco IPO. Then once that’s complete they can sell their production at whatever price the market provides. Understanding that the overabundance of oil over the next 50 years will only provide for the lowest cost producers. Will the cooperation being expressed by the North American producers towards who is entitled to produce now earn them a seat at the table tomorrow when low cost producers are just looking for revenues?

The Saudi oil minister said after yesterday’s meeting that finding equilibrium in oil markets will take another two to three years. A sober reflection of the issue at hand. Contrast this with the attitude of the North American producers who appear hell bent on world domination. I think it is a clear reflection of the desperate financial position that they’ve put themselves in. Their outlook is towards the next payroll and to sell as much production as they can. The business of the oil and gas business doesn’t concern them. They can produce unprofitable production at investor expense for ever. That is just as soon as the investor's return.

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. 

Differing IT Strategies

I read a comment the other day regarding how the oil and gas industry might solve its Information Technology related issues. The point being asked was, would there be a large solution like People, Ideas & Objects in the marketplace or a continuation of what I would call the ad-hoc approach of today? I found the argument they put forward was interesting in that it seemed to be attempting to refute what was becoming the consensus in the industry, that the large solution was the answer. Whether this is just me being optimistic or there is that consensus building is unknown to me. These are the thoughts that I have about this topic and why we need a comprehensive solution like what People, Ideas & Objects have proposed in the Preliminary Specification.

The first point that I would make in our argument is that People, Ideas & Objects are not the comprehensive, “big-bang” style of solution that it may be perceived of initially. If we look at the user community and their related service provider organizations these are fully independent organizations that are specializing in their particular area of the industry. The Preliminary Specification is using specialization and the division of labor to expand the throughput of the industry. This can’t be done in a centralized fashion, only a decentralized market can approach the type of scope and scale that the oil and gas industry presents. We believe that too much reliance is placed on each producer to develop the accounting, administrative and IT capabilities within each producer. That these capabilities are redundantly replicated within each oil and gas producer and are therefore unshared and unshareable. They are certainly not core to the producers competitive advantage. Therefore having each producer building these requisite capabilities to meet these demands and each one of these producers capabilities being redundant in terms of building the overall capabilities for the industry, is one of the key reasons for the lack of profitability in the industry.

People, Ideas & Objects are dedicated ERP software developers providing the Preliminary Specifications development. Providing a change based software development capability to the oil and gas industry. One that will accommodate the needs of the industry as it develops in the future. This capability is wholly missing from the marketplace at this time. There are a number of ERP systems providers and many developers working on these applications within the producers and within other software vendors. The industry has however fallen into a situation where it is leaderless and directionless. Software occupies a much larger role in our lives than we probably recognize. To leave the future of the industry in the hands of a disparate marketplace without leadership and without direction will only leave us with the same issues. I have believed for many years that there is only one type of business. That being the software business. Anyone who thinks otherwise is quickly going out of business. In oil and gas it’s not enough to own the oil and gas asset, it's also necessary to have access to the software that makes the oil and gas asset profitable.

The question becomes how much financial damage have the producers and industry sustained? What are the prospects that these can be resolved and overcome with the industry moving forward with a dynamic, innovative, accountable and profitable future for all? The media would have us believe that the shale producers have OPEC on the run. The only missing element of that vision is the continual fresh injections of your cash into the shale producers. I see the financial consequences of these issues for the producers for the past decade as permanent and terminal. There is no coming back from this for the current producers. Are we to feebly limp along as a damaged and destroyed industry that makes its best efforts? Or should we take control of the development and management of software that is proving to be such a critical element in our society today and realize the full potential that exists for these next 25 years. The answer to this question I think is the same as the answer to the question that we began with here today. Is the solution to the industries IT needs a large solution like People, Ideas & Objects or a continuation of the ad-hoc approach we’ve seen for the past 40 years.

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. 

Markets

During our research phase one of the topics that we spent significant amounts of time on was the study of markets. This was primarily through the work of Professor Richard Langlois and several other prominent researchers. Review of our work in this area can be sourced from here and here. The important question that we needed to ask was; if producers were too bureaucratic and inefficient today, what organizational method would facilitate a more dynamic, innovative, accountable and profitable oil and gas producer and industry. The answer of course was the use of markets in allocating resources, developing capabilities and organizing the industry. Only then could the performance trajectory of the industry begin to be addressed and we begin to move away from the constraints of our current organizational issues. Therefore for the oil and gas industry to change its future prospects it must change its organizational methodology.

Within the Preliminary Specification there is a decided move toward markets. First we establish the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable producer. Align the compliance and governance frameworks of the hierarchy with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee to achieve a speed, innovativeness and accountability that is unobtainable in the current organizations. Then by establishing the Resource Marketplace, Financial Marketplace and Petroleum Lease Marketplace modules as part of the Preliminary Specification we have the software to define and support these frameworks and markets.

We then take the concept of markets one step further by establishing the marketplace of our user community that defines the software that is developed by People, Ideas & Objects developers. For all intents and purposes this is a stand alone market established for providing the quality software that the oil and gas industry needs. In addition we have established a market for service providers who will provide the administration and accounting services to the producers in connection with our software.

Without these structural changes to the producers and the industry then no change will occur to the behaviors that we see today. And particularly in this day and age where we are so dependent on software to define and support our organization's, changes must be planned and implemented in the software before the changes can take place in the organization. We see a number of businesses today believe they can make the transition from one business model to another when the time comes. Yet I have never seen it happen in real life outside of the forces of creative destruction. You have two seemingly opposing objectives of growth and profits. Where profits are foregone at the expense of growth. This was the model used by the oil and gas producers. It is the model that is currently being employed by Amazon and Tesla. Amazon has made such little money in its lifetime that it’s strategy of being everything to everyone will only fail as that strategy has failed so many times before. And Tesla has proven itself, like oil and gas to have great technology, no profits and no cash. Elon Musk has also displayed the propensity to spend money like only oil and gas producers can.These organizations can not now just hit a switch, say they’re going to make the change from growth to profits, as the producers are parroting today, and transition to a profitable organization. It has to be built from the ground up, brick by brick and stick by stick. Like Apple who have experienced phenomenal, substantial and real profitable growth throughout its second life.

Creative destruction has always been the force in which People, Ideas & Objects implemented these changes. Today the financial performance and structure of the industry is in desperate condition. Producers believe that their well defended balance sheets with large balances of property, plant and equipment reflect value. It is an illusion. These are the unrecognized capital costs of past production and are supported by equally bloated share distributions and debts. Who wants to invest in an unprofitable, spendthrift operation that forces you to dilute your interest to a negligible value at closing? The revenue of these firms barely cover the cash costs of production as the industry experiences a cash crisis like no other. The transition to markets will begin soon as the status quo becomes untenable even to its current cheerleaders. This is creative destructions finest hour and the beginning of a markets based approach to oil and gas.

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.