These Are Not the Earnings We're Looking For, Part XXXIV

We noted yesterday the difficult situation in oil and gas in terms of its cash and working capital crisis. What we have is a unique situation that is overlooked by the producers when their focus is on the development of reserves and not on financial performance. Accountants are in the industry to pay the bills, not to speak unless spoken too and that is the extent of their purpose. Simple cash management would show that what the industry does is not a viable method of managing an enterprise. Unless, that is, there was a reliable stream of investor dollars available to continually shore up any of the producers cash shortfall. That this investor support has been missing for more than three years hasn’t caused the thinking within the industry to change or to focus on simple cash management to deal with their cash crisis. Or alternatively they’re fully aware of the cash crisis and are also aware that the only solution is the Preliminary Specification with the decentralized production model’s price maker strategy. Nonetheless how does this chronic cash shortfall occur?

Oil and gas is a capital intensive industry. Where most costs are capital in nature to begin with. What makes it particularly difficult is that the industry is operated in such a way that “building the balance sheet” is the objective. Therefore capitalization is done everywhere and always. Particularly in the overhead accounts where each year large percentages of the overhead costs are capitalized to property, plant and equipment. In addition interest is capitalized to a certain extent and at one point PennWest even capitalized their royalties. As we know all of these capital costs escalate each year and property, plant and equipment builds ever larger, quite rapidly. This is also due to the minimal amount of depletion that the producer recognizes. Enabling them to report higher profits than what they should, attract more investment and overproduce more of their “profitable” oil and gas. They are therefore through this process passing an indirect discount to the consumer when these capital costs that should have been recognized stay dormant on the producers balance sheet in property, plant and equipment for decades at a time. The amount of this discount is the amount of property, plant and equipment sitting on all of the producers balance sheets today. An amount believed to be $1.5 trillion. This is also the amount that investors should have received in the form of dividends over these past 40 years.

The point in my stating this once again is that the capital costs are purchased with cash. When you have a willing investor supporting your organization the cash consumption might not be an issue. That doesn’t make the activity right, it just doesn’t become a crisis. When producers needed more cash they just issued more stock. When you don’t have a willing investor or banking group supporting your organization then you’re paying out the monthly bills each and every month, with cash, and only retrieving those cash resources in small bits over the next few decades. What cash does come in as a result of the producer recognizing some of their capital costs has an immediate call on it to maintain the production profile of the producer. This is the way that oil and gas is operated which is not a business. It is a spending machine that was consistently reloaded as required by investor money. This has become the culture of the industry and is done systematically throughout North America in order to “build the balance sheet.” This process is deemed, I suppose, to add some value in some way.

What needs to change, and what will change in the Preliminary Specification price maker strategy, is the producers will cease “building their balance sheets” and begin recognizing their capital costs in a more timely manner. We believe a 30 month period is adequate to compete in today’s capital markets. Therefore instead of having depletion take 12 years it will be done in 2.5 years. When production only occurs when it’s profitable as it does in the Preliminary Specification. And the producer begins to understand that true profitability only occurs when they are not diluted by any of their unprofitable properties, and therefore only produce profitable properties. That their reserves will be saved for a time when they can be produced profitably. These reserves costs won’t have to carry the incremental costs of each months losses incurred from unprofitable production. And the commodity markets will find the marginal cost when unprofitable production is removed from the marketplace. Producers will need much higher oil and gas prices in order to retire the capital costs that are being recognized at a much faster pace in order to remain producing only profitable production and compete in terms of their returns in the larger capital markets. Consumers have had the benefit of the investors paying the capital costs on their energy consumption now for four decades. That is the net effect of the actions of the producers and industry for the past four decades. Both of these aspects of the producers business are unrecognized, or at least not discussed publicly. Producer bureaucrats are either obtuse or they’re uncaring. Either / or it doesn’t really matter.

Profitability is the fairest and most reasonable means of production allocation. We see in Alberta that none of the producers are satisfied with the government mandated production cuts. They can not be applied in a manner that will be acceptable and controllable other than in a competitive market where profitability and innovation are the two drivers of producibility. If a property is unprofitable, under the Preliminary Specification, it is a priority for the producer to expend their earth science and engineering capabilities upon that property in order to return it to profitable production as soon as possible. Innovation is the source of profitability in the long term for the producer. Innovation and profitability are two of the key capabilities provided in the Preliminary Specification.

This is how the business of the oil and gas business must be operated from this point forward. Confusion about the issues and opportunities are rampant in the industry. Everyone has an opinion as to the source of the problem and that there are no solutions other than to “muddle through like always.” People, Ideas & Objects believe the scope of the damage that has been self inflicted by these producers is terminal. Creative destruction is our method in which we’ll bring our solution to the marketplace. Rebuilding the industry brick by brick and stick by stick on the basis of dynamic, innovative, accountable and profitable oil and gas producers. To continue without any action on these issues is untenable. There are believed to be prospective capital expenditures in the range of $20 to $40 trillion in the next 25 years. It is therefore assumed by today’s inaction of the producers that investors will be picking up this tab. It is also the common knowledge on the street that all that is needed is for the “investors to back up the truck to the producers loading dock and replenish the cash needed to make everyone flush again.” A ludicrous expectation that the damage sustained throughout the industry, the service industry and the general economy can be resolved by investor resources provides an understanding of the level of business in play at these producers. There is not enough investor capital in the universe to make the industry “flush.” It can only be on the basis of the consumers paying the full costs of their energy consumption that the industry will right this ship. Investors currently see no future in oil and gas because there is no future. All that oil and gas has become is a giant sinkhole where money goes to die. The only group discussing otherwise is here on the ugliest websites on the InterWeb. The place where thinking through the industry issues occurs, solutions are provided and has no support from the industry. That’s because oil and gas is not a business.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North American 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.

These Are Not the Earnings We're Looking For, Part XXXIII

What we see in Occidental’s purchase of Anadarko is the acquisition of oil and gas reserves as the key to all oil and gas activity. What else is there? Paying so much for such little performance shows the emphasis is not on financial performance or building value. It’s on building balance sheets and collecting more stuff to put into your collection. The culture of the industry has been so distorted that People, Ideas & Objects focus on real profitability is the outside discussion that the bureaucrats are unwilling to listen, acknowledge or act upon. There is so much distortion in the market that the ability to hold an idea in ones head is limited by the fact that everyone in the industry is an expert and know intuitively that no ideas will work. To reflect on the fact that the behaviors of the producers are what’s at fault never enter the conversation. It’s always someone else that’s responsible. Any subsequent actions by producers would imply that they’re responsible and they couldn’t do that. Besides as far as the bureaucrats are concerned they’re still getting their paychecks, and although that’s not as good as the golden days of creative compensation it’s enough.

What we see in the first quarter of 2019 is a continuing deterioration of the industries and producers financial health. What we also see is a substantial acceleration in the trajectory of that decline. Particularly in the area of cash and most specifically working capital. We’re now in a situation in terms of working capital that I’m having a hard time visualizing what it’s like to manage an oil and gas producer. You have in our sample of 23 producers property, plant and equipment of $487.3 billion, debt of $146.6 billion and current liabilities of $70.5 billion. Working capital is only $4.8 billion down $6.7 billion from December 31, 2018. We have watched these numbers for several years now and they’re deteriorating far more quickly. In 2018 we saw dividends, stock buybacks and debt payments total $45 billion which contributed to the decline we’re seeing in working capital. Much of this was fueled by asset sales that were generating large losses in addition to the cash that was raised. In the first quarter of 2019 stock buybacks, dividends and debt payments totalled only $3.2 billion as it appears this is the area that producers have determined as unsustainable. Cutting dividends and harboring as much cash as possible. Nonetheless the consumption of cash was $3.8 billion vs. $5.2 billion for all of 2018. Some pundits state that the cash balances of the producers are very healthy. Which some are, they’re however the exception to the rule and the healthy balances of cash have all been spent with current liabilities wiping out current assets and leaving minimal working capital. It's great to have large bank balances but if you’ve already spent that money, you can’t spend it again.

Go ask an investor to shore up your working capital. You may never see another potential investor again. No one is going to provide you with working capital. Banks will get spooked and start calling their loans. Working capital deficiencies are a serious warning to anyone that the problems in the business are comprehensive and unresolved. Throwing more money at it is only incinerating it. The business must address the underlying issue and the discussion in the industry isn’t satisfying anyone who sees that the issue consists of chronic, systemic overproduction everywhere and always. Businesses manage their production so that their inventory levels do not bloat to the point where they depress the price of the product they’re selling. It’s common business sense not to do so. Producers believe they have the right to produce whatever they want from whatever area at whatever cost and the “market will rebalance.” Which is the most foolish thing that any business could consider or think is a valid point. Markets produce one thing, and only one thing. That is the price that the market is willing to pay. If a producer can make a profit at that price, then the producer should produce. Otherwise stay out of the market and ensure that only profitable operations are achieved everywhere and always. People, Ideas & Objects have been screaming this logic for over a decade now and the response from the industry continues to be they will not interfere with the markets. And therefore continue to produce at 100% production capacity.

Of course our sample of producers recorded a profit of $6.1 billion for the first quarter of 2019. Which would be some of the highest profitability recorded in the past number of years. So the point of my argument about only producing profitable production is misunderstood. These profits that are recorded by the producers of course contain very little of the actual capital costs incurred to produce them. Deferral of any and all capital costs, which as we know consist of only the royalties and operations being excluded, is the science and art that producers are most proud of. “Building balance sheets” is the name of the game. The business is a spending discipline pure and simple. People, Ideas & Objects believe that a capital intensive industry would recognize their capital costs as quickly as possible in order to retrieve the cash resources that had been invested in the business. By recognizing the capital costs, and assuming they were capturing adequate prices for their product, these capital investments would be returned to them in the form of cash for reinvestment without having to go to the investors for more cash and dilute last years investors. The business would be self funding as it turned over its capital in a competitive fashion with other industries that compete for the investors attention and dollars. In addition to being a self funding operation producers would generate enough cash to pay down debt and provide adequate dividends to their shareholders. Instead, oil and gas is the place where money goes to die.

This argument has been put to the producers by People, Ideas & Objects for many years now. Isn’t it odd that the producers have such large balances of property, plant and equipment. Are "wildly" profitable in their minds but cash starved and becoming more so as each day passes. Analysis of the issue and proposed solution can’t make it past the “muddle along” strategy and “do nothing” operating procedure that are unanimously applied in each producer. They know too much about the business to impart their sophisticated analysis and explain themselves. Even though the “good times” have occurred for a total of 5 of the past 34 years, investors and bankers don’t understand and can’t see the “healthy” lives that the bureaucrats live. So what exactly is the issue. People, Ideas & Objects have determined that this has gone on for too long and has carried on to the point where there is no value in the industry anywhere anymore. We don’t believe we can remediate the problems within the constraints of the current organizations. We therefore have looked to other methods in which to achieve our funding and proceed with our software developments. These are captured in our Initial Coin Offering and we’ll be using creative destruction to rebuild the industry in the vision of a dynamic, innovative, accountable and profitable oil and gas producer and industry.

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 American 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.

These Are Not the Earnings We're Looking For, Part XXXII

We have now compiled the first quarter financial statements of 2019 for our sample of 23 producers. As of the second quarter we will have 22 producers as the Occidental acquisition of Anadarko was finalized last Friday. Today we’ll be talking mostly about that transaction with tomorrow’s post focusing on the state of affairs across the industry. I am of two minds regarding the Occidental deal, first the structure of it, the political moves made by Occidental and there ultimate success reminds me of the 1980’s when acquisitions were more difficult, competitive and less friendly. The acquirer had to be very creative and active in order to make the deal a success. We see that here again in Occidental’s moves once Anadarko was put into play by Chevron. The second aspect of the deal that more or less frightens me is why would Occidental pay so much? With the acquisition of the shares at $38 billion and the debt that exists in Anadarko, Occidental is paying $69.46 billion for Anadarko. That is substantially too much for the company from my point of view.

Valuation has always been a difficult issue with the oil and gas industry. It has been a tool that has been used, I believe, to distract attention from the larger issues of the day and more to build empires. Over the years I’ve not seen the effects of any acquisition or merger, particularly when two elephants start to dance, provide any subsequent value. The point when looked at from the bureaucrats perspectives is that they’ll have a firm with a 2018 revenue stream that will be $32.3 billion per year. That provides for the kind of power that would otherwise be considered budgetary intoxication. Paying 6% or $3.2 billion of interest on the combined debt would be incidental. Therefore we can see the motivation behind the pursuit of the deal. The actual value that is generated, has been generated and will be generated is questionable. We’re told it's all in the reserves!

The strategic value of the acquisition is to augment Occidental’s acreage in the shale basins. Occidental makes the claim that their shale wells perform better than any other producers. A claim that would be difficult to verify from my point of view however they wouldn’t say it if it wasn’t true. Expanding that performance across a larger area would be a challenge in order to enhance Occidental’s capacity and capabilities. However, with the price and availability of good shale properties having more or less expired, this may be the only manner in which to expand in those basin’s. Although not directly relatable Chesapeake once traded at the highs of $62.40 in June of 2008. They now trade at $2.61 after their positions in shale gas basins didn’t work out quite as expected. Certainly the financial crisis had something to do with that, but the point is you always get surprised on the downside. Are $60 oil prices here to stay?

The Permian is the jewel in both of these producers inventory. What we saw in natural gas was the expansion of shale capacity far beyond what anyone could have ever imagined. This collapsed the price initially, and the overproduction continued to the point of fundamentally damaging the pricing structure permanently. Instead of holding its heating value equivalent of 6 to 1 to oil it now varies anywhere from 15 to 1 or 25 to 1. Oil being a global price it has withstood the upswing in oil deliverability from shale formations better than natural gas. Nonetheless the global oil prices have had severe pressures since at least 2014. It appears to me that the issue is not so much the North American deliverability overwhelming the global price but the regional production volumes overwhelming their takeaway capacity. Producers outside of North America are not as damaged by overproduction from the North American based producers as the North American producers are. Price differentials due to regional takeaway capacity are the chronic issues that plague the entire continent.

Collectively Anadarko and Occidental will have negative $563 million in working capital once Chevron is paid their breakup fee. This also assumes Warren Buffets and Total’s $18 billion in commitments will go to finance the deal. What is most disconcerting about this deal is that Anadarko has $695 million in retained earnings. The expectation that combined Occidental, which will have $54.6 billion in debt and has a $563 million working capital deficiency, which consumed $2.4 billion in cash in the past five quarters will perform is questionable for me. But maybe I’m not looking at the bigger picture. The fact is that short term liabilities are only $13.26 billion which implies… Lets cease thinking this way throughout the industry. That a firm would be carrying $13 billion in short term liabilities is a frightening concept to the former accountant in me. My god they must have warehouses full of invoices to pay. These numbers reflect that whatever Occidental does it won’t be earth shattering. It will have to be put into lock down and rehabilitated over time. Significant time. At the same time they’ll need to be prudent in order to expand their capacities and capabilities across the larger base of operations without the cash necessary to do so. I’m not of the belief that much cash will be available to them. They may have consumed all the oil and gas industry investment capital that was available in this one deal. They may have also consumed all the capital available to purchase oil and gas properties. This will be a difficult road.

There is an alternative that would be more viable than this dark scenario. That would be funding their contribution of the Preliminary Specification. If so the investors would look at this firm as an opportunity to maximize the properties they just acquired. If everything they produced was profitable all the time they would also be generating the cash flow to deal with the issues noted above. This can be done with the Preliminary Specifications decentralized production models price maker strategy. That won’t happen however and People, Ideas & Objects will be continuing on with the development of our Initial Coin Offering.

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 American 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.

Our Oil and Gas White Paper, Part XX

Analytics & Statistics and Performance Evaluation

The Performance Evaluation and Analytics & Statistics modules have similar interfaces, the Performance Evaluation is focused on the Joint Operating Committee and the Analytics & Statistics module is focused on the producer firm. Essentially these are user based tools that enable analytical and statistical calculations run against the data and information that are contained within the People, Ideas & Objects ERP systems and other unstructured data. Providing users with the ability to analyze data in new and innovative ways in seeking value for their firm or Joint Operating Committee. They will be used predominantly by the people who are in the oil and gas producers, the Joint Operating Committees and People, Ideas & Objects user communities service providers on a daily basis. Although the service providers will have access to a very small number of data attributes, only those data elements associated with the individual process they manage, they will have the entire industries population of that data.

The types of data and information that are prepared and presented in these modules is dependent on the individual users and will in most instances be unique, based on their needs and interests, their scope of authority and the type of work they do. When it comes to who will come up with the next great innovation we should expect that it will come from anywhere. Part of the process of innovation is discovery of the problem and we all see the situation from different perspectives. Therefore the point of view and the innovation will depend to a large extent on those different perspectives. Someone working in the trenches may find innovations that affect their work materially, which may not interest others and vice-versa. This process of discovery should be assisted by the types of tools that include the Performance Evaluation and Analytics & Statistics modules. Professor Giovanni Dosi notes.

Thus, I shall discuss the sources of innovation opportunities, the role of markets in allocating resources to the exploration of these opportunities and in determining the rates and directions of technological advances, the characteristics of the processes of innovative search, and the nature of the incentives driving private agents to commit themselves to innovation.

Irrespective of the source of the innovation the fact that it materially affects someone's work should indicate that it should be followed through. These opportunities are hard to discover and we need to be able to evaluate them and assess them based on their impact and their ability to build value. What sometimes appears to be a good idea can also sometimes become an area where the firm could be exposed to unnecessary risk or loss. Having access to the historical data available is necessary, however, in the 21st century it is also necessary to have these advanced analytical tools available to analyze that data.

In the Preliminary Research Report, People Ideas & Objects determined two important findings. One was that the process of innovation can be reduced to a quantifiable and replicable process. Analytical tools are part of that process. The Preliminary Specification sets the industry, producer firms and Joint Operating Committees on this foundation of a dynamic, innovative, accountable and profitable industry. And two, that the Joint Operating Committee is the key organizational framework for innovation in the oil and gas industry. Therefore having analytical tools in the Joint Operating Committee and producer firm are critical.

Within the Preliminary Specification we have also identified that many of the data elements within the Joint Operating Committee are public in nature. Production volumes and how wells were drilled are generally released into the market soon after they’re obtained. In terms of proprietary data there is less of an issue with respect to the data contained within the Joint Operating Committee. It is not to suggest that this removes the need to have the highest levels of security on all aspects of this data. Only to identify that the data within these two distinct organizations are fundamentally different. Within the producer itself there are many attributes that are unique and considered the proprietary technologies and understandings that make them what they are. The value discussed within the Preliminary Specification of the treatment of data and access builds significant value for all concerned. Participation is necessary throughout the industry. The issues and opportunities are not resolved here and won’t be resolved until such time as the user community studies and determines the manner in which it is handled. Today’s existing producers, should they survive their own self inflicted destruction, may want to relate their concerns and also participate with the user community to ensure that their concerns are considered.

Work in the 21st Century will be different. The tools that people will use will need to be different as well. The Performance Evaluation and Analytics & Statistics modules are the beginning of these new era tools for the way in which people need to work. We frequently speak of specialization and the division of labor in the Preliminary Specification. There is also a specialization and division of labor between what the people and computers will be doing and that is reflected here in these two modules. Computers will be responsible for the storage and processing, and people will be responsible for the leadership, problem solving, issue identification, research, thinking, ideas, design, planning, decisions, creating, negotiating, compromising, collaborating, the innovation and the many other things we do well. Much of these things being generated based on the facts that will be determined through the use of the Performance Evaluation and Analytics & Statistics modules.

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 American 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.

Our Oil and Gas White Paper, Part XIX

Knowledge & Learning

We now move onto the Joint Operating Committee focused Knowledge & Learning module of the Preliminary Specification. This module shares many similarities to the Research & Capabilities module, and in fact is populated with the capabilities from the “Dynamic Capabilities Interface” as its base of information. Recall that one of the objectives that we’re working to achieve is to move the knowledge to where the decision rights are held, the Joint Operating Committee.

As I noted the Research & Capabilities module organizes each of the producers knowledge based on geologic zones, geographical areas, etc. This is so that the information that is pertinent to each zone can be separated into its own “packaging” within the Knowledge & Learning module. Additional ways in which data may be sorted in the Research & Capabilities module might include geographical location, conventional or unconventional, drilling, completion, etc. Where all the vendors who operate are therefore available within a certain geographical location are referenced only in those regions in the Knowledge & Learning module, etc.

With each Joint Operating Committee being concerned with one or a handful of geologic zones. The focus of the Joint Operating Committee can be limited to just those specific areas and or capabilities. What is particularly different about the Knowledge & Learning module, however, is that the information that is contained within the module is aggregated from multiple producers. Any of the producer participants within that Joint Operating Committee who have pertinent information contained within their Research & Capabilities module will have that data and information for those geologic zones, geographical regions etc, of that specific Joint Operating Committee populate the Knowledge & Learning module for that property.

With the potential to have multiple companies contributions of Research & Capabilities about that zone. It is important to have the information organized within the Knowledge & Learning modules in a manner that when the multiple producers data is merged, use of the data is probable. Each capability contains the knowledge, skills, experience and ideas of the people who are part of that producer firms and the service industry representatives. People, Ideas & Objects have developed the football analogy where the decision makers are presented with a list of these capabilities in the "Dynamic Capabilities Interface" and can select and deploy them in much the same fashion as the head coach in a football game.

As we have learned “knowledge begets capability, and capability begets action." Quotes are from Professor Richard Langlois book “The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy.”

Indeed, the job of the entrepreneur is precisely to introduce new knowledge. The “Circular Flow of Economic Life” is a state in which knowledge is not changing. Economic growth occurs at the hands of entrepreneurs, who bring into the system knowledge that is qualitatively new – knowledge not contained in the existing economic configuration. p. 27

Here we begin to see the role that people take in the makeup of the oil and gas industry. And to sum it up is to state that it’s everything. One also needs to consider the role of computers in these “actions” and that it amounts to not very much. People, Ideas & Objects divides the jobs between what people do well, the thinking, generation of ideas, leadership, collaborating, deciding and learning and leaves the memory and processing to computers.

There has to be a mechanism by which new knowledge enters the system. And that mechanism cannot be rational calculation, for as David Hume (1978, p. 164) long ago observed, “no kind of reasoning can give rise to a new idea.” p. 27

There is much to be done in the oil and gas industry and a lot of it involves blazing new trails. The hard work is what the people will need to be involved in doing. The challenges and opportunities are of historical significance and will require the dedication of a lot of people.

What has been done already has the sharp-edged reality of all things which we have seen and experienced; the new is only a figment of our imagination. Carrying out a new plan and acting according to a customary one are things as different as making a road and walking along it. p. 27

The Research & Capabilities and Knowledge & Learning modules work hand in hand to provide the producer firms and Joint Operating Committees with an innovative footing. One that does not replicate errors continuously and learn what was already learned last year, and the year before. Providing a structure that ensures that innovation is the focus and results of the activities that drive not only profitability across the continent, but ensures that costs are managed in a manner that provides consumers with the lowest possible costs of oil and gas exploration and production.

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 American 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.

Our Oil and Gas White Paper, Part XVIII

Research & Capabilities

The Research & Capabilities module enables the producer firm to structure a division of labor between those people that will develop the research and innovations within the producer firm (Research & Capabilities), and those that will implement the innovations within the Joint Operating Committees (Knowledge & Learning). This is one of the major processes of innovation that is carried out in the Preliminary Specification. Another major process is that it provides the innovative oil and gas producer with the ability to move the knowledge and capabilities to where the decision rights are held. This module is at the core of the innovative oil and gas producer. Identifying and supporting the key elements of “what” and “how” innovation requires. The Research & Capabilities module is the focus of the producers competitive advantages of how they are able to develop and deploy their earth science and engineering capabilities. What we’ve learned about capabilities is that they are the “knowledge, skills, experience and ideas.” And that “knowledge begets capabilities, and capabilities begets action.”

There are a variety of interfaces in the Research & Capabilities module that enable and encourage innovation, and develop the capabilities of the producer firm. These capabilities are ultimately captured in the “Dynamic Capabilities Interface” which is the key to both the Research & Capabilities and Knowledge & Learning modules. What the “Dynamic Capabilities Interface” does is capture, document and enable the deployment of the capabilities of the producer firm. These are the knowledge, skills, experience and ideas of the firm. The deployment of these capabilities is by way of their pertinent geological zone, or geographical area, etc. and as a result these capabilities will be populated into the various Joint Operating Committees that meet that criteria in the Knowledge & Learning module. It will be each of the producers within the Joint Operating Committee that will be populating the Knowledge & Learning module in this manner. It is important to note that the information that is documented is the explicit knowledge that has been developed regarding that producers capabilities and innovations.

The far more valuable tacit knowledge can not be captured by any medium. It is resident in the earth science and engineering resources of the producer firms that are referenced and documented through the explicit knowledge of their Research & Capabilities module. Just as our user community has the ability to capture the explicit knowledge of the oil and gas industry. It is their tacit knowledge of how the industry actually operates that will be what they design into the People, Ideas & Objects software during development. And while at the same time they’re building their service provider organizations to deliver that software and their services to the producer firms. It is through the service providers that the tacit knowledge of how the People, Ideas & Objects software and the industry operate that ensures that the producer is dynamic, innovative, accountable and profitable at all times and everywhere on the North American continent.

The objective that we are fulfilling in the Research & Capabilities and Knowledge & Learning module is we are moving the knowledge to where the decision rights are held. The Joint Operating Committee is the operational decision making framework of the industry. With the current method of designating one of the producers in the Joint Operating Committee as the operator there is an attempt to move the decision rights of the Joint Operating Committee to where the knowledge resides. In the Preliminary Specification we have eliminated the concept of operator and replaced it with the pooling concept and therefore we are able to align the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee with the compliance and governance framework of the producer firm. Providing us with a speed, accountability and profitability that is missing and unavailable in the current organizational structures. This therefore will require that we move the knowledge to where the decision rights are held. By doing so we eliminate one point of conflict between the partnership represented in the Joint Operating Committee and the producer who was formerly designated operator.

The Research & Capabilities module of the Preliminary Specification provides the means in which the producer is able to take their inventory of shut-in wells, which are those wells that have been shut-in as a result of their inability to produce a profit. And determine if there are means within the capabilities of the producers earth science and engineering resources to move the property back into profitable production. It is also a testing ground where the focus is on the issues at hand. Where the testing and application of new ideas can be developed and determined if they are successful. Where those successful ideas can be developed fully within the producers earth science and engineering resources capabilities in order to successfully replicate the new methods across the entire producers production profile. Test, prove, develop then deploy. Making mistakes will always occur in an innovative process. The division of labor between the Research & Capabilities and Knowledge & Learning modules ensures that these new procedures are fully proven, documented and deployed successfully. And the producer doesn’t have everyone attempting to be innovative in an environment where things may be learned over and over again at great cost and disruption. It is these processes of innovation that are captured throughout the Preliminary Specification, based on the primary research of those listed in our bibliography, that will ensure that the cost of oil and gas remains cost effective for the consumers.

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 American 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.

Our Oil and Gas White Paper, Part XVII

Accounting Voucher

We now shift our attention to the Accounting Voucher module. The interactions between the Accounting Voucher and the Partnership Accounting modules of the Preliminary Specification are naturally quite significant. Both being accounting modules, it is natural that they have high levels of integration. The Accounting Voucher is unique in that it brings to the producer the ability to design transactions and the Material Balance Report. These are not innovations that the producer will use to become more innovative but are provided to ensure that the innovative producers processes are actively defined and supported through out the People, Ideas & Objects application modules. When the business is a science, as it is in oil and gas, it is in the producers interest to remain open and flexible in both its scientific and business approach. The Accounting Voucher and Partnership Accounting modules provide that organizational flexibility. The manner in which these two modules operate is the Accounting Voucher captures the transactions. Partnership Accounting reports on the transactions. Accounting Vouchers remain open for one accounting period and are subject to the same closing process that is familiar and traditional in the accounting world. A Joint Operating Committee will have many Accounting Vouchers each month.

We’ve noted in the summary of the Partnership Accounting module how the Work Order enabled producers to form and participate in working groups. Providing a flexibility in participating and accounting for these working groups. This flexibility is what is being sought after in the rest of the producer firm and Joint Operating Committee from both of these accounting modules. Elimination of the bureaucratic inertia that impedes these activities today makes these modules critical to a producers innovation as much as the Research & Capabilities or Knowledge & Learning modules do.

The People, Ideas & Objects Accounting Voucher Module will provide the means for the application to “manage the disparate inter-dependencies of modularity theory and Transaction Cost Economics.” That is a summary application of Professor Baldwin's comments and theories. And therefore this Accounting Voucher is one of the key cross roads to all other modules in the People, Ideas & Objects Preliminary Specification. What this means is that it's necessary for people to cease, by way of automation, in just processing and recording transactions and move toward the definition and design of transactions to optimize the business of the producer and Joint Operating Committees performance. Designing transactions is best described in the Preliminary Specification as coordinating the marketplace.

As a result of the pooling concept that is a basic assumption that was developed for People, Ideas & Objects Preliminary Specification. Some of the Accounting Vouchers will be open to charges from multiple producers represented in the Joint Operating Committees that a producer firm is a participant in. The revenue, capital and operations of each of the Joint Operating Committees accounts are open to the direct debit and credit charges of all of the participants in the Joint Operating Committee. The pooling concept has been developed as a replacement to the “operator” designation that currently exists. This is a necessity as a result of the ability for each producer, as a properties designated operator, to have the just-in-time capabilities available for all the properties they operate, demand that they have a surplus capacity, or as we describe them as unused and unusable earth science and engineering capabilities and capacity. The ability to pool these critical resources from participating producers of the Joint Operating Committee enables each producer to use specialization and the division of labor to expand the industries capabilities and throughput capacity and releases these hoarded unused and unusable capabilities. This pooling concept also implies that some producers will provide resources to the property in disproportionate amounts to their working interests. Therefore any over or under participation is equalized monthly through the Work Order system that enables these charges to be made. All producers need to contribute the skills, knowledge, experience and ideas that they have in an innovative oil and gas industry. Therefore each of these producers needs to have the ability to charge their earth science and engineering capabilities to the joint account. Opening a secondary revenue stream for all producers, the deployment of their earth science and engineering capabilities to the Joint Operating Committees they participate in and to other producers who may need their specialized capabilities. All charges are subject to the AFE or Work Orders budget requirements and cost control remains the domain of the producers participating in the Joint Operating Committees.

Professor Dosi (1988) states that profit motivated agents must involve both “the perception of some sort of opportunity and an effective set of incentives.” (p. 1135) Professor Dosi introduces the theory of Schmookler (1966) and asked “are the observed inter-sectoral differences in innovative investment the outcome of different incentive structures, different opportunities or both”? (p. 1135) Schmookler believed in differing degrees of economic activity derived from the same innovate inputs. It is People, Ideas & Objects assertion that the “different incentive structures” and “different opportunities” are facilitated or constrained by the administrative ease in which the producer operates. The same can be stated for the Material Balance Report. If the producer is confident that the deal that was conceived is accurately captured in the Accounting Voucher. And the operation is therefore reporting a substantial, actual profit. Then they know that their innovations are working, their systems are working and the alignment of the legal, financial, operational decision making, cultural, communication, innovation, strategic, compliance and governance frameworks is achieved.

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 American 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.

Our Oil and Gas White Paper, Part XVI

Partnership Accounting

The Partnership Accounting module is a pure “accounting” module from the traditional sense, however, I think there are many attributes and concepts in this module that make it unique and of interest to everyone in the industry. The standard list of output from an accounting system is provided and this is standard fare for any software provider in oil and gas. Our user community will provide the details, data, reporting and process management that they demand from a system. As we see in the Partnership Accounting module the difference in the People, Ideas & Objects software application is substantial in that the Joint Operating Committee is managed as the partnership that it is. Each Joint Operating Committee will be provided with full financial statements, complete with depletion calculations and actual overhead, not estimates, in order to evaluate its performance to ensure that only profitable production is produced everywhere and always. It also recognizes that the costs of the property for each of the producers within a Joint Operating Committee are as unique as the strategies that are employed by those producers.

When we talk about the scope of operations that will be managed under the Partnership Accounting module I would say that it includes everything in upstream oil and gas. Simply the cut-off would be the inlet to any refinery. Let me be more specific about that from the point of view of geography and type of operation managed by the People, Ideas & Objects application. If we look at the North American oil and gas infrastructure we see a variety of oil and gas installations designed to serve both producers and consumers of oil and gas. Wells, gathering systems, gas plants, pipelines, storage facilities etc. At each point along these systems there may be additional deliveries of product, or sales of product or products inventoried. What seems to be an obvious and simple business becomes incredibly complex when it's realized that each asset may be owned by a Joint Operating Committee itself and hold product on behalf of the owners of other Joint Operating Committees. This summary glosses over the incredible complexity of this business when the volume of transactions that occur in these businesses make it an important part of the oil and gas operations.

Critical to controlling this business is the “Material Balance Report” which is a key part of the Partnership Accounting module of the Preliminary Specification. It is the central document that so much of the subsequent process activity is based upon. It acquires from the source documents the volume, contract or spot price, allocations and other data for the Joint Operating Committee and its integrity can not be questioned. If someone is to be charged for storage of butane for example, or if someone is to be charged a marketing fee for delivery of product to a customer. Or simply if a sale of a raw gas stream is deemed to have occurred at the wellhead. The Material Balance Report captures these transactions and initiates the flow of documents that need to be generated. Once this data is captured the automation of these processes can begin. It is the scope of the Partnership Accounting module that captures all of these data and activities for all of these North American facilities as its purpose. Each Material Balance Report must balance, and each reports inputs and outputs balance to other Material Balance Reports. The key to the Material Balance Report is that it provides a means to ensure that the volumes and prices etc. that are reported are factual. Which is the necessary requirement for much of the subsequent process automation, which includes any amendments.

Reviewing the Partnership Accounting module further will provide an understanding for the reasons why we are taking such a broad scope of operations into considerations. It would be an understatement to state that the Material Balance Report has been poorly served by IT. To approach it from a global perspective that includes production operations, accounting and the other areas that depend on this information would be “ideal,” however, the complexity of the business has always been in the way. The budget and engineering of software has never been available to approach the type of problem that this area presents. It exists now with the Preliminary Specification and People, Ideas & Objects. And I think that the Partnership Accounting and Accounting Voucher modules of the Preliminary Specification provides the vision of how this engineering solution solves this problem.

We also introduce the “Work Order” in the Partnership Accounting module. The “Work Order” enables producer firms to participate in informal and ad-hoc working groups to conduct studies and research. These informal groups are able to be established and formed without the traditional accounting nightmare that they’ve normally created, that are an impediment to their formation. An innovative oil and gas industry needs to have these studies and research working groups form and develop on an exponential scale in order to expand the overall science of the industry. The “Work Order” is also an internal cost control mechanism that producers and Joint Operating Committees can rely on to manage the costs, and recovery of those costs, of the producers internal earth science and engineering resources being charged directly to the Joint Operating Committees.

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 American 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.

Our Oil and Gas White Paper, Part XV

Financial Marketplace

With many of the world's financial markets continuing to be illiquid and nervous about certain situations. The capital and debt markets have been very negative towards the oil and gas industry with many of the independents being shut out of those markets. The rise of the Asian Joint Venture, particularly in the LNG business, is a direct result of the inability to raise any money in the traditional capital markets. I would expect to see further fall out as the Euro / Brexit situation which seems to be far from resolved, the U.S. is deeply indebted and Canada recently achieving the most indebted citizens in the world. All of these will be demanding a lot of capital with only the quasi-government groups in Asia holding any significant amount of capital to invest.

The primary feature of the Financial Marketplace module is the recognition that there are competing interests and motivations in the industry in attempting to get things done. With different strategies and priorities being deployed by different partners within a Joint Operating Committee, is it any wonder that the financing of a project can ever fall into place. What the Financial Marketplace module proposes is that instead of the property being funded by several individual producer bankers or investors, each taking a working interest share claim against the firm. The Financial Marketplace module would see one bank fund the property in its entirety on behalf of the partners represented in the Joint Operating Committee. Aligning the bank and investment financing of the dynamic, innovative, accountable and profitable oil and gas producers with the Joint Operating Committees legal, financial, operational decision making, cultural, communication, strategic, innovation, compliance and governance frameworks.

Today that may or may not be an objective or opportunity worth considering by the existing producers. However, I think that the freedom of having the attributes of the Financial Marketplace module still reside within the oil and gas market, and possibly even more as a result of the financial crisis of 2008, the destruction of natural gas prices in 2010, the beginning of the destruction of oil prices in 2016 and the oil and gas investors strike that continues since then. The demand for capital in a capital intensive industry will continue to be strong, and its supply will continue to be tight. There has been a serious cash and working capital crisis in the industry over the past three years as a result of the investors withdrawal. Making the situation the producers face untenable and most certain to lead to further wholesale destruction of all involved.

The future also requires that we’re able to provide for the markets demands for energy, demanding even more capital than before. This therefore demands that new capital structures will be necessary to lead to the overall performance of the producer and the Joint Operating Committees they participate in. We need to get our heads around this energy demand situation and start to deal with a solution. Muddling through just seems to be too much of a risk. Therefore creating a physical financial marketplace based on profitability, performance and throughput is necessary in order to realize this future. And profitability today, every day and everywhere throughout the industry during this time. Oil and gas is a mature industry, expectations that “building balance sheets,” whatever that means, and capabilities has to shift to real, tangible and actual profitability. It is estimated that the capital demands for energy over the next 25 years will require investments of $20 to $40 trillion. Based on today’s producers actions and behaviors we can see that their assumption is that the oil and gas investor will continue to provide those resources. This being a continuation of their currently employed business model that capitalizes every possible cost down to the receptionists Post-it-Notes and subsequently recognizes them over several decades. The producers current business model and assumptions of it continuing are unreasonable. What will be needed will be for the producers to turn their capital over on a basis that is competitive with other industries and what the capital markets demand there. That means they’ll need to recognize their capital costs on a very short time horizon in order to recover that previously invested cash as possibly the only source of cash for future capital investments. Having investors endlessly pay every bill while producers achieve no performance compared to what capital markets provide investors elsewhere, is over. What we seek to prove in the Financial Marketplace module, is that through its use we can provide the innovative oil and gas producer and the Joint Operating Committee with the ability to ensure that their capital structures are more efficient than what can be attained in any other system. My criticisms of the management are that the velocity at which the management operates is too slow, its innovativeness is non-existent, profitability has been non-existent for over four decades and cash is only ever incinerated, never returned. In the physical financial marketplace the pace of activity will need to accelerate in order to address these issues and our future. I think we have identified and addressed the associated issues and opportunities with these changes in the Financial Marketplace module of the Preliminary Specification.

A note about the “Marketplace Interface” that is a critical component of the Resource, Petroleum Lease and Financial Marketplace modules. The “Marketplace Interface” is a virtual representation that the user has of each of the marketplace modules. It uses avatars where firms and producers establish a virtual representation of their firms offerings. This provides a means in which people have to conduct their business virtually as well as through the traditional means. The avatars are supported through the People, Ideas & Objects ERP system that provides them with the ability to conduct any and all operations that they’re able to conduct in any of the Preliminary Specification modules. It is the ultimate collaborative interface. The following video is a demonstration of the technology by the project owners Project Wonderland. (Please review the video below.)

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 American 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.

Our Oil and Gas White Paper, Part XIV

Petroleum Lease Marketplace

The Petroleum Lease Marketplace is I think the most interesting marketplace module as its objective is to replicate virtually what the physical oil and gas marketplace is. Which of course begins with Petroleum Leases. When we’re replicating the physical oil and gas marketplace, the Petroleum Lease is the source document that is the common denominator of all activity and ownership within the industry. This is also one of the critical components of the producers key competitive advantages that include their land and asset base, and their earth science and engineering capabilities. As such it should be considered a producer facing module as its primary role. The Joint Operating Committee will also have a use for the Petroleum Lease Marketplace, however, their land position may be somewhat static for long periods of time. This is the opposite of the Resource Marketplace module which should be considered more of a Joint Operating Committee facing module where the markets resources are acquired. Any physical oil and gas asset will be attached to some lease, agreement, rights or concession granting the holders the rights and privileges of ownership, lease or rental. These are the things that are contained within a marketplace. They are what are purchased and sold, bargained and traded for, they are the things that people are recruited to provide services for. Generally a marketplace is a dynamic and evolving commercially oriented hub of activity. That is what we are replicating in the Petroleum Lease Marketplace.

When we look at the types of work that are carried out in the Petroleum Lease Marketplace we see a large group of administrators working within different areas of a producer firm. Whether it be the Land or Legal department, Production or Exploration Operations staff or Accounting people; all of these groups have an interest in the information, people, assets, documents, processes and functionality contained within the Petroleum Lease Marketplace. The primary concern of the people in these groups is the information and data contained within the module. its accuracy, access, and use by those within their firm, but also within the Joint Operating Committees that their firm have interests in. Some of this data will be similar to the data that is held by their firms partners, and much of this data will have been generated in a cooperative and collaborative manner by those partnerships.

One of the greatest opportunities that we have in developing this system is to address the division of labor and specialization. To take these people’s work and to reorganize it across the industry, so that it is focused on the needs of the producer and Joint Operating Committee and very specialized in terms of the tasks that they conduct. To apply those skills across the entire industry, a geographical region, or some other classification. Which is something that could provide significant increases in oil and gas industry productivity, overall cost savings and value. That is to say that an individual would work at an individual process that is billed to 1,000 Joint Operating Committees that might represent 100 oil and gas producers within a specific region that focuses on Shale and is geographically constrained. Specialization and the division of labor are determined by identifying and filling “gaps.” The natural process of gap filling in today’s business environment is now constrained due to the strict and unchanging structures that are imposed by today’s ERP systems. In order to make changes, to fill gaps, the producers will need the software development capabilities, user community and service providers to make the changes in the software first, then the changes in the organization can follow. These are what People, Ideas & Objects Preliminary Specification provide.

The types of documents and the associated processes that are managed within the Petroleum Lease Marketplace are somewhat self-evident. (Recall we are including Land, Legal, Production Admin, Exploration Admin, Accounting and Others in the classifications.) Most of them are created in collaboration with the participants of the Joint Operating Committee and include: Authority for Expenditures (AFE"s), Capital Budgeting (Firm and JOC), Construction Ownership and Operating Agreements, Mail Ballots, Daily Drilling Reports, management of the lease bidding process, Lease Bonus, Lease Rental, Lease Taxes, Areas of Mutual Interest are some of the forms, processes and attributes of the Petroleum Lease Marketplace module. A more detailed specification will be the result of our user communities contribution and commitments.

In Professor Giovanni Dosi’s paper “Sources, Procedures and Microeconomic Effects of Innovation” he notes the following three factors involved in the development of innovation.

The search, development and adoption of new processes and products in market economies are the outcome of the interaction between:

• Capabilities and stimuli generated with each firm and within the industry in which they compete. 

• Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers etc. 

• Additional issues include the conditions controlling occupational and geographical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulation, tax codes, patent and trademark laws and public procurement.) 

The innovative oil and gas producer relies on their competitive advantages of their land and asset base, and their earth science and engineering capabilities. The Petroleum Lease Marketplace is the module that provides the producer and Joint Operating Committee with the tools to build and manage their land and asset base. But there’s more, using the “Marketplace Interface” and the service providers that support the innovative producers and Joint Operating Committees. The Petroleum Lease Marketplace provides the producer with the competitive advantages that are necessary to compete in the 21st century.

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 American 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.