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

Picking up where we left on Friday. I noted that on a number of the Canadian producers 3rd quarter financial statements that they’ve incurred the dreaded ceiling test write downs. It appears natural gas prices in some areas have been forecast to decline on the horizon. Precipitating the ceiling test write downs of some of the producers property, plant and equipment. Although it seems that we were just there in 2016 when most producers had to record write downs of their assets as a result of the decline in commodity prices. It seems the constant and chronic bloating of the balance sheets demands that we need to start this process once again. How widespread these writedowns will be is unknown. What we do know is that there is further deterioration in the long term natural gas prices as a result of the chronic oversupply and overproduction that has gone on unchallenged by those bureaucrats in the producers firms since at least 2010. If we expect to see further deterioration of the natural gas markets then there will be more than just Chesapeake questioning their viability as a going concern.

Some are calling shale a failure! That’s all, no solutions, no arguments or alternative points of view expressed by anyone in the industry. What better way to exit the disaster than to have it argued that “shale is a failure” and you’re therefore justified in seeking more prosperous industries outside of energy. After all as “one individual bureaucrat you weren’t responsible, and the attempts that you made to clear it up were not listened too.” We’ll have more to say about the beginning of the mass exit of the C suite in subsequent posts, today I want to focus on the viability of shale.

If we consider that oil and gas is a business that seeks to cut costs everywhere and always to ensure the consumer pays the lowest costs for their energy. That commodity prices have risen substantially from the prior century, multi-lateral fracing and other service industry innovations having unleashed untold reserves. That the costs have been wrung out of the system to the extent that they can and are still unable to provide a commercial operation in any shale basin. Then yes, most definitely, shale is a failure. What producers fail to consider is the value proposition that is provided to the energy consumer. They believe that consumers are paying full value for their oil and gas and as a result see no justification for analyzing the situation as it stands today. They’ll just use this time to make their exit from the industry in as quiet a fashion as is possible.

However, People, Ideas & Objects believe it is this lack of responsible actors that makes up the industry's difficulties and the conclusion that shale is a failure in oil and gas today. The consumers value proposition from oil and gas is substantial. Each barrel of oil equivalent provides them with 23,200 man hours of mechanical leverage. Enabling every human to expand their physical efforts by 87 times. For $60 U.S. / bbl that’s not a bad deal. What producers think is, if the price should increase too high above $60 then they’ll put themselves out of business with renewables coming in to take away market share. “If that should be the case then most certainly we should sell unprofitably everywhere and forever,” I assume is their thinking. Nonetheless, this is the best example that we have of the scope and scale of thinking in the industry.

What we believe is that producers should undertake an evaluation of the role they take in society of providing the energy for the advanced methods of organization and capabilities we as a society have obtained and currently enjoy. Without energy our standard of living will drop precipitously. How does the viability of shale’s commercial capability become a factor in this discussion? Energy is as vital a resource to the world as is the oxygen and water that we consume each day. If we exist in a market economy then we should listen to what the markets have to say about oil and gas commodities. Markets provide one thing and only one thing, a price. If a producer, whether shale or conventionally based, can make a profit at the price the market is telling them, they should produce. How does the “shale is a failure” come into question here? The only question is, does the property produce a profit, based on a reasonable accounting, and if so then it should produce? There is no magic solution to providing the market with some technical breakthrough that will drop the cost below what the consumers expect to pay. Consumers will always expect to pay the lowest possible cost. And I believe they will also pay the cost, which includes an element of real profit for the industry, and all of those who are represented in that industry, if the alternative is to give up in a comprehensive fashion their advanced standard of living.

Instead we are treated to this ludicrous and elementary level of discussion being undertaken by the producer bureaucrats. Which doesn’t surprise me. It may be the first indication that I can say that reflects some level of thinking by the producers bureaucrats since the collapse of natural gas prices in 2010. I guess the bigger question has to be is why are we waiting for those that are responsible for this mess, and its continued deterioration from chronic inaction, to do something about this? Theirs is not the thinking that is going to provide us with a solution or direction out of this. The difficulties that we’ll face if we accept their willing acceptance of their failure, is that our way of life will fail as well.

We will document in tomorrow's post the volume of people who are exiting the industry in the past month. If producer bureaucrats are shrugging their shoulders, declaring their companies are not “going concerns,” walking away and accepting that they’ve failed, what is it that we’re waiting for? We need to be building the Preliminary Specification in order to replace this serious threat to our societal way of life. Or, alternatively the little white men in the little white suites can come and take me away!

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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 XXXV

In the producers third quarter reports we see the continuation of the issues that are detailed in our white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” There is much activity in the marketplace as these issues become more mature with producers reporting a number of actions in an attempt to mitigate them. I feel their most important issue is cash and working capital. Nothing has been done to stop the flow of cash and working capital from diminishing in this industry. Under their current business model there is nothing that will stop these resources flowing out of the industry. It is the producers capitalization policies that create this situation. First, all the activities in the field, other than operations and royalties, are capitalized. Overhead and interest are also capitalized at material percentages. I believe the industry average maybe as high as 85% however there is no verifiable proof of any of these claims. Just as there is no one who can provide verifiable proof otherwise. The last element of capitalization that is draining cash is all of these capital costs are allocated to each molecule in the reserve base and only those reserves produced in the current period will have their allocated capital costs depleted on the income statement. This is the case whether the reserves will be produced this month, this year, this decade or century.

The effect of these capitalization policies is that it allows the producers to build the handsome balance sheets their so proud of. When all you do is spend, and then recognize only a portion of that spending as a cost in the current period you’ll always look profitable, even today, but the cash is being left in the ground for the month, year, decade or century to pass before that cash is returned to the producers. The capitalization of overhead is done too, I think, hide their size and uncontrollable, fixed nature. Many people in the industry believe that overhead costs may be as little as 4.94% of revenues. as our sample of 22 producers report. If this was the case why would any cost cutting layoffs ever occur? A 10% percent staff reduction would create a 0.5% reduction in overhead costs. These don’t account for the “billions” in cost savings that are alleged. And as we noted in the white paper, taking a view of all the buildings in the downtown cores of Calgary, Dallas, Houston, and Oklahoma city would conclude, understanding that these strata of people on those floors are paid handsomely, that does not total 4.94% of the revenues of the industry. Our estimate is the well rounded number of 20%.

What we have is all of these costs, which are the majority of the costs of the producer firms, being expended each month. With smaller portions of those costs being returned by way of depletion. Therefore we can conclude as a result of these accounting methods, the full cost of capital is not being recognized in the pricing of the oil and gas commodity products that are sold to the consumer. Most of these costs are being deferred, and continually so, to the future. Leaving the pricing of the commodities deficient in recognizing the full cost of exploration and production. They do cover the royalty and operations but the majority of the capital and overhead are not cost into the commodity prices that are realized by the producers. Therefore the producers are not generating a “float” of capital, overhead and interest costs that are returned to them in the form of cash on a 90 day basis from the prices of their sold commodities. Therefore they consume cash constantly and in spectacular fashion. Investors finally realized this and stopped enabling this foolishness by replenishing the cash balances of these bureaucrats each year. The scope of this cash consumption is not as severe as it was in the past, however, it will still lead to the demise of the producers. For the nine months ended September 30, 2019 our sample of 22 producers, invested cash flow of $67.9 billion and depletion of $39.8 billion, a $28.1 billion cash drain for the nine months ended September 30, 2019. It is also notable that these producers have $520.4 billion in property, plant and equipment requiring on average 8.3 dedicated years in which to eliminate. Dedicated meaning no additional capital expenditures would be spent for 8 years in order to fully realize the amounts that are currently recorded. At the current pace they will take decades to actually remove the current balances due to the additions under the current business model. This is the justification for the cultural propensity to “build the balance sheet.” Think of this balance as what it is, a $520.4 billion or one half of a trillion dollars of cash sunk in the ground by these 22 producers. This at a time when producers starve for cash yet report great profitability. Profits, profits everywhere, but not a nickel to spend.

Certainly there is cash flow, however over the decades of this type of business model, value has steadily eroded out of the industry. Allowing the built up value that was in the industry, and the subsequent investments made by investors to seep out of the industry into the hands of the energy consumer. Which equals the amounts recorded as property, plant and equipment on the producers balance sheets. Hence for the producers to generate adequate cash flows to cover the costs of this monthly claim on cash eventually diminishes. Cash flows have become proportionally smaller and cover less of these costs today than in prior years. There is less residual value in the industry generating the value needed to sustain itself. As a result, it begins to produce less to the point, where I think we are today, that it begins the process of value destruction. Anybody want to propose a solution to this situation? How about a new business model built on resolving these systemic, cultural issues such as the Preliminary Specification does.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Well That Was Quick!

I wonder what the markets will have in store for us today. We know two things that we may not have fully appreciated prior to this past weekend. The first is that, for some reason, oil prices did behave in the manner that we would have expected a commodity that’s subject to price maker characteristics. The second thing we now know is that Vice-President Joe Biden was able to deal forcefully with the gangland activity of local bully “Corn-Pop.” Therefore maybe we know a third thing as well, that both of these facts are not viable and therefore true. The removal of approximately 5 mm boe / day should have been made up with alternatives that would have kept the price at the same value. This assumes the producer bureaucrats price taker characteristics were valid. But their not, it was the story from Joe Biden about Corn-Pop that wasn’t viable or true.

We should note too the behaviour of the oil and gas producers stocks on Monday. Many skyrocketed on the basis of greater days to come. Then the news on Tuesday that things are not as bad as they appeared and half of the suspended production was back on stream, with the remainder being replaced in the next few weeks. Down goes the price of oil and the prices of the shares of the producers. It used to be, in a land far, far away that management provided greater generation of value than the increases / decreases in the underlying commodities. Otherwise why would anyone buy the producers when they can just participate in the commodity markets directly. The takeaway that we should all have learned this weekend is oil and natural gas are subject to price maker characteristics. Small percentage decreases in supply had a disproportionate effect on the price of the commodity. Only the Preliminary Specification with it’s price maker strategy has implemented this logic in our decentralized production model. You can read about these points and why their needed in our white paper, “Profitable, North American Energy Independence - Through the Commercialization of Shale.”

I started mainlining Information Technology back in the 1960’s. My dad worked for Shell and would tell me about the computer that they were installing that took up the whole floor of the building. That was it for me. My pursuit of access was never satisfied until the always on broadband days of the mid 1990’s. That’s when I knew I became dangerous. Two of my favorites were of course Steve Jobs. I am the self declared Apple fan boy # 1. And Larry Ellison. The latter made his keynote address at Oracle OpenWorld in SanFrancisco on Sunday. Oracle’s technology is what mitigates the majority of the technical risk that we’re faced with in delivering the Preliminary Specification. This keynote was not unlike any of the past decade. It had many new ways in which Oracle was configuring their products and making them available. Their enhancements to their products have always been state of the art as well.

The theme of this years conference and the title of the keynote is “Generation 2 Cloud Infrastructure.” The first generation of cloud value is the shared cost that cloud infrastructure provides. Autonomy is the second generation of cloud value being delivered today. Autonomy, is where the elimination of human error comes into play. Human error in terms of configuration issues, security and other common problems plaguing IT. Autonomous Oracle Database will self configure and as a result, Oracle guarantees there will be no loss of data or damage to your organization. Not what AWS does which uses the standard “you configured it, you broke it, its your’s” logic.

Autonomy is now extended to the whole stack as Oracle Linux is autonomous. With the ability to conduct patching while its running. Which includes the full population of all instances. None are missed. Continued shared and dedicated infrastructure available for the Oracle Autonomous Database. One database for all the organizations needs, unlike Amazon configuring different databases for different purposes. A truly untenable exercise. Oracle’s approach here will demand far less costs than Amazon’s and the simplicity of one solution is far superior. Some other news that is of interest to larger producers is that the full configuration of Oracle Cloud Infrastructure software can be brought in house to those that have the wherewithal to manage it. You can therefore have your portions of the People, Ideas & Objects applications, Oracle applications and hardware operated by yourselves and interact with our service providers and user community from there. Oracle had previously configured this state of the art product offering as cloud only. Now you can have the full autonomous database and Linux operational in-house. But they saved the best news for me.

Our user community members and their associated service providers are provided with an IT infrastructure that are necessary for them to do their jobs. This includes the GSuite Enterprise, Google Voice, an account and a monthly allowance for Google Cloud Identity Premium. These are what are necessary to collaborate and interact with the user community and the larger oil and gas industry. None of these have changed as of today. What has changed is we were providing access and an allowance as well to an Oracle account that provides the user community member with an understanding of those technologies and their use. Although this has not changed, it is now provided to everyone by Oracle free of charge. I highly recommend those who are contemplating and are in the process of preparing their application to the user community to acquire one of these accounts.

The always free Oracle Cloud consists of the following configuration.

• Autonomous Database
• 2 x Databases @ 20GB each
• Compute
• 2 x VM’s @ 1GB memory each
• Storage
• 100 GB Block, 10 GB Object, 10Gb Archive
• Networking / Load Balancing 
• 10 MBS LB, 10 TB Outbound data transfer
• Monitoring / Notifications
• 500M Metrics Ingestion, 1B Metrics Retrieval, 1M Notifications, IK emails.

• Oracle Autonomous Database
• Each Database gets 1 OCPU and 20GB Storage
• Free Tools for Application Development
• APEX for low-code, web-based app development
• SQL Developer Web for Database development
• SQL Notebooks for Machine Learning
• Automatic REST for easy access and publishing of DB data
• Drivers for all popular programming languages 

Take it for a spin.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Deck Chairs on the Titanic

Well there you have it, what we thought would never happen, action from the oil and gas bureaucrats! And not just some oil and gas producers, all the big guys including Chevron, ConocoPhillips, ExxonMobil, Hess, Marathon, Noble Energy, Pioneer, Repsol, Shell and Equinor, formerly known as Statoil. They’ve formed under the Offshore Operators Committee (OOC) which is a not-for-profit organization that has established the Oil & Gas Blockchain Consortium. Which was designed to, from their website…

Blockchain technology is a catalyst for reimagining the way we do business and this consortium represents a collaborative effort to explore the technology’s potential and leverage learning to drive industry adoption.

World Oil announced that the Oil & Gas Blockchain Consortium has selected its first vendor to implement blockchain in the Bakken shale on a pilot basis. Data Gumbo is a startup initiated by “major global energy companies, including Equinor’s venture subsidiary Equinor Technology Fund and Saudi Aramco Energy Ventures.” Data Gumbo being a startup has secured $9.3 million, terms of their contract with the Oil & Gas Blockchain Consortium were not released. My one recommendation to Andrew Bruce, CEO of Data Gumbo is to be sure to have the consortium, or the producers themselves, pay up front. Please review why this is necessary in this blogs September 4, 2019 post and why we demand such notions in our Revenue Model. 

Where do I begin in detailing the issues that I have with this initiative. Although Data Gumbo suggest that producers could save 30% of their costs, I’m assuming that’s only in the administration of water hauling, etc. Which in comparison to the untold costs of this initiative to date, may not be material, I don’t know. To me it sounds as if the producers are attempting to retrofit a new technology into their existing business. Did their Artificial Intelligence initiatives not work out? Which shows a systemic behavior of these bureaucrats, waving around the latest and greatest technology to show that they’re “on the edge.” Another behavior they’re famous for is to pass a 200 page Service Level Agreement (SLA) onto Data Gumbo that details all the ways in which they’ll be held responsible and accountable for any failure. That indeed, expecting any support or participation from any of these producers will be a result of Data Gumbo’s fantastic, determined and skilled efforts at herding cats. The SLA will define that all decisions be made by the producers, all the responsibility and accountability with Data Gumbo, none of the authority and of course there will be no entitlement to what it is Data Gumbo has or will have done. What I mean by that is the Service Level Agreement will dictate that the Intellectual Property for this initiative will reside with the Offshore Operators Committee and once Data Gumbo have the solution implementable, then their competitors will be fully brought up to speed on how to implement the technology just as effectively as Data Gumbo. Producers may even sponsor Data Gumbo’s employees to launch their own enterprise in direct price competition.

On to the other Issues I see as a result of this.

• People, Ideas & Objects stops this foolish game by having the producers paying, in the form of the coin holders levy, prior to the solution being built. Motivating them to participate and collaborate with our user community, but most importantly to act and take responsibility for the success of the Preliminary Specifications development. Writing agreements to ensure that the responsible culprits are identified prior to signing is not effective when seeking successful initiatives.
• When Encana, which is the only specific case we’ve discussed on our blog, doesn’t pay their bills to those who’ve provided services in prior periods. Doing this so that they can manipulate their stock and then shred the share certificates (stock buy-backs), soon the oil and gas industry will have the poor credit and reputation that demands they pay everyone in advance. This will be the long term consequences of not paying the bills!
• It’s 2019, using a methodology of establishing committees and initiatives within the industry seems so 1965 to me. How soon will this be available, what about the other 99.99% of the software and services required for administration and accounting? Who’s leading this initiative? What’s the vision?
• Who’s going to participate in this technology once it’s proven? One of the key advantages of using People, Ideas & Objects is that we’re agnostic, just as Data Gumbo claims. We are providing a standardized and objective software and service based solution. Exxon could use the solution but ours will be built collaboratively by our user community. Not Exxon, Chevron or Shell et al which may seem agnostic to Data Gumbo but I wonder how the intermediates feel about their definition of agnostic?
• Ownership of the Intellectual Property is critical in a development such as ours. Our user community are in complete control of all of the IP and benefit by leveraging it in their own service provider organizations that will have earned exclusive licenses that ensure they are able to focus on their key competitive advantages. Not the producers ability to abuse the price of their service.
• I can’t discern, outside of the fact that this is a technological solution, if Data Gumbo et al is a practical or a political solution? It certainly isn’t a business solution, one that only defers 30% of the administrative costs of water hauling in an industry facing existential threats.
• Again what is the vision, how will this technology drive the industry forward in the most dynamic, innovative, accountable and profitable manner. Which is of course People, Ideas & Objects claim to fame through the use of the Joint Operating Committee, three marketplace modules and a comprehensive business model that defines and supports an innovative and profitable producer and industry based organizations.. 
• Nonetheless it does show the industry is “active,” more so for the sake of being seen to be active, and on the bleeding edge of technology. They’ll ultimately get a solution for their invested $9.3 million. What I personally think is that we have typically large companies with big existential issues applying their small minds somewhat in the necessary general direction. 

People, Ideas & Objects addresses the flow of ownership of Intellectual Property and the subsequent flow of cash. If you don’t address these aspects then the producers will assume that everything defaults to them. In the 21st century, people are not motivated by work for the sake of work. They need to know they’re successfully contributing to something much larger than themselves, but also earning something exceptional for themselves. After all, it won’t be long before anyone can earn $15 / hr at McDonalds. People, Ideas & Objects provide our user community and their service provider organizations with that role and ability to remake the industry, and realize some sustainable financial benefit in the long run. If producers believe that resolving an existential threat with $9.3 million in a circa 1965 committee structure, motivating people by the altruistic joy of work, is that what’s expected to be the solution here? To me it’s more representative of how misguided and confused the management of the oil and gas industry is.

Producers can coble this and the other 2,999 software products together from different vendors to make one cohesive, functioning application. Each producer spending the same time, energy, expertise and money that will be consumed by coordinating these 2,999 software and service providers. To ensure that each of their administrative and accounting overhead costs remain unshared and unshareable within each silo’d producer. As we indicated in our White Paper this is a secondary reason for the chronic unprofitability that is achieved by the industry. Speaking of the White Paper we have a section entitled “A History of ERP Systems Development and Integration in Oil and Gas.” Which documents why there is not a coordinated, integrated product or products on offer to the producers. Generally you get what you pay for. It’s here that producers have paid for mostly nothing and have the market leader P2 Systems issuing their own publication that describes their offering. Recall in our White Paper P2 Systems purchased Qbyte from IBM after it was unable to source any financial support from industry for a much needed rewrite of the application. Review of P2’s document shows how well managed the clerical aspects of oil and gas accounting are handled.

Producers can’t, won’t and will not ever provide People, Ideas & Objects with any resources for the development of the Preliminary Specification. Their approach must continue with misdirection and poor issue identification that has brought them to the point of their demise. Our attempts to work with them for what is twenty eight years at the beginning of 2019, has now diverted our approach to resolving these issues without them. Their future is terminal. If that isn’t clear, or if you think that they’ll rally from here, all I can say is just wait. If a $9.3 million blockchain initiative for water hauling is the first tangible signs of action from the 2010 collapse of natural gas prices, just wait, you’ll need to be patient. In the meantime you may enjoy our White Paper that details our perspective. How the hollowing out of value has been done quietly by these producers bureaucrats over these past four decades.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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 Plan for the Next Six Months

We’ve settled on a plan for the next six months here at People, Ideas & Objects. It’s pretty simple and involves the desperate financial conditions and issues in the oil and gas marketplace developing further. What I mean by that is there is some optimism back in the producers as the vacations give way for another year of meeting new targets and objectives. Some of this optimism may have seen small amounts of money move back into the stock market which gives the appearance of support to the industry. The issues producers have created for themselves have not disappeared however. Overproduction and oversupply are maybe more severe at this time of the year than at any other point in the past decade. Global inventories of oil are a looming catastrophe as is the natural gas business in North America, which has now destroyed the LNG business by oversupplying natural gas markets globally. What we should look for during these next six months is the shock and surprised expressions painted on the faces of the producer bureaucrats. After ten years of the same story over and over and over and over again, it’s remarkable how well their acting skills have improved.

Speaking of which we should notice how these producers have avoided, once again, any accountability for the situation they’re in. We never hear anything from any of them anymore. They too seem to be getting tired of performing the same script each night. That they had the ability to deal with these issues by implementing the Preliminary Specification as early as 2013 is not what they want to discuss. It’s a topic that I think they can’t engage in without looking bad no matter how the conversation ends. What are you doing to deal with the issues if you’re not adopting the Preliminary Specification? Nothing. What systems are you using to automate and accelerate your ERP performance just as other industries are doing? Nothing. Who are you engaging to assist you in any of these endeavours? Nobody. And so on and so forth. If they could just engage in conversation at that level they’d be happy, but inevitably the difficult questions will come about. What organizational construct will you use to enhance the performance of the industry now that the Preliminary Specification has the Joint Operating Committee as theirs? Don’t know. What method will be used by the industry in order to ensure that the price maker strategy is implemented without violating any of People, Ideas & Objects Intellectual Property? We haven’t thought about it. I don’t know if it’s me that enjoys pounding away at the same message all the time or if it’s the bureaucrats who like to cower in the corner.

The industry has stepped off the cliff. And like the Coyote is at the beginning of realizing the full scope of his dilemma. People, Ideas & Objects are here, and they are there. Anyone that tries to help them now will fail in doing so. It’s time to pick up and start rebuilding the industry in the vision of the Preliminary Specification. We are not exiting the market as we believe we have the solution that makes the difference in oil and gas. We have been patient in our long history of dealing with the producers and we will continue to be patient over the next six months while the last few pieces fall into place. If we look at the five stages of grief we are at the beginning. Denial is the first stage which will soon give way to the second stage of anger. This will be when the bureaucrats start shuffling in an orderly fashion out the back door where no one will see them. Which leads to the third phase, a period of bargaining, does that include People, Ideas & Objects for the development of the Preliminary Specification? I don’t know. We will however be patient for these next six months. Until then we have much to do on our Initial Exchange Offering which is difficult and risky. We’ve chosen to pursue that method of financing due to the fact that we’ve not given up on the industry, only on the existing producers. We have much to do in rebuilding the profitable oil and gas 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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Twitter thread regarding Encana Corporation

I am finding that Twitter is satisfying my need to communicate what it is that I want to say. The need to write a complete blog post about the point or concern is not necessary now that the White Paper has been published. It is therefore best to find the majority of our activity on that medium for the time being. The web address is twitter.com/piobiz

Last night I posted two tweet threads, copied below, regarding news from Encana. It is these activities in oil and gas that I find that are not acceptable to me and if they were then it might also be considered acceptable that Encana should not have to pay their staff on a timely basis. After all what's the difference between the staff and the people in the field?

I'll be posting these twitter threads to this post at or around the same time they are posted to twitter. I'll also be posting some time this weekend about our upcoming plans for the next six months.

Twitter thread

Today Encana Corporation announced the completion of their previously announced normal course issuer bid. This information is fascinating and provides a clear look at the objectives and strategies at play in the oil and gas industry. Based on the second quarter report we know…

In the first half of 2019 the company recorded the acquisition of 186.9 million shares for $1.487 billion. The announcement was these programs are now complete and its unknown how many shares were acquired and dollars spent in total. Other interesting facts from f/s...

As of 6/30/19 s/t liabilities = $2.351 B up 21% from 12/31/18, capital expenditures of $1.486 B and annualized cash flow of $2.87 B. All cash flow went to stock purchase or capital expenditures. It was so good of the service industry to provide Encana with the use of their money.

I’ve never been a fan of stock buybacks. More value would have been provided to Encana if they paid down their current liabilities. Spending $1.487 billion on share certificates that will, or have been run through the shredder does little for anyone. Why not just burn the cash?

Some may suggest buying the stock at today’s price of $4.45 vs. $94.35 in May 2008 is smart. However I say Encana’s a lost cause and there is no reason the service industry has to go without being paid. Producers need to understand there’s a depression going on in the industry…

One in which they’re responsible for. Shredding share certificates instead of paying off those who have depended on producers and operated in good faith, who have carried the producer financially through these difficult times deserve better treatment.

Producers need to start thinking outside their own skin. Think of what their doing as a business, not an engineering exercise or stock manipulation. The price of Encana’s shares in 2019 dropped from $5.78 at 12/31/18 to $4.45 today. I wonder what it’ll be in six months?

There is a better way. The Preliminary Specification provides the industry with the most profitable means of oil and gas operations, everywhere and always. Producers could even achieve what would be called responsible corporate citizens. http://short-links.people-ideas-objects.com/WhitePaperDL

If we recall back in one of those five good years of the past thirty four. When members of the service industry were busy working as hard as they could. Companies such as @encana accused them of being lazy and greedy for billing what the market would bare…

That same disrespect and pious attitude is evident in @encana unwillingness to pay the service industry for the work they’ve done, and are rightfully owed. Buying stock to shred the certificates is more important than paying the people who are suffering the most in this downturn?

With $1.486 billion spent on 6 months capital expenditures, the $2.35 billion owed in s/t liabilities equals one full year of capital expenditures. With annualized cash flow of $2.87 billion it also represents what cash will be generated by @encana in the course of one year.

@encana maintains a substantial working capital deficiency, the service industry will / might / won’t see that money in a future far, far from here. Next upswing these drillers and fracers, if they survive, should best deal with reputable firms that honour their commitments.

The sad part of this transaction is that @encana would have been better off on a pro-forma basis to have used that cash to pay off their current liabilities. Their balance sheet would have been healthier than it is today, post normal course issuer bid.

After all it’s about “building balance sheets,” we were told. Any comments @encana, or how about all the other producers who have done the same. Don’t worry, we’ll all believe you next time you blame your despicable management on the next scapegoat.

Profitable oil and gas operations can be conducted through our Preliminary Specification. Leaving this history behind. http://short-links.people-ideas-objects.com/WhitePaperDL

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

Response to our White Paper

With the current meltdown in oil and gas well established. The question I’d ask is how long will the bureaucrats responsible for this mess continue in their current director, C suite and managerial positions. The trade-off they need to manage is the transition to their new positions in new industries, denoting a transition in which their income from oil and gas declines, before their new industry cash flow kicks in. The key tradeoff is the need to disappear before anyone notices that they’re the ones responsible for the damage. In the rush to the exits, people will only remember who was the first and who was the last to disappear. By making haste at the right time they can also make it sound like they left when things were still profitable! That way they’re also able to invoke the classic cultural instinct of blaming everyone else.

The issues the Preliminary Specification resolves are well identified in oil and gas today. The full scope and scale of this issue needs to be better appreciated by the market. They see that the Preliminary Specification is a solution, an expensive solution. And would think that there has to be a less expensive solution. Which is possible but highly unlikely. An alternative would take a long time to figure out for anyone to develop. They’ll also need to start fresh and avoid my Intellectual Property which will be the first two of many roadblocks that will need to be overcome. Whereas I had to resolve the producer and industry configuration to meet the pure interpretation of the oil and gas industry, any new ideas are going to have to begin on the basis of redefining a new way of operating the industry outside of what is done today. The Preliminary Specification took me ten years of research after I determined that the Joint Operating Committee was the key organizational construct of the dynamic, innovative, accountable and profitable oil and gas producer. That makes the possible solution that industry is looking for, the one they can have for $5, the most expensive due to the losses the industry will incur from now until the decades in which, whatever it is, is available. The culture of the industry as we document in the White Paper doesn’t know what it is they’re doing wrong. Why these issues have manifest themselves in this way. It’s been four decades of waste so far, how many more will this go on for? I can assure you muddling through isn’t going to work.

The question as to who will do this work will also need to be addressed. This is difficult work that requires someone to test and rethink the various ways of doing things a thousand times before a workable model comes about. This can only be conducted based on the primary research that has been done by others. Finding these sources is a difficult process in itself. Although I only used about 25 papers as referenced in the Preliminary Specification I had to review in excess of 300. I’m only now recovering to the point where the sight of an academic paper doesn’t make me nauseous. Or maybe industry might find that striking a committee of all stakeholders would be the best way to proceed. And as I would say there is no guarantee that any success will come about from the process that they undertake. There’s also the start of this whole mess with me and the industry. When I began I offered to conduct the research of using the Joint Operating Committee in August 2003. I was told to take a hike as the industry didn’t hire small research firms. Therefore maybe McKinsey or Cambridge Energy Research could define what it is the industry could do. They’re big research firms. My point is, if you want to have an alternative to the Preliminary Specification sometime later this century now is a good time to start making your first attempt.

If you can speculate on a certain scenario coming about. If you work on that scenarios solution as hard as you can for as long as you can. I believe the pricing of that solution is based on the value that the solution brings to the market when that scenario materializes. In this instance the Preliminary Specification is one of the more cost effective investments the industry would have ever been provided with. Over the next 25 years our value proposition is $25.7 to $45.7 trillion, making it a good investment. What future is being provided through the muddle along strategy that’s in place today?

So yes there’s always alternatives. And the IEO we are pursuing may not come about, I can live with that, but it's difficult to suggest what things will be like three years from now. Maybe this will be another false start for People, Ideas & Objects, we don’t know. What I do know is there’ll be no cash anywhere in the industry very soon, as things just never seem to get better in this environment. An environment that has existed for four decades and has only come to be difficult as a result of investors becoming wise to what was happening with their money. A company without cash is not a company. I wonder what an industry without cash becomes.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

You Can't Buy Time, Part V

I’ve stumbled upon a graph that I’d never seen before. It was sourced from Lev Borodovsky who publishes the DailyShotWSJ.com, and can be reached on Twitter @SoberLook. As far as I can tell it has most of its input from the bureaucrats who operate today’s oil and gas producers. I can state this due to its representation of their view of the world. A world view that is skewed culturally as a result of four decades of specious accounting that People, Ideas & Objects document in our white paper “Profitable, Energy Independence in North America -- Through the Commercialization of Shale.” When I first saw this chart it confused me until I could figure out that it was representing the status quo perception of costs and how to handle the management of them in oil and gas.

Looking at this from the perception of the producer bureaucrats. Their total costs of each barrel of oil produced in the various shale formations is in the range of $48 to $54. The operating and royalty cost of each barrel varies between $28 and $37. I would point out the $18 to $23 in capital costs are based on an allocation of all of the capital costs across the entire reserves of the property. In our white paper we’ve argued that this allocation is unreasonable in a capital market where the demands for the performance of capital are far greater than what can be achieved when a producer is cycling their cash through their investments in a manner that retrieves their cash over several decades or more. As an alternative, People, Ideas & Objects recommend in our Preliminary Specification that the producer retire all of their capital costs within the first 30 months of the properties life to provide for the reuse of the previously invested cash. Providing them with the means to meet the demands of their future capital costs, shareholder dividends and bank debt repayments, and better match the rapid decline rates experienced in shale. This can only be done if the producer is selling their commodities at a price that is above their break even point which considers an appropriate accounting of the costs of operations and capital.

Note this graph reflects that Well Break Even and Shut-in prices denote that at any point, and as long as the commodity price covered the operating costs, the property would continue to produce regardless of the impact on capital costs. If a dollar of capital costs was being returned, or one dollar above the shut-in price, that would enable the production of the property to continue. Only at the point in time where the commodity price dropped below the operating costs would the producer allegedly shut-in their production. This is a fundamental misinterpretation of the term break even, it is the reason the industry is in the difficulty that it’s in and why the producers have continued to lose money for the past four decades. Break even is not what is being interpreted here. What in fact the producer is assuming is that as long as there is cash flow above the operating costs then they’re making money and will continue to produce. What they’re stating is acceptable is they may not be breaking even, but they’re generating cash flow.

What People, Ideas & Objects provide in our Preliminary Specification, if we could assume the accuracy of this graphs numbers, is the point at which the property would be shut-in would be at the breakeven point and below. The reason for this being the production discipline gained through knowing that producing any property unprofitably only dilutes the producers corporate profits. Producing below the breakeven point is the point where unprofitability begins. Producing below the breakeven point for one producer, in an industry who’s commodities are price makers, will have the effect where the price of the commodities will be dropped below the breakeven price for all producers. When all producers continue to produce below the breakeven price for four decades you have an exhaustion of the value from the industry on an annual and wholesale basis. Times were only “good” when investors were willing.

People in other industries operate with the appropriate level of production discipline. Producing only above the breakeven point. They are considered businesses and do not have the luxury of new investors at the ready. They don’t immediately shut-in what is unprofitable when the conditions in the next month or two are going to change positively. That is unnecessary. All industries will wait a month or two to see if conditions change before they’re forced to shut-in production. If conditions don’t turn around then it’s time to make the changes to ensure that losses don’t pile up and, in this case, the commodity markets are permanently damaged (from 6 to 1 to 20 to 1) such as natural gas has been and oil is well on its way to becoming. The same situation would occur with an upswing in conditions, a producer would wait to ensure that the revised situation held before moving too quickly to return to production.

One of the consequences of using break even analysis such as we’ve done here reflects the Keystone Cops mentality that is on constant display in the industry. Today the entire industry is focused on shale as the only aspect of interest anywhere. Conventional just doesn’t excite anyone. Before it was heavy oil sands projects, Steam Assisted Gravity Drainage, before that there were half a dozen trends which saw the producer bureaucrats scurrying in an animated fashion to reconfigure themselves for that new “future of the industry.” Remember oil and gas is not a business. Using break even analysis today would reflect that the most profitable place to be would be in conventional oil and gas properties where the capital costs have been captured and returned, the breakeven costs are therefore very low and hence continue to be profitable at these prices. Returning even more cash to the producer. Yet the Keystone Cops have done everything to divest, cannibalize and let these “assets” atrophy in order to position themselves by investing all of their cash flow in shale. Ghawar in Saudi Arabia being discovered in 1948 and therefore conventional, North American producers behavior would have abandoned it because it's not shale.

What we do know is that no producer at any time in the past four decades has shut-in any oil or gas due to its lack of economic performance. Here is the very difficult aspect of the behavior which is conducted in oil and gas today. Not only do they continue to produce systemically, everywhere and always below the breakeven point. They’ve attempted to deceive everyone by allocating their capital costs to each and every molecule of oil and gas held in reserve no matter how long it will take for that molecule to be produced. Will it be this year, this decade or this century in the case of shale reserves of natural gas? Therefore deceiving everyone with the misguided belief that their breakeven costs are $50 when they’re really $150. Causing the erosion of value and wealth to accelerate even faster.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

You Can't Buy Time, Part IV

The trend is your friend they say, except in oil and gas. I’m seeing a definitive downward trend that began in the first and second week of April 2019. Look at any oil and gas stock and you’ll see a wholesale decline since then. Something must have happened at that time. Something that I’ve missed, or the Camel’s back finally broke and no one noticed. The last shred of credibility must have escaped the industry and they’re now left to find their own way home. Action is not the North American producers forte. We heard on Wednesday from Harold Hamm at Continental that they would apply capital discipline, which as he says, they’re known for. It’s this deep, critical analysis that has led the industry through these dark times since natural gas collapsed in 2010, oil in 2014 and the producers investors flocked to safer locales. Our white paper captures my frustration in attempting to deal with these people since these threats began eating away at the value in their organizations. It is difficult for me to see how they continue.

Since the April 2019 trend began producers have been able to achieve what I would call a modern miracle. With all the destruction that has occurred over the past decade, or as I prefer to say at times, decayed. Halving their market cap in the course of one quarter should be considered an achievement. With late July and August 2019 seeing an even greater acceleration in this overall decline, I think we may be able to welcome many more producers into this club’s membership which has no rewards. As I note in the white paper, it is necessary to evaluate North American based producers with the following pro-forma accounting adjustment. To adjust for the unrecognized capital costs of prior production over the past decades, by taking at least 65% of property, plant and equipment and moving it to depletion. As we’ve noted this adjustment exposes these producers to the real value that they’ve created and that which is reflected in shareholders equity. The nature of this revised capitalization captures the issue regarding the leverage of their debt, reflecting the remaining assets are solely the property of their banks. Maybe that’s the trend being played out in the market, providing a lesson on how we learn that leverage can work against you.

The path forward being touted by many is the method that had been used so many times before. Consolidation was the beginning of creative destruction and would make the industry look fundamentally different a decade from now. Just as the industry is different from what it was ten and twenty years ago, etc. I’m putting this conversation in the category of excuses that are used to ensure that no producer bureaucrat needs to get off the couch. This being one more of their lies that are told and no one believes. The news as of yesterday is that consolidation is dead in oil and gas. Shareholders in the Occidental / Anadarko acquisition approved their deal and as a result it will proceed. What may not proceed as it was specifically voted down in a non-binding vote is the bonus compensation awarded to Anadarko bureaucrats. The amount was $300 million to be paid to five of the top people who were exiting, with the CEO taking $98 million. Whether they get the money or not, I think the reason that anyone attempts to sell their firm “on behalf of their shareholders” was to capture the golden parachute. If that has been voted down in a premier deal such as Occidental / Anadarko it may be the canary in the coal mine that dictates future transactions. So much for consolidation.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.

You Can't Buy Time, Part III

On page 29 of our white paper, Profitable, Energy Independence in North America -- Through the Commercialization of Shale, we detail the reason cash is escaping from the producer firms and the greater oil and gas industry. Through the capitalization policies that have developed over the past four decades, the culture of the industry is to capitalize almost everything other than operating costs. Royalties are no longer capitalized as PennWest was busted by the SEC for that reason and some of their people are still in the SEC’s crosshairs. As a result of these industry wide capitalization policies, and the allocation of these capitalized costs across the entire reserves base. Where only the capital cost of the reserves associated with that years production volumes are recognized as depletion. (By the way, did anyone hear that the U.S. has in excess of a 100 year supply of natural gas reserves?) The cash used to pay for these capital costs are sunk into those accounts of property, plant and equipment for decades and left to rot on the big, bold, beautiful balance sheets. The purpose of the producer bureaucrat is to build these big, beautiful balance sheets so the CEO can strut about with the largest of all balance sheets. These producer firms consumption of cash is voracious and this demands that investors and bankers step up if they want to have the biggest, best and most beautiful balance sheets! Otherwise the cash consumption will eat the producer alive. The account of property, plant and equipment, as the Preliminary Specification and our white paper state is the source of the producers cash resources to fund their future capital requirements, investor dividends and debt payments. By charging the consumer the appropriate amount of capital and operating costs of the oil and gas commodities the producers will then have these otherwise hibernating capital costs returned as cash to the producer. That is if the producers use the Preliminary Specification with its decentralized production models price maker strategy and by doing so only produce profitable production. We have argued this point for as long as we’ve been ostracized from the industry. The “muddle through” and “do nothing” strategy and operating procedure is in full operation within the industry. The persistence of the bureaucracy will be its demise. If you don’t recognize the capital costs, in a capital intensive industry, and pass these on to your customers you will go out of business. And that is where we’re at in the second quarter of 2019.

The persistence of the bureaucrats have now created a permanent divide between their investors and bankers. But they’ll now “fight to the death,” the problem is their dead. The meltdown in their stock prices is truly epic from an industry point of view. From a few years ago named companies are trading at single digit percentages of their highs. Chesapeake 2.1%, Encana 4.3%, Crescent Point 5.6%, and PennWest or Obsidian 0.36374%. I added all of the digits to give them the full value and benefit of their efforts, if I rounded it would be 0.0%! In theory you could rally any investor with a viable, workable plan to quadruple the value of a company's stock. The problem in oil and gas is that no one who has been along for the ride from the highs is going to be motivated to see them recapture 15% in the case of Crescent Point or 1.09% of their investment in the case of Obsidian. But then I could be wrong.

The financial statements produced in the second quarter are a wonder of the world. “Stellar” companies such as Canadian Natural believe they can run a $79 billion company on negative $3.5 billion working capital. That the infection of the culture, let’s call it a culture of destruction, is systemic, prolific and everywhere. It also shows the nature of the business from an operational point of view. Producer bureaucrats manage their risk through the contracts they issue. Shifting the responsibility for failure onto the other side of the contract, that way they can blame them when things go bad. What producers need to do is to continue to identify the risks but also identify the elements of success. Effectively communicate these to those concerned, but also participate actively in mitigating the risks and ensuring the success is achieved. And to do so not by handing off the responsibility onto someone that can be held accountable but by actively participating in making the initiative a success. The responsibility for the damage that the bureaucrats have done is not a point of discussion anywhere or within any conscious thought that I saw. What I did, do and have seen throughout the process of bringing the Preliminary Specification to oil and gas is remarkable. An industry focused on saving as much time and money on each and every transaction incurred. The equivalent of moving deck chairs around on the Titanic. What People, Ideas & Objects have traditionally called the cottage industry approach. A lot of chatter about what the right thing to do is, none of it consistent or acted upon, just as there has been over the past four decades. Small minded talking heads that occupy themselves with chatter while the ship goes down.

Pointing out the producers responsibility is the fifth element of this series of “You Can’t Buy Time.” The others being cash which the industry continues to flush, time in terms of making the effective changes and having them realized, choices since People, Ideas & Objects have realized that we’re unable to be successful for producers in their current degraded and disintegrating situation, and a future which requires a vision, plan and means to get there. Responsibility as far as the bureaucrats have been concerned is to undertake none, do nothing and ensure that no one thinks that they’re responsible by forcefully developing scapegoats everywhere and always. The producer bureaucrats role in society was to collect the checks from oil and gas sales and the investors and make sure everyone knew it was they who had the check book. Much like a bird feeds its hungry chicks these bureaucrats revelled in the role of sole provider. They were absolute ruler of the land and what they said was all that was heard. Or, you were blacklisted, kicked out and never allowed to return. Such as I was in August 2003. It is this process that taught the bureaucrat that everything flowed one way. Down from them. These payments were burdens that had to be made to be a good corporate citizen. Never realizing the role that anyone other then themselves took in the generation of the revenues in which the bureaucrats enjoyed exclusively and without question. Now the people that have been employed at the producer firm are excess and costly baggage, the service industry and overall general economy as well. They all had better start realizing that the oil and gas “producers themselves are not going to tolerate any insubordination or negative chatter. It’s time for those that have benefited at the expense of the producers to put in the effort to make it right and to do so on a volunteer basis. After all it’s their fault.”

This hypothetical rant is not far from the truth. Lets just look at the well known example of the manner in which investors have been treated these past few decades. Investments made last year are now sunk costs and we don’t consider them in what it costs to be profitable. New investment is required to continue to develop x and y property and we’re diluting the shareholders that we do have in order to do so. That’s what’s required in order to ensure that we treat this years investment as next years sunk cost, subject to dilution, rinse and repeat. Different rules and processes applied to different groups of people but the same outcome was always the case. The bureaucrats won. In the U.S. most of the cities that oil and gas operates have other industries in which to diminish the impact of the downturn in oil and gas. In Calgary oil and gas is all that there is. We are feeling the full brunt of this downturn. And it is an unmitigated disaster. Most people do not see a future that they want to be a part of. Whether that is a supervisory person in an oil and gas producer themselves or the gas station attendant. The consequences of the management of oil and gas are prevalent everywhere. Yet we see no admission, accountability or responsibility being taken by these bureaucrats for their primary, exclusive and absolute fault.

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 have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. 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.