What's the Plan, Part V

Ours is a 25 year plan to deal with the issues and opportunities within oil and gas, establish a foundation for innovation and profitable operations everywhere and always. It would all be so much easier if we could just phase this project in and take one stage at a time. Except it doesn’t work that way. We run into a unique situation with People, Ideas & Objects Preliminary Specification. With the shift away from the corporate model to the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer. We change every element of how the industry operates. To have this part of the industry operate on some components of the Preliminary Specification, and leave others to follow on later wouldn’t work and we would gain none of the benefits of the decentralized production models price maker strategy. A strategy which would be the first objective attained in any interpretation of a phased plan. Service providers can’t be built to operate on some functional areas of the industry and not on others. In order to make the transition to the service providers there must be the change where the service providers are available to implement the entire Preliminary Specification. Otherwise that would require duplicate administrative and accounting administrations throughout the industry. One industry based, the other producer based. The service providers are the key organizational change that makes all of the producers costs variable. Taking the fixed overhead capabilities of the producers and rebuilding them as the variable based administrative and accounting capabilities of the industry. Variable based on production.

In order for each producer to benefit from the implementation of the Preliminary Specification each producer has to be operational on the Preliminary Specification. That’s not stating that it's our way or the highway. The Preliminary Specification is more of an industry based ERP system with components operational in each of the oil and gas producers. Each producer needs to be able to use the service providers in order to shut-in any of their unprofitable properties or they will not be able to compete in the new, dynamic marketplace for capital that would be created once the system was operational, the determination of which property is shut-in is based on the profitability of the property. Therefore all of the data and all of the functionality of an ERP system needs to be available in order to determine the profitability of each property. Currently producers know the revenues, capital and operations of a property but use allowances for overhead. These allowances are inadequate to determine the real cost of oil and gas administration and accounting. Service providers will bill for their services directly to the Joint Operating Committee. Therefore the actual overhead costs will be known.

In addition the producers role has been expanded to include two separate and distinct revenue streams. One is oil and gas production. The other is the services of their earth science and engineering capabilities that are provided to the properties they own, or are provided as a service to other producers. The Preliminary Specification costs these resources to the various Joint Operating Committees that these people work at during the month to generate the revenues that offset the producers overheads that are incurred to maintain their earth science and engineering capabilities. This is a detailed costing of these resources, without this feature being available the actual cost of the properties will be unknown and some properties that are unprofitable and should be shut-in will not be, and some producers that should have offset their overhead costs will not have. What we would have is a far more inaccurate accounting then what were provided with today. The Preliminary Specification is seeking to attain an accounting throughout the industry that is timely and accurate, failure to implement the full specification would lead to the reverse of this accounting holy grail. Besides anyone who has worked in oil and gas knows that manually matching and patching systems together to make some kind of coherent sense is what the bureaucrats are good at. Therefore we would only guarantee them further employment. I wouldn’t want to be responsible for that.

Automation, innovation, the benefits of specialization and the division of labor, integration of new technologies, quality and gaining the leadership of the user community and service providers in dealing with the issues and opportunities of the oil and gas industry throughout the industry must be done. Why undertake the review of a mostly manual 1970’s / 1990’s concept of accounting systems and bring only one element of our plan into what can be done, and has proven to be of value in other industries? Bureaucrats believe they can muddle through for another 25 years without revisiting these points. Ours is a comprehensive plan due to the scope and scale of the issues that are destroying the industry. Any critical review of the industry shows that the current model is untenable and must be addressed. Ours is a highly interdependent oil and gas system that deals with the issues and opportunities that are present and sets in place the capabilities to deal with them in the future. Pursuing one issue at a time is beyond the time scale that the producers currently enjoy.

There is the opportunity to have each producer cobble together all of the needed elements mentioned above on their own. What they state is impossible for People, Ideas & Objects to undertake in terms of scope and scale can easily be scaled at each and every producer location with their much smaller individual budgets and with the greater demand for IT services by these producers in an ad-hoc disorganized fashion. One of the elements of People, Ideas & Objects et al’s offering is the permanent software development capability that is being purpose built through this plan. Change will be enabled within the oil and gas industry as a result and the issues we face will be able to be dealt with in this era where software sets organizations in cement. The only way to have the flexibility and dynamism that change demands is for an industry to have the software development capabilities available always.

People, Ideas & Objects et al believe that oil and gas energy independence on the North American continent, for the remainder of this century, is a viable and worthy objective. It is unattainable however with the current bunch. Profitability is foreign to the culture of the industry and they have proven incapable of changing or understanding our point of view. Theirs has been 28 bad years out of the past 33, “so what if the next 25 years doesn’t generate any more value increases.” Energy independence can only be attained and sustained by a profitable industry. As a result we have started down our own road to provide the systems that the dynamic, innovative, accountable and profitable oil and gas producers will be needing not only today but for the next 25 years. Our timelines are a bit scattered here as a result of our new plan. We know that it will be 3.5 years for us to complete the financing of our Initial Coin Offering. Making our delivery of commercial software somewhere beyond the time in which we can accurately plan for. There is much to do, as you could imagine, and there is one main ingredient that is necessary and that is you, so join us.

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 profitable 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. 

What's the Plan, Part IV

I’ve now published our revised budget to the Preliminary Specifications wiki. I have also updated this plan under the Implementation heading. Both the plan and budget are located on that one page. The old April 7, 2017 plan has expired, however I’ve left it there for the understanding of some background to the process that we’ve passed through and the origins of our current plan. We’re no longer attempting to create a sense of urgency for industry to act in their own self interest. They do not respond to any outside input and have established for themselves a comfortable regime where they’re satisfied with the performance and future of the oil and gas industry. Simply they don’t care, and to build a sense of urgency is futile. There’s is a self-centered and destructive pursuit that realizes the industries cash flow will always be adequate to maintain their fortunes. I believe the remainder of the industry, the secondary and tertiary industries, investors and bankers, governments, royalty holders and most importantly the people involved in these groups are not the concern of the current crop of bureaucrats and I believe we’ve established our credibility in attempting to deal with them.

The relief that I sense in no longer having to create a sense of urgency to act. That we hold the solution no longer implies to me that we hold the responsibility to solve it anymore. We are changing our perspective from an overall concern and sense of urgency to one where the primary focus and concern of the larger community involved here of People, Ideas & Objects, our user community, the service providers and our coin holders is on the quality of our offerings we ultimately deliver. That will be the manner in which we can approach a task that has the scope and scale of difficulty that we are collectively undertaking. We now have the time, and will have the money in order to make this transition successful. We continue to permeate more and more minds each day throughout the oil and gas industry and it is this slow and time consuming process of having people evaluate our offering, assessing the difficulties of the current administration and making their own decisions that will grow to the point where the impossible things we are attempting will become the inevitable.

Of the past 33 years 28 have been financial disasters, all of those as a result of the overproduction that is chronic throughout the industry. Therefore we can be assured that this will not be going away as I see the producers behaviours and actions continuing. The dull blunt instrument of reducing capital expenditures in the face of these issues is now being done for the 28th time in these past 33 years. Anyone see a correlation? There is also handsome profitability being reported by the majority of the producers so each of them know intuitively that they are not the ones that are responsible for any overproduction. And so it will be if their administration is in control of the industry in 2045, who knows, they may be able to muddle through and do nothing to survive that long.

The other characteristic we see through this situation is that the cyclical nature of the commodity prices. When this is married to the phenomenal capability of the industry to suddenly produce oil for $40.00, in a capital intensive industry, where the historical costs of production was I assumed fixed, if the price of oil should happen to drop to $49.00, is the other reason why the producers have the upper hand today. Although more layoffs are still being reported there is a calm in the market that all will be well soon. Which is the same calm that arises almost annually since the natural gas prices collapsed in 2008. The fourth quarter reports show that cash continues to be the area that bureaucrats are unable to resolve. Oddly this has been the case since investors and bankers abandoned the industry. The point being the behaviors have been evident in the industry for decades. These behaviours were overlooked when investors were backfilling the producers with their cash each year. The industry has developed under these behaviours, sees nothing at issue today and these have now formulated into the culture of the industry.

In terms of how I see the situation this frog’s legs are well done, the body is only cooked rare at this point but the brain is still functioning. Therefore the frog still believes it has a future. And we can see through the actions of the bureaucrats that the frog has never been happier. It may be unreasonable to compare the industries leadership to the mind of a frog slowly cooking, however I find it quite appropriate. It is the producers responsibility for the demise of the industry. We went well beyond the call of duty in attempting to deal with them. Sure I had some fun in the process, but they needed to see the other side of the issue and my criticism provided that. Now we need to move forward and do our thing. We have 3.5 years before the financial resources will be raised through our Initial Coin Offering. People who wish to participate in any aspect of our offering will need to be able to use this time productively. Please review the user community vision to determine what it is that you can and could be doing during this time. The most important thing about this plan is that people need to understand that there is a plan in place. It is these people that are the most important aspect of that plan and the solution we are providing for the future of the oil and gas industry. Their role is critical. Taking a moment away from the noise at this point to think about the Preliminary Specification and the role you could take in the future is what you should be thinking about as the opportunities in my opinion are amazing. Now is the time to leverage what we have and begin to bring it all together.

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 profitable 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.

What's the Plan, Part III

Now that I’ve dispatched that Neville Chamberlain characteristic to the history books and taken on the Winston Churchill point of view. Attempting to work with the bureaucrats and have them do the “right thing” was never going to come about. We’ll need to “fight them on the beaches” and such, and most importantly on their ability to generate value for all concerned in oil and gas. The Preliminary Specification is designed to resolve the issues of the industry and build a foundation of innovation for the future. People, Ideas & Objects, our user community, the service providers and our coin holders will provide the most profitable means of oil and gas operations throughout North America. Our value proposition is in the range of $25.7 to $45.7 trillion over the next 25 years and is derived from two critical aspects of the deficiencies in the bureaucrats current business model. Our price maker strategy will bring about at least $5.7 trillion in incremental profits over that time period. The $20 to $40 trillion is based on industries estimates of what amount of capital expenditures will be needed in order to meet the demand for oil and gas during these next 25 years. Bureaucrats believe that they will raise that money from dopey investors who will watch with amazement and excitement at the size of the producers balance sheets, as property, plant and equipment grows to unseen and unheard of heights and spectacle! We believe the capital investment in the industry is adequate as it currently stands and will recycle the approximate $1.5 trillion sitting in property, plant and equipment in rapid fashion, recovering that invested cash repeatedly in order to meet whatever the future demands for capital will be. Bureaucrats have proven that they love to sit on their duff’s, spend money and fill their pockets. Expecting action to be taken by these bureaucrats was foolish of me to have ever considered.

It’s in that sense that we need to discuss our user community. Our focus and the point of our quality software offering. We initially published our budget in November of 2013 as part of the final version of the Preliminary Specification. It was determined at that time the standard charge out rate for user community participants would be $185 U.S. per hour. We are changing that to $250 U.S. per hour in this revised plan. We are also increasing the volume of hours that are dedicated to the user community by 10% to accommodate the recently completed 12th, or Blockchain Module. This therefore increases our budget by $324.7 million for the user communities requirements. With the required Intellectual Property royalties and profit margins of People, Ideas & Objects our budget is raised by $955 million for user community changes. With respect to the increases in cost and the addition of the Blockchain Module we are increasing our development dollars as well. The principle we have always used is that for each user community hour there will be one hour of software development. Therefore there is a commensurate increase in the development costs in terms of hours and we’re also including the rate change in these budget revisions. I am satisfied with this increase due to the fact that we did not adjust our budget in 2018 for the change we made in hiring Oracle Consulting to conduct the work. This was done to reduce the number of calendar years that would have been consumed by People, Ideas & Objects in terms of recruiting, building and having our team perform at the level necessary for the oil and gas industries demands. Or at least what we expect they will need. By cutting the number of calendar years off in this fashion we were able to save the industry substantial amounts of money due to the fact that the price maker strategy would be operational sooner and without it, the industry is losing hundreds of billions of dollars each and every year.

As an incidental item I’m increasing the research budget of People, Ideas & Objects from $10 million for the project to $30 million. We recently refocused our organization around the changes where we’re using Oracle Consulting for our software development. Reclassifying ourselves as a user community, Intellectual Property and research firm. This will help us to deal with the many changes that are occurring in the marketplace from a business, technical and market perspective. Therefore what was a $6 billion budget has now been updated to these new realities and is a $8 billion budget, for now. Time's a wastin and time is money. In our case the value proposition we provide is highly leveraged to those within the oil and gas industry. We have the opportunity to provide our software with any two of three priorities. On time, on budget or feature rich. The general rule in software development is you can pick two at the expense of the third. Therefore we’ve picked the timeliness and feature richness as our two priorities which causes the solution to be inordinately costly.

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 profitable 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.

What's the Plan, Part II

When we’ve discussed the coin holders in the past we’ve always discussed the idea that they would be capturing their revenues from the producers for their share of the extrinsic value of the industry that they negotiated with the producers. It would be from that revenue stream that the coin holders in turn would pay People, Ideas & Objects for the use of the software, any further and future software developments and the user communities participation in those developments. We have also held out the option, at the coin holders discretion of whether or not they also wanted to collect the fees from the producers for the service providers as well. In doing so they would be able to attract a cost plus fee structure of the service providers fees in addition to earning their share of the extrinsic value. The service providers fees would be a current cost to the producers that is paid within the normal accounts payable cycle and as such would take minimal capital requirements in order to participate. The attraction would be that they are earning a fee off the total administrative and accounting costs of the North American oil and gas industry.

To suggest that these incremental costs that are being incurred here and there by People, Ideas & Objects et al are detrimental to the viability of the oil and gas industry is evidence of the inability of current management to critically review the situation as it stands in the industry today. Although our costs are higher in comparison to the current model, we are profitable in that we are applying basic business sense to the exploration and production of oil and gas. In order to motivate the people to make the changes to divert the cash flows away from the current and highly destructive management of today, we will have to incur some small incremental costs. The focus of the People, Ideas & Objects is to provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. This is what we will have to do in order to achieve that. Just out of curiosity what is it that is being offered today?

Having two sources of revenue for the coin holders makes our ICO more appealing. To raise the amount of money needed for this project the attraction will have to be highly compelling, mitigate as much business, technical and market risks and be very profitable for the coin holder. Therefore we will do what we need to do in order to achieve this. The opportunity to participate in the ICO is open to everyone in our community, oil and gas investors, people within the industry and John Q. Public. As opposed to arguing the rising cost issues the point should be to evaluate the Preliminary Specification to determine the viability in the marketplace and its capacity to deal with the well identified issues in oil and gas. Then determine if the ICO is an investment of interest for yourself.

We are unaware of the amount of administrative and accounting costs that will be incurred by the service providers when the Preliminary Specification is operational. Under our model the actual costs of the overhead of the industry is charged directly to the Joint Operating Committee in the current period. This allows the producer to turn around the cash that is used in the payment of the overhead, charge it to the consumer of the oil or gas and reuse it repeatedly throughout the year. What happens in today’s bureaucratic nightmare is that up to 80% of the overhead of the industry is capitalized and held on the balance sheet as property, plant and equipment for upwards of a decade. Then the cash that is consumed each month by the overhead is very slowly returned over the next decade in the form of depletion. A brilliant use of the cash resources of their investors. If the coin holders choose to also manage the service providers revenue stream as part of their value proposition to the industry, then they will add their levy on top of the amount of industry overhead being charged to the Joint Operating Committee and have that cash recovered in the subsequent months accounting period. This is due to the fact that the treatment of overhead under the Preliminary Specification is as a cost, not an asset as it is today. The coin holder would then be able to earn a handsome finance fee for the management of these costs.

We do not expect to define the coin holders percentage of the extrinsic value that we think they should be entitled to. They will better understand their process and will be able to negotiate with the producers what it is that they expect in terms of access to the software. We also do not expect to define what the percentage fee of the service providers costs would be. We see the coin holders being somewhat separate and distinct from People, Ideas & Objects, our user community and the service providers. It's in that sense too that we don’t want to limit the types of revenues that the coin holders would have available to them. There are possibly many other sources of revenue that would be just as valid for them to pursue. As we develop the coin offering these can be better defined with some of their input and begin to assess the incremental costs that will be incurred by the industry. The key point of their business offering is that we are providing them with the access point in which producers will access the oil and gas ERP systems that are being built in the vision of the Preliminary Specification, based on the input from the user community and financed by the Initial Coin Offering or coin holders we’ve discussed here. The value proposition of the coin holders business offering is substantially greater than today’s base case and that will be the draw for oil and gas producers investors to demand they participate in the use of this software and receive their share of the extrinsic value that is generated throughout this community.

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 profitable 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.

What's the Plan, Part I

No one can successfully argue that People, Ideas & Objects haven’t been patient and persevering in attempting to resolve the issues we see in oil and gas. The one thing that I would suggest is that we’ve given the bureaucrats ample enough time in which to evaluate our solution and begin the developments of the Preliminary Specification. It is not that the Preliminary Specification is inappropriate or unworkable as the reason that it has been rejected by industry. It is a workable model that deals with the chronic overproduction and lack of innovation within the oil and gas producers themselves. That the bureaucracy is conflicted and know they would be eliminated from the industry if the Preliminary Specification ever came to be. Disintermediation is a trend that is affecting all industries in similar ways and the resistance to these changes comes in many different forms. With the destruction of value in the producer firms, with the landscape littered with secondary and tertiary industries that are struggling even more, where the towns and cities where oil and gas has operated all being forced into a depressionary period that never seem to end. With an oil and gas industry that is alleged to be so innovative as the bureaucrats have always claimed, why in the world has this downturn continued for so long and been so deep? Maybe I’ve been patient and persevering but the real award for this has to be presented to the bureaucrats for their ability to hang on to what they have.

As hard as we’ve tried, and maybe I could have been kinder and more pleasant with my approach towards the bureaucrats. There has been no movement, none, zero, nothing from the other side. They are further entrenched than they’ve ever been. They will not move to save the industry from the damages that are being generated by their hands. They have it under control and are truly unchallenged in their position. After more than a decade they know that they are invincible to any force that desires any change in the business. Therefore People, Ideas & Objects must begin a different approach. Change will not come about internally, therefore it will be forced upon the industry in a manner where it will in essence be taken from those that have managed it so irresponsibly to this point.

As I indicated yesterday we will be working to disrupt the cash flow that the producers bureaucrats are dependent upon. Providing an alternative investment vehicle that will compete with the performance of the current producers. The cash flow that is the bureaucrats source of compensation and seemingly everything outside of that is of little to no concern to them. As long as they maintain the cash flow they will remain where they are and with the resources necessary to live a long, prosperous and happy life. As it stands today they’ve also used that cash flow to buy the allegiances of others, such as our competitors and those who are dependent on the status quo. This has effectively aligned most of the current industry against People, Ideas & Objects and our Preliminary Specification as people know where their bread is buttered. Expecting the producers shareholders would support People, Ideas & Objects has to be classified as a failed strategy on my behalf. We have seen them withdraw their money from the industry. They still maintain their positions in the producer firms today. And are demanding that they receive large portions of the cash flow from operations in the form of dividends. This has been granted by the bureaucrats as they have no alternative but to comply. In the course of doing so the shareholders and investors have become satisfied with the status quo. Whoever controls the cashflow will therefore control the fate of the industry. The phrase is money talks and bullshit walks.

We’ve been discussing and considering the Initial Coin Offering for the past 16 months here at People, Ideas & Objects. We have it as our stated objective of how we would raise our funds. Although the cryptocurrency marketplace has taken a strong hit during that time it is showing some resilience. I am satisfied that this is a viable method of raising the financial resources that we need in order to proceed with the development of the Preliminary Specification. Cryptocurrencies are new to the oil and gas landscape and the coin holders will not have any current allegiances to any of those with the status quo. Earning the rights to exclusively control access to the software, and if they should choose, the service of the service providers once the Preliminary Specification is operational. They would be able to compete with the status quo bureaucrats by offering a better value proposition then what is being provided by the producers bureaucrats today. By using the Preliminary Specification we are able to capture the extrinsic value that the bureaucrats feel is of no interest to them, and is unavailable to them. That is many trillions of dollars over the next 25 years and would be the source of determining the price of the software and services they offered. Offering a better deal financially is what we have to offer to all concerned in the industry. The producers, their employees, their investors and bankers, the service industry, and tertiary industries that depend on a healthy and prosperous oil and gas industry. With the larger monetary value being generated by People, Ideas & Objects, our user community, the service providers and now our coin holders we can buy the allegiances of our own communities and align ourselves with those who choose to become unaffiliated with the bureaucrats.

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 profitable 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.

It's a Capital Intensive Industry

People, Ideas & Objects Preliminary Specification seeks to change the source of funding of the oil and gas industry. Moving it from investors and bankers to internally generated cash flow. We do this through our decentralized production models price maker strategy. The first aspect of this change is we need to change the perspective of the way that people view the oil and gas producer. The items in the balance sheet account of property, plant and equipment are most certainly the assets of the firm. And those assets are worth far in excess of what the value that is listed in those historical accounts of the producers. Accounting is not about recognizing the value of the firm but the performance of the firm based on its historical costs. Anyone looking to the quarterly and annual report for information about what the company is worth will be misguided when viewing the quarterly reports property, plant and equipment account. The property, plant and equipment account will only reflect the amount of money that was spent. If the money was spent by an oil and gas genius then that won’t be reflected there. If it was spent by the local fool who is running a scam it won’t be reflected there. We need to stop looking to the “balance sheet” to determine what a firm is worth based on what it’s historical spending was. It’s irrelevant.

The desire to “build” the assets ever higher in the industry is enabled through what I consider to be a poor interpretation of the industry by the Securities and Exchange Commission. The interpretation from industry is also distorted in that the SEC states what the maximum allowable values of property, plant and equipment can be, also known as the ceiling test, nowhere is there a minimum value. If you speak to the knowledgeable investor and why they’re now avoiding the industry it’s as they say “a rapidly depleting resource.” Which is exactly correct. Money spent today will bring about flush production that will meet the inevitable decline curve. Which subsequently meets the inevitable mind of the engineers at the firm who figure out how to spend more money to maintain a higher throughput. All of this money is spent in order to produce the oil and gas and all of the spending is recognized as capital in property, plant and equipment. People, Ideas & Objects believe this spending to be the capital costs associated with current production. However, the industry has deferred the recognition of the capital costs for so many years, and even decades, that property, plant and equipment consists of what we now call the unrecognized capital costs of past production. They are certainly not assets from the point of view of assets that you buy and sell on the oil and gas marketplace. The historical costs have nothing to do with market value.

If we take an overall look at the oil and gas marketplace this is what we see in what I would call the generic oil and gas producer. A producer spends one million dollars in the year. They recognize one half of one million dollars as depletion that year. And the production profile of the producer throughout the year is highly variable, however, year over year for the past three years our sample of 23 producers have averaged 0.8364% increases in annual production. What we see, in this generic example, is the tendency for producers to continually increase the amount of property, plant and equipment each and every year. This is an academic accounting exercise that will be debated by the CPA firms for the rest of the century and otherwise keep them occupied and out of the way. No one outside of a CPA firm should be concerned one way or another. What we should be and are concerned with from an industry point of view is how to perform competitively in the public marketplace for capital. Right now with depletion schedules never allowing, in my opinion, the capital costs of production to be recognized, the actual cost of oil and gas is not being calculated correctly and the consumer is therefore not paying for these costs. The capital costs are being paid for by the investors and the amount sitting in property, plant and equipment can be, and should be, seen as the amount that the consumer has been subsidized. The ideal situation would see the most competitive producer with a zero balance in property, plant and equipment.

Here is the point that the industry is missing. If we recognize the capital costs of oil and gas exploration and production in the competitive environment for capital. Producers would change their capitalization policies to recognize their capital on a much faster basis. Meaning each barrel of oil equivalent is going to carry a much larger freight in terms of the capital costs for each barrel of oil that it’s producing. The only reason we are doing this is to compete in the marketplace for capital. Something that the investors and bankers are stating that we are not doing. Or in other words, convert the amounts sitting in property, plant and equipment into cash by recognizing the actual capital costs of oil and gas exploration and production. Of course this assumes that the price maker strategy is operational in the industry and the commodity prices realized cover all of these costs.

The consequences of doing this in the current environment are disastrous and the investors can do these calculations on a pro-forma basis themselves. They are not, and have not been fooled by the deception of the financial statements published by producers for many years. The first consequence of course is that the asset mix is going to shift from long term assets into cash. Well maybe not that disastrous, yet. The second major consequence is the producer is going to reports significant financial losses based on the spending that they’ve conducted. That is unless and until they can begin to capture the full value of their costs in the price they sell their oil and gas for. The only method in which they can sell their product for the cost is through the development of the Preliminary Specification and its decentralized production models price maker strategy.

Here is the problem, the bureaucrats within those producers have chosen not to take this route. One in which other industries have learned to manage their business. People, Ideas & Objects, our user community, the service providers and our coin holders hold the various rights that a producer would need in order to operate in this fashion. The producers of today have proven two things that we’ve documented here. They are unable to operate in the manner that the Preliminary Specification specifies as evidenced by the continuation of the same failed state. If they could have made the change they would have made it by now, one would conclude. And the second is that they have no desire to change as the structure of the industry is directed to the health and welfare of the bureaucrats themselves. And as such what change would be required?

The Preliminary Specification, our user community, service providers and coin holders 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 profitable 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.

Bureaucrats Set a Fine Example

What People, Ideas & Objects had traditionally done at this time of year was to pressure the producers in the lead up to their Annual General Meeting. Understanding that soon after the annual report and AGM they would be able to escape any accountability for the rest of the year. What we saw last year was shareholder activists in both Crescent Point and Obsidian. Neither company were materially changed in the process and as a result have languished throughout 2018. As a result on December 31, 2018, Crescent Points market cap had achieved 22.4% of its book value and Obsidian’s market cap was 25.4% of its book value. These being reflective of the levels of investor faith in the management of those firms. For comparison purposes our sample of 23 producers market cap is 2.5 times its book value. And that includes both Crescent Point and Obsidians values. I might argue that book value is a poor judge in determining the value of a firm, which it is, but when values are as low as Crescent Point and Obsidians they reflect that something’s not right. Therefore if shareholders are unable to exact any change in the behavior of the management of those that are in the most need of change, then for People, Ideas & Objects to be doing the same thing and expecting different results from this AGM; is not a place I’m willing to admit that I’m at, yet.

Those with the dollars are more than able to exact the pain necessary for changes in the typical organization outside of oil and gas. What both People, Ideas & Objects and the oil and gas investors are clearly facing is an entrenched and self centered bureaucracy that has it far too good to make the types of changes that will ultimately upset their franchise. The more that action is required the more entrenched they become. They are able to sit back and do nothing but belittle others for their losses, divert cash flow to support their demands and continue unobstructed in doing so. All with a declared strategy of muddling along and doing nothing. With the cash flows generated in oil and gas, there will always be enough cash for them to survive handsomely. What ever could the issue be? One part of me wants to continue trying to pressure the producers through their AGM. Chronicling the further deterioration of my personal situation. The other part of me knows that this is a dead end that will not get the job done. Something has to be done in order to have the Preliminary Specification funded and developed.

Time is up, whether it’s obliviousness to the situation or a deliberate act the fact that the cash flow generated can buy the interests of others to align with the bureaucrats. That leaves us well outside of the industry as we have been for well over a decade. The source of capital necessary to make this change has to come from somewhere that can be motivated by that cash flow as well. If the bureaucrats are able to use the cash flow that they have under their control to line their pockets and to buy others allegiance then two can play at that game. The problem for the bureaucrats is that I have a value proposition valued in the trillions of dollars that represents the extrinsic value of the industry. Adding the extrinsic value with the intrinsic value they currently manage makes my capabilities more powerful than theirs.

I’ve now dealt with the part of me that wanted to continue pressuring the bureaucrats through the AGM. We are now putting our Initial Coin Offering forward as the means in which to proceed with the funding and development of the Preliminary Specification. It is through this coin offering that we are granting the exclusive right to the coin holder to use the software that is generated from the Preliminary Specification. We believe this will provide all concerned with the necessary changes and funding mechanisms to correct the issues in the oil and gas industry and move it forward through the next 25 years. A time which will be the most difficult in its history. The rights that the coin holder will be granted will be the exclusive access to the software that is derivative of the Preliminary Specification. Software that the holder of the oil and gas property needs in order to ensure that it achieves the most profitable means of oil and gas operations. Through our price maker strategy the extrinsic value of the industry will be realized as a result of the price maker strategy. The coin holder will earn one third of those values over and above today’s base case in consideration for access to the software. The two thirds extrinsic value will be earned by the owner of the oil and gas property. The oil and gas property owners extrinsic value earned in this process is what People, Ideas & Objects call our free money strategy, free in the sense that the coin holder did the heavy lifting to fund and develop the Preliminary Specification. The accountability for that individual property will have ownership interests that will demand to know why the management of that property, whomever they may be, are not realizing the free money strategy. Compelling them to participate in the use of the Preliminary Specification software that is controlled through the rights of the coin holder.

I am not one to suggest what the coin holder would do in terms of the value they generate. I am only suggesting the one third value as a placeholder for discussions here. They would of course be free to designate whatever percentage of the intrinsic and extrinsic value of the property that they desired. The only method that we are going to be able to cut off the abuse of the cash flow by the bureaucrats is to establish a profitable means in which to produce oil and gas. Profitable in the sense of all of the costs of oil and gas exploration and production which would include the coin holders compensation. The time for us to act on this strategy has arrived and we will now be actively pursuing this source of funding and development. I am currently the beneficial owner of all of the coins that will be distributed to fund the Preliminary Specification. As the owner of the Intellectual Property that is developed in the Preliminary Specification, I will control the coin offering through contractual means. We rewrote our Revenue Model in October 2017 to make this change. We subsequently noted that it would take approximately five years to complete. We now believe with the work that we’ve done that we are down to three and one half years and will be pursuing this aggressively to push our timelines forward.

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 profitable 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.

Beyond the Imagination and Capabilities

Do these oil and gas producer organizations survive? Business history would show that they should have expired some time ago. A capital intensive industry has large flows of cash from prior investments to keep its vested interests, the bureaucrats in this case, alive. We believe this chronic overproduction issue is now terminal for the existing producers. As we’ve documented this is the 28th “bad year” out of the past 33. The contrast between what is seen on the street and our message is stark and unambiguous. Producers continue to misdiagnose their difficulties and cloud the issue. Theirs is an unserious approach. Stratification of the industry has always included the start-up, junior, intermediates, integrated and national oil companies. The start-up oil and gas producer can now be seen at the local museums of the town’s with heavy oil and gas influence. The juniors, just as the startups are heavily dependent on frequent capital infusions, their financial statements are miracles of modern science. Juniors have not been part of our sample of 23 producers that we review, but we know from the juniors financial statements that we’ve reviewed that time is precious. The various levels of intermediate producers have now lined up in terms of their financial health. Some such as Crescent Point and Obsidian, the former PennWest, companies that experienced active shareholder challenges at last years AGM and are having difficulties that will be near impossible to overcome. Overproduction is an issue that will take out the smallest, then the weakest but no matter who the producer is, there’s no escaping the inevitable consumption of the entire industry.

I was thinking the other day why doesn’t someone make the appropriate decision to move forward with the development of the Preliminary Specification. Then I realized, who exactly? Over the past 33 years there has been a flattening of producer organizations and many rounds of layoffs to the point where the organizations became optimized well drilling machines. This depression we’re in has decimated the ranks even further and few are remaining. Who’s going to be the mole that pops their head up and gets whacked?

Throughout the past decades, particularly in Canada, nothing has been done to invest in the business, why when drilling wells was the business. As a result everything else was left to atrophy. With everything now in a dismal state, the producer is faced with a scope and scale of issues that are beyond just drilling wells, and well beyond their capabilities. These issues have led to commodity price collapses in every decade since the 1980’s. Now as the global saturation of the commodity market continues unabated, regional differentials in North America are enhancing the overproduction effect to reduce producers revenues further. Overproduction is an issue that we believe will never end in the hands of the bureaucrats. The producers revenue losses are valued in the hundreds of billions of dollars per year across the industry. Many trillions over the past decade. Regulated pipeline companies revenues and profits are and always will be fine as they are always profitable at any level of operation due to the nature of their business model. Yet producers feel pipeline companies have a vested interest in ensuring that their product is shipped to market in a timely manner. There has, and had, been no leadership or concern expressed by producers during the pipeline review process. Passing the full responsibility for this logistical, political and environmental nightmare onto a regulated company to manage. Expecting the utility to safeguard the future upside of the producers operations and to maximize and realize those trillion dollar revenues. Now the Canadian producers conveniently blame the Canadian government of mismanaging the process. Who’s revenues were in jeopardy if the pipelines weren’t completed? The utility, the government or the producers?

Service industry representatives take the brunt of the hit when oil and gas producers accuse them of being greedy and lazy, sorry that was during the few brief minutes of good times we had about a decade ago. The service industry have had their business volume slashed to a quarter of their capacity of a few years ago, and their pricing pressures are now as high as 50%. It would be interesting to see how a producer would deal with a reduction in their revenues of 87.5%. Maybe we’ll see that soon, or that could be the situation today! The leadership in oil and gas hasn’t been missing. It would have had to have been there at some point in order for it to have been missed. Instead of working with those that make the industry happen, producers sit on the revenues of a primary industry and belittle those in the secondary and tertiary industries. Belittle and blame them for not maximizing the producers value. When faced with an existential threat the producers always blame others. As it is today. I don’t understand why someone who is out several trillion dollars in revenue would point fingers at others stating it was their fault and whining that they get no support as the Canadian producers recently argued. If oil and gas producers don’t care about their revenue losses why would others? Certainly their investors and bankers have expressed their lack of faith.

With the Preliminary Specification all oil and gas production becomes profitable through the decentralized production models price maker strategy. When each producer is able to make independent business decisions, based on the profitability of the property, determined by the actual accounting of that property, to shut-in any unprofitable properties, then those shut-in properties reserves can be saved for a time when they can be produced profitably, keeps the cost of those reserves down when the losses on the property are not incremental to the cost of the reserves, the producers profitability is maximized when unprofitable properties stop diluting their profitable properties and commodity markets will find the marginal price when unprofitable production is removed from the market. Producers are then able to focus their attention and innovations on those properties that are not producing and determine how to enhance them and return them to profitable production. Or, alternatively producers can just drill wells, turn everything on and leave them on at all times. Which system sounds best?

We should not be producing any oil or gas unprofitably from this point forward. And profitably based on a reasonable accounting, not the myth that is spun in the current producers financial statements. Subsequent generations will ask what justification was there to use a limited resource in such irresponsible ways? We also need to begin to realize as a society that the most powerful economy will be the one that consumes the most energy. North America can be energy independent, however it will have to be profitable in a competitive way in order to do so. Investors have ceased to subsidize the consumers for their energy consumption. What we have is an unworkable situation that is destined to fail in a manner that is beyond the imagination and capabilities of the leadership within the industry 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 profitable 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.

Odd's and End's

When I think about what we could be doing in 2019. It’s frustrating that we’re unable to do anything, and forced to sit back to admire the efforts of the oil and gas bureaucrats. We have no remaining resources to continue with the developments of the user community. This will not be detrimental in the long term to the development of the community. We will not be, or ever will be, taking any volunteer contributions from anyone and most particularly user community members. Producers will be paying for their systems, one day, and they will not be receiving any of their systems on the backs of volunteers or free contributions. As much as that is the way the oil and gas industry has been operated to date. It’s also a failing industry. The value that has been destroyed in the industry is catastrophic and complete. It continues today and we see no remedial efforts or recognition that anything is at issue with the producers. For the past fifteen years of working on the development of the Preliminary Specification, and subsequently the user community. I’ve always been satisfied that we were at least moving forward and therefore reducing the amount of time that the industry would be incurring the unnecessary and very costly losses they seem to enjoy. This is no longer the case as we are now at a standstill with no resources to move the development of the user community into its next phase. Therefore producers are now actively losing time in which People, Ideas & Objects solution will be provided.

Our last post regarding the user community generated some discussion regarding the AI algorithm that we would be developing and using to determine the user community members allocation of service providers licenses. Although I’m hesitant to define anything more than what was stated earlier, I expect the user community will conduct these discussions themselves and manage them for their interests. Starting from day one of our developments user community members should be able to resolve their issues over the term of the developments towards commercial release and come to an agreement as to how the algorithm will calculate and generate these service provider allocations. People, Ideas & Objects will therefore provide all of the technical resources necessary to coordinate the developments of the algorithm, data and its capture.

I’ve also been reading some articles on recent ERP systems integration failures in a variety of industry marketplaces. Many of these are around the SAP Hana product, just google “Sap Hana failure” and you’ll be presented with a number of details. Producers may be concerned about what People, Ideas & Objects is doing to mitigate the failure of the Preliminary Specifications integration. We first of all state that the situation in the industry as it stands today. With its downward and accelerating trajectory, the industry has no opportunity to contemplate failure. I’ve done everything that I could have done to this point. And it won’t be down to one person to make this a success. The placement of this development in the hands of the user community with their vision provides the highest level of quality possible. The chance for failure still exists if the producers sit back and expect someone else to deliver them from their current situation without their direct, painful, dedicated and committed efforts and assurance that it will be a success. This is today’s modus operandi of the producers. Which is to shift the responsibility to the vendor for their success and conceal that within a contract. As we’ve mentioned there will be no industry / producer Service Level Agreements with People, Ideas & Objects. And if the producers think that an SLA can capture what is necessary to make this a success then they’ll be wasting their time and money. We demand a distinct change in attitude and method of operations for the success of this initiative. Otherwise producers may be best to go with the likes of SAP Hana which seems to have achieved a 50/50 probability of success through their SLA methodology. I wonder what their plans for oil and gas are?

Bureaucrats would love to have someone to hang for the failure of this initiative. Their actions and behaviors have proven this to me time and again throughout these past fourteen years. When I published the Preliminary Research Report in May 2004, which states that software defines and supports the organization, therefore to change the organization you must change the software first, they interpreted that as long as they never changed the software they would remain unchallenged in their management of the industry. Which has been the case hasn’t it? Therefore for them to establish the conditions in which we were to fail is an obvious precondition of dealing with them in the future. They would like nothing more than to prove that they are the only alternative to the management of the oil and gas industry. All other initiatives had failed. Therefore, using this same corrupt logic of the bureaucrats, we can state unequivocally that the industry would not survive the failure of the People, Ideas & Objects Preliminary Specification, user community and service provider initiative. And the responsibility for the success of this initiative is squarely on the shoulders of the bureaucrats. We have the evidence that they would choose to have this fail through their non-actions in these past fourteen years, we have seen it’s failure through its lack of funding. Therefore who is going to be ultimately responsible? If they choose me then that’s fine, I’ll have one payday down and will miss out on the second payday, but I’ll survive quite prosperously. It’s the user community members that I worry about. It should be to no one’s surprise that I see this as life or death for the oil and gas industry. The question is when will the bureaucrats see it as life or death.

It’s important to point out the role of the user community within the industry on a go forward basis once we’ve released and are operational on the software. We expect the user community will provide the leadership in the administrative and accounting areas of the oil and gas industry. Their role in subsequent developments will continue in order to cater to the changes and needs of the industry and producers. They are also enabled through the user community vision to be the ones that are able to ensure that the industry is able to address the issues and opportunities in the administrative and accounting areas. If there is a new business model that would better fit the industry, then the user community will have it developed and implement it. This overall development of the administrative and accounting capability and leadership within the industry are the direct threat to the current bureaucracy and their motivation to fight as they have.

It is difficult for me to define what People, Ideas & Objects are doing. Are we custom software or integration? We are built on the Oracle stack of technologies that include Oracle Fusion Middleware and Oracle Fusion Applications which are now offered in the Oracle ERP Cloud product. We are standing on the shoulders of many giants here. We determined in 2018 that we could save many, many years of development time if we switched to use Oracle Consulting for our development of the Preliminary Specification. The user community will be defining the necessary details to fill out the requirements of the Preliminary Specification. They are also the ones that will be conducting the administrative and accounting functions for the industry in the future. It is only natural that the service providers therefore undertake the installation and integration of the software and services necessary to be operational in the producer firm and industry. Therefore to answer the question if we are a custom software development or integration is appropriately answered by stating that we are a hybrid. Developments and integrations will begin to some extent on the first day of our projects beginning and continue throughout.

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 profitable 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