Best Business Opportunity, Ever, Part XIX

The extraction of value from the oil and gas industry as a result of the accounting methods dictated by the SEC may be difficult for some to comprehend. It is believed that having big asset values on the balance sheet of your producer firm is the ideal situation at all times. With People, Ideas & Objects argument being counter to this, these capital costs should be recognized by moving them to the income statement as soon as possible. Which has large implications in terms of the value that is generated in the industry. Currently all of the costs of exploration and production are “stored” on the balance sheets of the producers. These costs have generally never been recognized on a timely basis and since this is a systemic, industry wide, multi-decade issue, this practice has created serious distortions in the oil and gas industry. By moving these costs from the balance sheet to the income statement you will either incur a loss, such as what the industry would have done, or the commodity prices realized should have been adequate to cover all of the costs of production, returning the invested capital in the form of cash, which industry hasn’t done and have therefore had the investor's cover the annual cash shortfalls incurred from production.

Firstly, without fully recognizing the costs of exploration and production, the oil and gas production appears to be highly profitable. Which attracts more investment leading to more capital costs which increases the productive capacity of the industry which “appears” to also increase its profitability. In reality none of the investment dollars are being returned to the business when these capital costs are not recognized in a timely manner. Therefore the investors and bankers have to make up for the annual cash shortfall of the producers created when the commodity prices are unable to cover the entire costs of the business. The business is still incurring these costs, however the accounting is reporting that these costs are ballooning assets that hold some mythical value for the producer. Nothing could be further from the truth.

Do this for four decades and the hollowing out of all measures of value of the industry will be complete. Producers have been reporting profits when in reality, if all of the costs were considered, oil and gas has been a lost cause, supported by investors, for decades. The residual infrastructure does not have the capital or financial base or the performance capabilities, because the overproduction as a result of the chronic overinvestment has systemically collapsed the commodity prices. Then, add shale!

Certainly my thesis of the willful destruction of the industry, as noted last Thursday, is one possibility. It is very easy to run an industry when it generates no value. Producers would assert that prices being what they are is the cause of the difficulties in oil and gas. That the “market” is responsible for those prices being the other part of their argument. The Preliminary Specifications decentralized production model contains the price maker strategy that enables the producers to “make” the prices necessary to earn profits in the industry. And it would also be my assertion that the producer's role in society expands beyond just what the oil and natural gas prices provide. That they may have a role beyond partying when prices are high. Again, our relationship hasn’t been harmonious or lucrative for me but at least I can say I make an honest living.

In addition to the financial wreckage that is occurring the people in the industry have been destroyed and displaced as well. This will hold long term consequences for the industry in whatever form it takes in the future. People who have been educated in a discipline, who have dedicated themselves for decades to a producer and an industry shouldn’t find themselves out in the unemployment lines with unskilled labor. It is however the easy way to run an industry, once again.

Industry could have built the Preliminary Specification but passed on that opportunity, now the consequences of their inaction are being realized and the situation is their responsibility. The Preliminary Specification has been available in the market for a long enough period for it to have been adopted. That hasn’t happened because it is contrary to the best interests of those in the industry. It is counter to the vested interests. On a go forward basis they will need to rebuild the value that has been destroyed within the industry. If all of the North American infrastructure can’t stand on its own without significant capital investment each and every year, that hemorrhaging will need to be stopped first.

If it is believed that those who destroyed the industry. That passed on our solution to resolve the issues that were leading to that destruction. Will be the ones that come up with the means in which to right the wrongs, rebuild the value that has been systemically drained for four decades, and realize all the value we have identified that is available to the startup oil and gas producer in the next 25 years. Then pigs really do fly.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Third Friday Off

No posting today.

Best Business Opportunity, Ever, Part XVIII

I thought for sure the producers had these commodity prices under control. Yet they seem to be in steep decline again. And those losses, as bad as last year, if not worse and it was supposed to be a good quarter! With rising prices and an Opec agreement to make operations run smooth! Only neither of those seems to be coming about. What’s a producer to do? Soon the talk in the industry will shift to the next talking point. This is a critical time because the focus will be on the producers to account for their poor performance from now until the American Thanksgiving. That’s November 24th, one of the longer stretches of time in which they may be asked to be accountable for their actions. Who, or what, will form the basis of the “talking point” that gives them the excuse for these poor performances and lack of action. What hymn will they all turn too to make it sound “real” to those that have lost everything as a result of having faith in our oil and gas producers.

And so it will go. It may seem that we’re doing the same thing over and over again at People, Ideas & Objects. But I think the insanity is with the producers continuing on with the losses and destruction of people's money, time and energy. It's the same thing over and over, nothing ever changes. Chronic overproduction in natural gas has caused the storage to fill to capacity and the prices are in freefall. I, like the producers, don’t understand why Opec can’t get an agreement in natural gas as well. It’s always someone else’s fault. Chronic overproduction and massive losses. And it just never stops. It went on for about fifteen years in the 1980’s and 1990’s but the natural gas prices were able to carry the producers then. Eventually the oil prices moved up and the producers were able to party like there was no tomorrow. Only today is tomorrow and no one has taken care of the business of the business. And refuses to do so.

The problem is systemic. It’s identified and documented in the Preliminary Specification. It’s also resolved there and the solution provided through the services of People, Ideas & Objects, our user community and service providers. The problem starts with the accounting magic of the SEC which was mandated in 1978, or there abouts. Enabling the producer to capitalize almost everything they did. And then slowly deplete those capital costs over the known petroleum reserve base. Therefore the producer, in effect, never recognizes the real costs of exploration and production. These costs are stored on the balance sheet for decades while the producer reports “profits” as a result of realizing the very few costs that are left after capitalizing most of the costs, in a capital intensive industry. This overreporting of profitability has led to overinvestment which has led to overproduction which has led to price declines. Shale makes this feature a permanent bug for the oil and gas industry. Producers will now always overproduce, and they will now always lose everything they have. Just look at their quarterlies.

The issue we face now is that for the past four decades of reporting on the basis of the SEC anything and everything of value has been incinerated in the industry. When you report profits that are not supported by an accurate accounting of the business you create distortions. The distortion that was created in oil and gas was the shortfall in cash. This cash shortfall was made readily available through the generous donations of banks and investors who thought they were investing. Only in reality they were just lining up behind the other investors that went into the abyss before them. As long as there were new investors and bankers, the profits would drive the new investment. Now, after investing all of those trillions, we pull back the curtain and find the hollowed out carcass of the oil and gas industry. An infrastructure built on investor money that generates no monetary value whatsoever and requires a fresh load of new, naive and flush investors each and every year. But in reality, they say, it’s the Saudi’s fault.

Everyone associated with the oil and gas industry, in any capacity, are having such a pleasant time that they look forward to the collective “talking point” in order to adopt the appropriate posture. It’s not a business, business people fix things. The Preliminary Specification has existed in a vacuum since December 2013. There was ten years of research before that. What I am saying today is not newsworthy it’s more of an annoyance and frustration to those that find this environment comfortable. I think it has something to do with their pensions, their retirement and their expertise in avoidance of hard work. They’re more than prepared to ride the destruction phase of the creative destruction that oil and gas needs to go through. What more proof would there be, or do you need? What we need to do is to get on with the creative phase and that starts here and now with the best business opportunity, ever.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XVII

Taken from the perspective of the next 25 years. Starting over with a startup organization, a clean slate, to pursue the oil and gas industry doesn’t seem unreasonable and is actually the preferred choice. Where will the existing producers be in 25 years? That question requires too much speculation and I’m too biased to provide anything objective. What we do know is there currently exists significant upside to those producer firms that have a current start date. They will be able to purchase the existing producing infrastructure of the North American industry at affordable prices. Maybe not today, but soon. When the only opportunity for survival of an existing producer is to sell properties, the market will be saturated with properties for sale and the prices will be affordable. There is also the additional upside that is provided by using the Preliminary Specifications decentralized production model. With its price maker strategy the incremental value that will be earned is $25.7 to $45.7 trillion over the next 25 years. And lastly the opportunity to make North America energy independent in both oil and gas provides substantial upside on its own.


There is no way that we’re getting to that upside from here with the organizations that we have in place. They’ve proven themselves incapable of action. If we don’t do anything we’ll be sitting with the same issues and questions that we have today. Oil and gas will muddle along on investors money and continue to experience huge booms against the backdrop of protracted busts. Doing nothing is something that oil and gas has excelled at. The Preliminary Specification eliminates the muddle along strategy and replaces it with a dynamic, innovative, accountable and profitable oil and gas producer. The two contrasting visions could not be more different.


Information Technology has been the variable that has determined the outcome of many industries in the past number of decades. Whether it’s computers, cellular phones or music to name just a few. Information Technology was used to leverage change within the industry and remake who and where the industry operated. I have stated repeatedly that it's not necessarily the important thing to own the oil and gas asset. The important aspect of the oil and gas industry will be to have access to the software that makes the oil and gas asset profitable. Without access you will have what we have today, which from my point of view is a mess. People, Ideas & Objects Preliminary Specification defines and supports a revised producer and industry structure that enables the producer to earn the profits that they are unable to earn in the current industry. That is the difference between the old industries and the new industries. The new industries understand that software drives the business. The old businesses believe that buggy whips are good investments. If I can’t motivate you with the opportunity that sits in front of the dynamic, innovative, accountable and profitable, startup oil and gas producer for the next 25 years. Then you should get out of the business.


Maybe all this technology is just a fad and the boom will return soon. If you're in an oil and gas company fighting to keep the doors open, you may not be far from this belief. These opportunities will pass you by when the technological fad’s become the ways and means of the industry and you were too busy stuck trying to restructure a buggy whip manufacturer. We all have choices. And that is what makes living in North America so dynamic. The old stale ways never survive. They’re always swept away by the better way. We’ve always embraced creative destruction. Sometimes it's just difficult to see it when it's here.


The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XVI

There seems to be a disconnect between the third quarter financial statements and the tone on the street. We came out of the second quarter reporting period with this giddiness that the low point in the industry had been reached. Then with higher prices being realized in both commodities during the third quarter, further fueling the confidence of the producers. And with the announcement of a potential Opec production agreement, there was the declaration that the war against Opec had been won by the shale producers. This has set these producers up for a serious hit if Opec declares that no agreement can be made.

Producers are missing their Wall Street targets. Missing them by significant, serious amounts. If this trend continues heads will roll. Reading these financial statements reflects the scope of the devastation that has taken place. It appears to me that the producers would need almost three times as much revenue just to be considered solvent. They are absolutely gutted, capital destroying machines. Money goes in, mixes with other money, and it all gets lost. Sinking ships unwilling to admit the end is here.

What it’ll take to turn these around is beyond me. What is there? A recapitalization? There isn’t that much money, anywhere. No investor or banker is going to absolve these firms of their bad past behavior. Especially when nothing has been done to correct the issues in the industry. Pretending that all is well doesn’t sell well when the financial statements are this devastating. The only thing that I can see is an attempted rehabilitation over the long term. Funded by the sale of properties to pay off debts. As the assets are sold the debts are paid and when nothing is left the doors are closed. That may be an optimistic scenario.

We should look at these producers from the perspective of a rational accounting methodology. To adjust for that, take the net asset balance of property, plant and equipment and write it off. This leaves the producer with the massive losses that the firm has really incurred during its lifetime. The debts that it has incurred in creating those losses, and reflects that those assets, in reality are nothing but an albatross on the back of the producer. The cumulative producing assets of the industry earn nothing in terms of financial return. Therefore they are worthless. The producer would perform better financially if they didn’t have any properties. That is the best way in which to evaluate any producer today.

Producers have over the course of the past forty years “believed” in the accounting magic of the SEC that enabled them to capitalize everything to the balance sheet. They then have left those assets on the balance sheet for as long as there are reserves on that property. For accounting purposes, which is to evaluate the performance of the management, would you allow the management to capitalize a concrete building for the period of time the building would be standing, or approximately 100 years? No rational management would do so. Yet we have the equivalent accounting treatment in oil and gas for the past forty years. Creating the belief that the more that the producer spent, the more valuable they became and the more profitable they were. Creating a culture of spendaholics with no concept of value or consideration of the overinvestment they were causing in the commodity markets. The only time producers were subject to a write down of their assets was during the ceiling test. Taking all of the reserves at today’s prices, or the total gross future revenues of the producer, and ensuring that the net asset value wasn’t higher! Ludicrous. Investors and bankers used to participate in these spending binges by funding them. They’ve finally caught on to the game. Now the curtain has been pulled back to reveal the extent of the real damage and the producers think it’s time to carry on!

So what to do. It’s time to start over with a startup oil and gas producer. One that doesn't’ currently carry the albatross of yesterday’s property values and performance. The amount that you spent to build your house has no impact on the value of your house. The amount that a producer may have spent on a property has no impact on the value of that property. Today’s oil and gas property values are history. If the market needs more time to realize this then the startup can wait. The existing producers aren’t going anywhere but down. Leaving the best business opportunity, ever for those startups that can participate. And don’t forget that People, Ideas & Objects, our user community and service providers also provide the opportunity of a lifetime.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XV

Doing the same thing over and over, expecting different results is a sign of insanity. With that in mind People, Ideas & Objects look forward once again to the quarterly reports of the oil and gas producers. Expecting that these reports will trigger the conclusion that the existing producers do not have the ways or means in which to continue in any purposeful manner. Which it would appear is my general purpose in life. I don’t expect to see much in terms of performance from the oil and gas producers. Commodity prices are up since the second quarter, but the second quarter was as disastrous as 2015, the worst year on record. One thing we did see in the second quarter was that most of the hedges that were providing a safe haven for many producers, have expired. Leaving producers fully exposed to the discounted prices. There had also been the issue of generating enough cash from operations to meet the needs of field operations and the organization. Something they were not doing in the second quarter of 2016 or throughout 2015.

I can scream until I’m blue in the face. It won’t matter and it won’t make a difference in the market. I’m here to provide an alternative to those that know that the industry is unable to continue in the way that it’s currently operating and structured. Convincing the world that this is the case can be highlighted here, but we have to wait for what Winston Churchill calls the “jarring gong” to occur. That being the time when people realize the situation is untenable. I think that’ll happen soon. When I can point out that the value of starting over with new startup oil and gas producers, which can acquire the existing producing infrastructure at fire sale prices from the current producers. Which will earn the $25.7 to $45.7 trillion value proposition by using People, Ideas & Objects Preliminary Specification over the next 25 years. Will also earn the further upside from the industry achieving energy independence in North America. All of this value is waiting to be earned by those that can see this opportunity. As a result I think the “jarring gong” will be heard soon. And as I’ve said before, maybe during this quarterly report season!

Today producers are fueled with optimism regarding a deal with Opec that may be put together by late November. I don’t see it. There is no interest in them putting together an agreement that I can see. Other than to fail at doing so and deflate the optimism that is rampant through the North American industry. This has been the game that's been played for the past number of years. It’s maybe difficult to see it this way when you're so vested in higher prices. Or maybe it’s just that I’m so vested in hearing the “jarring gong.” If the third quarter reports show that no progress has been made by the producers. And the Opec agreement falls apart. I think then this buoyant, optimistic oil and gas market will quickly disappear.

We’ve also come along way in terms of the natural gas market. Prices in the mid $1 to $2 range have been replaced by the low $3. About half of what is needed to be profitable. It was a warm summer and it looks likely to be a cold winter here in Canada. The shale gas production volumes have also come down significantly from their peak of 44 bcf / day and are now in the range of 42 bcf / day. One thing I learned from my years in oil and gas is to never listen to a non-engineer talk about the natural decline curve. So I won’t, there is still ample capacity in Canada and the United States. Storage is almost at capacity. If it takes eight years to destroy the natural gas business to achieve these results the producers should be happy that they’ve arrived, somewhat. Shale gas still exists however, and we’ll find that the producers unconstrained drilling response would overwhelm the market very quickly.

So the score card will show who’s making money and who’s losing money. I expect the tragedy to continue unabated. And these losses will be calculated based on the foolish accounting that has deceived everyone for over forty years. If you used a proper assessment, it would be far worse. The industry has a lot to earn to make up for these past losses. They’ll have to provide a real return on the investments they took, but then lost, but will need to have earned back. When that's done, in the far off future, maybe then they’ll be able to look at some of this upside. Or alternatively we could all just start over now with new organizations and a new way of operating oil and gas based on the Preliminary Specification and earn the value that awaits us.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XIV

Existing producers believe that given time the commodity markets will rebalance and prices will normalize. Until that happens, they will produce everything they possibly can, regardless of the economics of that production. Does anyone else see the foolishness of this strategy? Markets communicate information through prices. If prices are high and profitable, then producers should produce any property that meets the basic criteria of profitability. If prices are too low to produce a profit, then the producer should shut-in production and wait for prices to rise. That’s how markets work. They are not mythical, magical things that become all knowing and self determining beings. All they do is provide information in the form of prices that they’re willing to pay for the things of value. I have yet to see a market rebalance based on the passive involvement of it’s actors.

Chronically overwhelming the market with oil and gas is the characteristic that we are presented with as a result of the operating strategies of the existing producers and shale based reservoirs. With shale we move from scarcity to abundance in terms of the oil and gas commodities. There will now always be the capacity and capability to overwhelm the market with more supply than there is demand. This will be the case for the foreseeable future, which brings a new dynamic to the oil and gas industry. Managing on the basis of scarcity is no longer valid. Managing on the basis of a fundamental misunderstanding of what markets do, is no longer valid. The need for producers to listen to market signals to determine if a property produces or remains shut-in is what is necessary for the industry to move out of the current boom and bust cycles, and chronic malaise that it finds itself in.

The Preliminary Specifications decentralized production model uses our price maker strategy to enable the producer to make this change to the shale based era. Using a detailed, actual accounting of the property the producer can determine if it’s profitable and if so maintain production for another month. If it’s unprofitable the property is shut-in and the reserves are saved for a time when they can be produced profitably, the producer only produces profitable properties therefore their earnings are not diluted by unprofitable properties and the commodity markets find their marginal costs.

It is on this basis that the startup oil and gas producer will be able to assure their investors that they’re providing them with the most profitable means of oil and gas operations. How they’ve gained the production discipline to ensure that the disaster that is the oil and gas industry today isn’t repeated again and again. That their producer is being treated fairly and equitably in the marketplace through a production allocation methodology that is based purely on the properties profitability. This is how markets work and the startups investors will know that they have the ability to earn profits all the time that they are invested in the oil and gas startup. That they won’t be subject to the boom and bust cycles that have become the accepted norm and are more destructive than any productive activity. That their producer is wholly focused on profitably, delivering all of the upside that this transition to a new profitable oil and gas industry promises. Upside that includes the ability to affordably acquire the producing infrastructure from the existing producers. Realize the People, Ideas & Objects value proposition which is valued in the trillions of dollars. And then profitably provide energy independence to the North American continent.

When the industry is operated on the basis of the Preliminary Specification everything is fundamentally changed. We are relying on creative destruction in order to implement our technology due to the extent of changes within the producer and industry. Changes which are too significant for them to undertake in the normal course. There is too much cultural inertia to overcome within the current producers for us to be successful. The current producers have permanently destroyed the industry that existed just a few years ago. Most if not all of the producers have experienced financial difficulties of catastrophic proportions. If these carcasses appeal to the investor then we have nothing for them. If a fresh start is what appeals then we have the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XIII

People, Ideas & Objects are focusing the oil and gas industry on profits. The Preliminary Specification is designed to optimize the producer and industry to ensure that they achieve the most profitable means of oil and gas operations. This seems counter to the status quo environmental and stakeholder focus that is the concern of the existing producers. Why is there such a stark difference in the focus of the industry between these two systems. Simply we’ve lost the ability to satisfy any stakeholders needs. The current organizations are confused as to their purpose and conflicted in their goals. These organizations are unable to determine what value is and how to increase it. Many have lost all of the money that they’ve ever raised in the equity markets and much of their debt. Those that haven’t achieved this stellar attribute are well on their way. Oil and gas isn’t a business or an industry, it’s performance doesn’t qualify it as such.

The investors, bankers, bondholders, service industry, the people who work in the industry. All of these stakeholders were invested in the oil and gas industry with their money, their time, their careers and their energy. As a result they have very little to show for it. What do they do now? Wait to see if this bunch gets their act together and figures out a way through the chronic overproduction and oversupply? That’ll take a long time and be a terrible waste. Since when did it become acceptable for an industry to be in such difficult times for the majority of its existence? Why don’t the producers take some kind of action?

People, Ideas & Objects can and have said goodbye to that way of life. There is no manner in which you can deal with a culture that is that convoluted, disorganized and unable to determine what it’s doing. The existing producers need to pass from the scene as a result of their poor performance. They’ve survived for forty years like this which has established their ways and means in stone. They can’t, won’t and will not ever change. Much of their past existence was supported by the annual share issuance and debt financing to cover for their continued poor performance. The investors now see that there is nothing there. They are wise to the game and are choosing alternatives.

An industry where everyone’s focus is on profits will support the investors, bankers, bondholders, service industry and the people who work in that industry. They will pay taxes to the governments and be good corporate citizens. Without profits you have what we have today. If everyone is focused on profits, and therefore can determine what they need to do to ensure that they provide the producer with the most profitable means of oil and gas operations. Then they can build value for the producer, the industry and these stakeholders. That’s how our capitalist system works. Or at least should work. It certainly isn’t in operation today.

Profitable producers would be able to better manage their operations and we would be less subject to the boom and bust disaster management that we have today. A profitable industry would be able to supply society with affordable and reliable energy on a consistent basis. That’s the promise that we provide when we’re focused on a profitable industry. There is money to be made here and that makes this the best business opportunity, ever. Show me a better time and place than this.

The Preliminary Specification provides the focus on profits throughout its eleven modules. Profits are its focus and everything else is secondary to that. Today, organizations are defined and supported by the software that they use. People, Ideas & Objects Preliminary Specification will enable the producers that use our system to remain focused on profits and have their entire organization building value. And that is how we will rebuild this industry brick by brick, and stick by stick.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XII

We’re at the very beginning of the changes that are happening in oil and gas. The destruction that has been realized by the existing producers is complete. However it may take some time for people to realize the extent of the damage and the resulting capabilities of these organizations. They’re finished, and the sooner we realize that the better off that we’ll be. The upswing in terms of the creative elements are at hand, and as we saw yesterday investments are being made. Now is the time for individuals to prepare and organize themselves to ensure that they maximize their exposure to the best business opportunity, ever.

Taking action now and on a sustained basis is what’s going to be necessary for people to participate in this opportunity. There are many things to be done. The absolute last thing that you want to be doing, and the absolute last thing that you will do, is leave where you're working now. Preparation now is the key to the success that you’ll realize in the future. The moment you set your mind to the process of this change you in essence make it real. That is how we’ll do this. The more minds working in this direction the better. That is the start.

Whether it’s an oil and gas company that you want to start or a service provider organization. The redevelopment of the industry is from the ground up from all disciplines. People, Ideas & Objects are providing the Preliminary Specification as the basis or vision of how the industry would operate in order to ensure that profits are the primary focus of everyone in the industry. Using this vision to guide you in the development of your organization will ensure that you’re consistent with the needs of a profitable oil and gas industry. With everyone in the new oil and gas industry doing the same we can leave behind the destruction and muddle along strategy of the existing producers.

I believe it’s necessary to read the entire Preliminary Specification. Although you will focus on the area that is most familiar to you. The understanding of how the industry operates based on the Preliminary Specification is very important. There are fundamental differences that make up the ability of the industry to focus on profits. The producer is reorganized, the industry is reorganized and the service industry is brought closer to the operations of the producers themselves. How this is done and why are important for everyone to know and understand. No one would undertake a significant journey without first studying a map of the area that they’re heading. The Preliminary Specification provides that level of understanding for those wanting to make these changes.

In order for the new oil and gas industry to realize the upside in the next 25 years. We need to be organized in a way that enables us to realize that upside. There is no way that an organization can function today without software defining and supporting what it does. At the same time that software constrain and cements that organization into an unchanging and unchangeable beast. To proceed down this path without the permanent software development capabilities of People, Ideas & Objects would be foolish. The ability to make changes to the software in the future will ensure that we don’t run into problems such as what we are experiencing today.

If we want to gain the upside of the the dynamic, innovative, accountable and profitable oil and gas producers by acquiring the existing producing capacity, realize the $25.7 to $45.7 trillion value proposition of People, Ideas & Objects and the upside from making North America energy independent. Then we need to ensure that the industry, the producers, the service providers and the service industry are configured in a way to make that happen. The path for that is the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part XI

The evidence that the startup route in oil and gas is the appropriate direction can be seen by these three startup announcements. (Here and here.) Backed by Blackstone and Quantum Energy Partners, Jetta Operating Company Inc, Guidon Energy and Sentinel Peak Resources California LLC were endowed with $1.8 billion. Sentinel has already leveraged their investment to purchase some properties. Now that super star engineer, the one that was passed over for COO at the large independent, who never lost a dollar of the company's money, passed over because he wasn’t as good at the big game politics, is thinking. What if?

I want to stress the difference in the way that the industry will be operated in the future will be on the basis of profits. Real, cash generating profits. That is why the investors are going with the startups, they believe in creative destruction as much as I do. The only way that we are going to keep the focus on profits is through the use of the Preliminary Specification. And I don’t want anyone to come along and say, ok put it in place. It needs to be built with someone's money. A big part of the way in which the industry operates profitably is the value proposition of the Preliminary Specification. Without it, you’ll have a remake of what we have today.

There are trillions of dollars that are available to the producers who use the Preliminary Specification for the next 25 years. This is the upside they receive for investing in the capabilities of having People, Ideas & Objects, our user community and service providers operational. Our compensation is defined in our budget. And I have to say that I am very pleased that I am bringing such a large monetary solution to what can only be described as the biggest issue the industry has ever faced. Information Technology is the means in which all industries are now operating. Without IT business and industry is in the dark ages. Use of the Preliminary Specification will bring the oil and gas industry well into the future of IT functionality and process management. People, Ideas & Objects also provide a permanent, dynamic software development capability to the industry.

Don’t cry on my shoulder if you miss out on this industry wide opportunity. I’ll be busy, as will many with the fortitude to make the leap of faith necessary to change the oil and gas industry. If you're not busting out of your skin right now then I suggest you stay where you are. The winds of change have become a category 5 hurricane wrapped up in a tornado. The opportunities for the people who are capable of establishing a startup oil and gas producer have never been better. The opportunity for those to participate in the development of the Preliminary Specification as a member of the user community exists today. Part time work that is an inherent part of the service provider organization that you’ll establish to provide the administrative or accounting process that you’ll conduct for the entire industry as your client base.

It doesn’t matter what discipline you're from the opportunities are open to everyone. The opportunity to invest in a startup oil and gas producer and service provider organizations is also available to everyone. If you think this much change is going to be a little chaotic, you're correct. If that excites you then there really is no choice but to participate. Creative destruction is inherently chaotic. It is the entrepreneurs, the people who can see their way through the disaster, who will make the difference in terms of the time and intensity of the chaos.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part X

The establishment and development of a new oil and gas producer has been determined to be the best business opportunity, ever. The level of destruction that has occurred in oil and gas has been complete. What we have left are carcasses that have been hollowed out by losses that by any measure are catastrophic. Most if not all producers have, or will have, destroyed their capital base in this downturn. The net, sum total of the producers existence has been to destroy all of the money that was ever given to it. The only things that are left are a collection of assets whose operations consume cash to produce, and debts that far exceed any operational performance possibilities. The dire nature of the existing industry contrasts with the upside of the startup oil and gas producer.

When you begin your startup what will be your area of operations? What will be your expertise and capabilities? These will form the foundations of your competitive advantages for the lifetime of the firm. The existing producers have opened the proverbial WalMart of properties on offer. You can have whatever you want, and for some of the best prices ever seen in the industry. Just remember to time your closing to the seller's debt payment schedule. That way you’ll force the issue and secure the property.

Recall that Chesapeake “sold” their Barnett shale assets for the right to get out from under a $300 million annual cash drain. Consider that the economics of a startup are different than the existing producer. If a startup were to have purchased these Barnett shale assets they could have instructed Chesapeake to shut them in prior to close. The startup would then be incurring a “null operation.” No profit, but also no loss. There are other considerations to consider, such as technical capabilities, but the startup can build those subsequently over time. The point is there are two extreme economic dynamics in play between the existing and startup producers. These economic dynamics can be leveraged by the startups.

As a new oil and gas producer you have much to offer an investor, banker or bondholder. Zero dilution of their investment from a history of bad management and total destruction. The history in the industry is that producers never wanted to account for the capital they used in the business. So they didn’t. As a result their asset values ballooned, or is that a bubble? And their earnings soared. Making it appear like a profitable industry. This has been the case for almost forty years and is the culture of the industry not to consider capital costs in assessing performance. They believe capital costs are “sunk costs” and are therefore irrelevant. The fact that operating a business on this basis creates significant shortfalls in real earnings and cash generation didn't matter. The implications of doing that were offset by the annual share issues that every producer seemed to participate in. Trillions of dollars have been invested in the North American oil and gas infrastructure and it can’t generate $0.02 in earnings. Those being the real type of earnings that the startups will be able to earn, not the fake type of earnings that producers have been claiming for the past forty years.

The investors will have to deal with their past investments in their own time and place. What we can do is provide them with the necessary changes in the industry that will ensure that their future investments are managed appropriately and establishing the value that is available today. That being securing the producing infrastructure of the industry, the value proposition of People, Ideas & Objects Preliminary Specification and the ability to increase the throughput of the industry and achieve energy independence in North America. The point is we are not going to be getting anywhere with the producers that we have today. They are waiting for the mythical market to rebalance. What we need to do is to turn all of the industries production profitable at all times. Then expand the capabilities and throughput of the producers within the industry. And then look to secure the energy independence that shale provides. Without establishing profitability first, none of the rest is ever going to happen. Ever.

And when we talk about profitability we mean that all production that is produced is always profitable. Not just some of the time. Oil and gas commodities are price makers. These commodities react quickly and substantially to shortages and surpluses. What we need these startups to do is to do the rational thing of determining if a property is profitable, based on a detailed accurate accounting, it produces. If it is unprofitable then it will need to be shut-in which will incur what we call a “null” operation. No profit, but also no loss. Under the Preliminary Specifications decentralized production model all of the producers costs are variable. No production = no revenue, no royalties, no operating costs, no overhead, a null operation.

Existing producers seem to think that losing money on all of their production 75% of the time is acceptable. This is the culture of the industry. If you think you can change the culture of the industry, don’t count me in. Creative destruction is the tool that we are using to make this change. The existing producers have exercised the destruction part of the equation to a level that I didn’t expect was possible. They really made a mess of the place. Which makes our job easier and more exciting, so what are you doing?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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.

Best Business Opportunity, Ever, Part IX

The choice that people have today is to participate in the development of a new startup oil and gas producer. With all the upside we documented yesterday. Or we can stick with the current producers and rehabilitate them into viable organizations once again. The question is, in ten years from now, which would be the better choice? By choosing the startup route the industry would fund its development during that time by the profits that the startup earns on production. We also know that by keeping with the status quo we will continue to depend on investors to provide the working capital for the industries survival. What are the other differences in terms of this choice that we have at hand? Which is the preferred route to take?

Choosing the startup route has implications for all of the people that are involved in the oil and gas industry. First we should all think of ourselves as investors in one of those startups even if we are unable to participate directly. Secondly People, Ideas & Objects have demands for software developers, administrators and accountants being reconfigured to accommodate these startup organizations. Our user community and service providers being business opportunities themselves that will depend on the entrepreneurial spirit of the people involved in those organizations. By realizing the best business opportunity, ever, we are providing for business, investment and employment opportunities that can only be described as substantial for all involved in the industry.

It's always difficult to determine when the last round of layoffs will occur in a downturn. Things look relatively more positive in the industry since Opec announced their agreement to limit production. I’m seeing a lot of premature declarations that the difficult times are over now and some claims suggesting that shale will make up any reductions that Opec undertake. Our current producers can’t, won’t and will not ever change their behavior or understand that they’re a large part of the problem regarding oversupply and overproduction. Resumption of standard operating procedures is the implied consequence of these comments. There has been plenty of opportunity to change in the past decade. Nothing has been considered, and I can assure you that nothing ever will. This is why creative destruction is such a critical difference to the performance of our society.

It may just be me but I see the implications of today’s losses and difficulties in oil and gas as being fatal to the current producers. They have suffered a terminal event. One in which they are unable to recover from without superhuman effort and skill over a sustained, extensive period of time. With massive investment. Their operations demand cash to operate and will continue to do so. They are unprofitable even though they have employed significant volumes of capital. They’re operated as if they are viable going concerns, however, due to accounting foolishness have never performed as such. This culture has been systemic for four decades and is responsible for the leaderships misunderstanding of performance and accountability. The significant event that has damaged these producers has been perceived as a minor bump in the road, with regular operations resuming soon. I see no change in the operation or outlook of these producers. They will exist in a cash deficient environment where selling assets and producing as much as possible are the only means to keep the lights on. Their destiny is to contract rapidly with the most successful being able to shrink their debts proportionately.

In terms of the startup, they will be establishing their firms on the basis of a different operating model. The Preliminary Specification focuses on real profits and not the artificial accounting profits of the past four decades. Purchasing assets from the current producers will enable them to establish themselves in the industry and build their organization through the deployment of their profits. They will be able to leverage themselves over the next decade with debt based on solid financial performance. Taking the opportunities that we discussed yesterday to purchase the existing producing infrastructure, the value proposition of People, Ideas & Objects Preliminary Specification and the upside as a result of achieving energy independence in North America. They will be able to grow quickly and profitably over the decade to position themselves as a producer that have the skills, capabilities, profitable operations and dynamic nature to approach the subsequent fifteen years as an established producer in the industry.

I think the choice is clear. What are you going to do, start a new oil and gas producer, or rehabilitate an existing one for ten years with massive capital infusions. After ten years you’ll probably be able to have the existing producer standing on its own by itself. And the opportunity to start a new oil and gas producer passed ten years ago. After a decade where the upside has been as promising as the best business opportunity, ever provides. I can assure you the startup will be the more dynamic, capable, profitable and larger firm.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part VIII

The competitive advantages of a newly created oil and gas startup are substantial. They include the ability to purchase the industries existing infrastructure of producing properties from the cash poor, failed producers of today. Realize the $25.7 to $45.7 trillion value proposition from using People, Ideas & Objects Preliminary Specification. Participate in the opportunity to further grow their firm based on achieving the overall objective of North American energy independence. Doing this in a manner in which all production will be profitable, based on an actual, detailed accounting of the property. Never before has such an opportunity been presented to those with the capabilities to participate in founding an oil and gas producer or making that investment in the startup. Now is the time to leverage these elements of value and to act to realize this opportunity for the next 25 years.

We should thank the current producers for messing things up so badly. Investors putting money into the current producers would have to be hell bent on losing it as quickly as they can. What upside is provided by an investment in one of these companies. The opportunity to line up with thousands of other investors if there were ever any dividends. Share any upside with so many investors that you end up with next to nothing! This of course assumes that the producer will have the good fortune to have “cash flow” to pay the interest and debt payments that are due. The history of the industry is that capital investments were always treated as a “sunk cost.” Not to be considered in the forward thinking decisions. While at the same time, the other hand was always stretched out taking the money that was raised in the most recent stock offering. They took the money but never wanted to account for it. Now, they have the legacy of billions of shares outstanding and debt so high that it's about to sink the ship. Leaving the only opportunity for the investors is to treat the existing producers as “sunk costs.”

The existing producers need cash. Flooding the marketplace with production is the easiest method to raise the cash that’s needed. The other method is to sell properties. There are a lot of desperate, cash hungry producers out there. The ability to purchase a property off of them at fire sale prices is rather easy. Just check their debt payment schedules and time your offer so that you will close the deal just before the debt payment is due. Guaranteed purchase. Investors are more interested in this due to the fact that the startups have no capital structure. They have no legacy of debt or history of an annual shareholder fleecing. Investors can take a controlling position in the firm and manage it in a way that avoids the difficulties that the industry is in today. Or, in other words, still have a controlling position in the producer in 25 years based on today’s initial investment! A startup oil and gas firm is a highly competitive offering to an investor in comparison to the existing producer.

Doing the same thing expecting different results is a sign of insanity. The startup oil and gas producer will therefore need to be using People, Ideas & Objects Preliminary Specification to operate their firm. Reestablishing the industry on the basis of profits. Real profits, not the fake ones the current producers have been reporting. As a result the startups will be the ones who are able to earn the value proposition that People, Ideas & Objects have identified. This value proposition is calculated to be in the range of $25.7 to $45.7 trillion over the next 25 years. The key element of this value proposition is our price maker strategy. Instead of dumping all of their production onto the commodity markets and watching the prices collapse for 75% of the time. The startups will have detailed and accurate accountings of each property. They will be able to determine which properties are profitable and which are not. Shutting-in the unprofitable properties which will remove the excess production from the commodity markets and the commodity prices will therefore find their marginal cost. The differences in commodity prices between these two methods of production, our price maker strategy vs. chronically overwhelming the marketplace, is the majority of our value proposition. Which is inherently understandable and logical to those who don’t manage a current producer.

Everyone can see the opportunity for North America to become energy independent in both oil and natural gas. Shale provides. There is no way that investors are going to fund a bankrupt industry with producers who don’t have a clue what a capital cost or a profit is. Expecting this industry to increase its throughput at investor's expense is a non starter. Energy independence has to be achieved on the basis of a profitable industry. It’s the only way. It’s really the only way to run an industry but that hasn’t happened in oil and gas for more than four decades. Expecting that the investment community that has supported all of the unprofitable activity in these past four decades, to continue and expand the throughput without profitability is about as ridiculous a notion as there is.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Under The Weather, Part II

No posting today.

Under The Weather

No posting today.

Canadian Thanksgiving

No posting today.

Best Business Opportunity, Ever, Part VII

Startup producers that are forming today will have significant competitive and capital structures in comparison to existing producers. Investments into these startups will ensure that the money that is invested will provide their investors with large, and maybe even controlling interests in the startup firm. Allowing the startup to participate in the market for oil and gas properties as a buyer. We expect, with commodity prices below their operating costs, the demands for cash to cover these operational shortfalls will maintain the market for properties as a buyer’s market for the foreseeable future. This represents what we consider to be the best business opportunity that has ever existed in the oil and gas industry. The time in which to act will therefore soon be upon us.

It’s difficult for me to understand any desire to continue with the producers that exist today. They are hollowed out carcasses that have experienced a terminal ending to their existence. When a “strong” independent such as Apache reports annual losses of $28.2 billion for 2015. Or when a former darling such as Chesapeake reports annual losses of $19.1 billion. And they continue to both generate significant losses for 2016. We see the functional end to the business model that these firms employ. These firms will continue to function as long as there is the ability to raise some cash to meet payroll. Whether increasing production or selling properties, it doesn’t matter, what the critical focus is to raise cash in whatever manner. The startup however has tactical and strategic advantages that are far more appealing than this cannibalizing and suffering.

Doing the same thing over again and expecting different results is a sign of insanity. What is there to ensure we don’t return to the destruction this industry has been responsible for. We need to ensure that the Preliminary Specification is the basis of the new industry. With its focus on profits so that the industry can grow and prosper. So that people who work in the industry will know that their employment won’t terminate as a result of external events like low commodity prices. Where investors can safely invest based on their understanding of the earth science and engineering capabilities of the producer. And society can be provided with the resources it needs to fulfil its possibilities. None of these things is available from the current lot.

So what happens now. We saw in the second quarter reports the viability of the producers being clearly displayed. The demand for cash is horrendous. An industry in that position will not attract the capital that is needed to keep the lights on. It is a slow painful march towards the inevitable demise of the firm. The sooner we realize we are at the end the better off we’ll be. But history doesn’t work that way. It is, as Winston Churchill stated.

Want of foresight, unwillingness to act when action would be simple and effective, lack of clear thinking, confusion of counsel until the emergency comes, until self-preservation strikes its jarring gong – these are the features which constitute the endless repetition of history.

I am not of the opinion that Opec has an agreement in mind. Their strategy has cost them many billions of dollars. The North American producers are at a tipping point, and that is the point that Opec blinks? They are more playing with the market and people’s expectations. The belief that these difficulties have passed is a hard one to overcome. If Opec doesn’t put a deal together, coincidentally around the time that the third quarter reports are issued, maybe then we’ll here that jarring gong. I expect the third quarter reports to represent a significant decline in the health of the industry. No one has ever made any money in oil and gas for over 40 years. The demand for capital was constant and chronic in order to supply it with the cash that it needed. With these last two points I’m of course talking about how the industry was in the “good times.”

This is the point in time in which your personal preparation towards the future will pay significant dividends. Starting a new producer, applying to People, Ideas & Objects user community. There are more business opportunities in oil and gas now than I’ve ever seen in its entire lifetime. It is this point where it becomes evident that it’s over, that we will then proceed with the developments of the Preliminary Specification.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part VI

What we see in the response of the producers to the difficult times we are in. Is the cultural capabilities of the industry. To accommodate the changes to correct the situation would require this cultural inertia to be overcome. Which of course is not possible. If we don’t change what we will find is in four or five years time the same situation will be plaguing the industry and the same complacency will be evident in the producers. The changes needed to deal with overproduction and oversupply are beyond what the current producers are capable of. They can’t, won’t and will not ever change. The only method that has proven itself are the forces of creative destruction. As the old no longer meets the needs of society, the new will be able to generate value in different ways.

In terms of that complacency or acceptance of the way things are, these being ever present in the industry. I am reminded of a quote from Winston Churchill. On May 19, 1943, a full year before the second European front was launched, Churchill told the U.S. Congress regarding the war effort.

No one can tell what new complications and perils might arise in four or five more years of war. And it is in the dragging-out of the war at enormous expense, until the democracies are tired or bored or split, that the main hopes of Germany and Japan must now reside. We must destroy this hope.

People, Ideas & Objects have a lot of work to do. Our budget is based on 5,000 man years of effort to bring the Preliminary Specification to commercial release. All industries and companies now operate solely on the basis of the software that they use. If you want to institute a change in behavior of the industry or producers, first it must be captured in the software that the industry and producers use. We live in a time where the software defines and supports the organization. Change is impossible without changing the software first. So when we talk about change, complacency, the scope and scale of our development efforts. This won’t be done with the flip of a switch and then all is well. We have hard work to do. It should be the expectation that the difficulties in oil and gas will continue until such time as People, Ideas & Objects Preliminary Specification is operational. We can blame the Saudi’s for all of our troubles, however it should be understood that they don’t import any natural gas into North America. And the difficulties in natural gas are going into their seventh year with no prospect of anything changing. It’s not a matter of us getting “tired, bored or split.” It’s much more, shale has fundamentally changed the industry.

Energy powers our economy. It is a viable option for the North American continent to achieve energy independence. However not from the current industry configuration. Changes as represented in the shale based reservoirs are fundamentally transforming the business from scarcity to abundance. What bigger change could there be? I saw the mechanisms leading to the oversupply and overproduction evident in the 1980’s and 1990’s low oil prices. A time when oil prices depressed the industry. Where no leadership or action left the industry to suffer for more than a decade. The configuration of the producers today remains the same and is inappropriate for either an industry with or without shale. Shale only makes the issue hypercritical.

Software makes society more complicated. To leave “things” to be resolved by themselves is inappropriate when the organization is defined and supported by the software that is used. To effect change cannot be done without changing the software first. Today ERP systems lock the organization and seal it in concrete. Producers will be unable to change without the defined software development capabilities of People, Ideas & Objects. Oil and gas have ceased to change in ways that provide value. We need to be proactive in our software developments in order to grow and prosper. I have frequently referred to these oil and gas overproduction and oversupply issues to be that of a modern software bug. And that is why starting a new oil and gas producer today is the best business opportunity, ever. Creative destruction is the last and only tool that we have to make the changes that are needed.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part V

Once the Preliminary Specification is operational in the industry it will be the new startups that will reap the benefits from it implementation. Organizing a new oil and gas producer today is by far the best business opportunity, ever. The existing producers have destroyed their competitive and capital structures. They are now unable to compete in the industry and they will not be supported by a plurality of the investment community. Their demands for capital just to produce is beyond the appetite of those that are intelligent investors. Establishing new startups will be able to offer high percentages of their firm without their new investors realizing the massive dilution that the existing producers well established shareholders and over indebtedness provides. And enable the investment community to leverage the demise of the old oil and gas industry through the purchase of properties being sold by those cash poor producers. Creative destruction is the process that has renewed many industries. All that is needed then would be for a way to avoid the same issues that plague the producers today.

The focus of the new startup is on profitable operations. Profitable from the point of view of considering all of the costs of production. Capital costs have traditionally been ignored by the existing producers as a “sunk cost,” and as a result, were never considered in business decisions. These “sunk costs” representing the investment capital they were entrusted with. This is what has caused the overproduction and oversupply that we have today. Investors were led to believe that the industry was profitable based on the gross margins that are quoted by the producers. This accounting sleight of hand is still in play today. The difficulty in accounting for your operations inappropriately is that it eventually leads to difficulties when the investors find out that things were not as they were represented. Then they stop investing, which is where we are today.

The only way that the new startup oil and gas producers will be able to capture that old time religion of profits is by implementing the Preliminary Specification. Where dynamic, innovative, accountable and profitable oil and gas production is the focus. This is done through the eleven modules of the specification that address the specific issues of the industry today. And they provide a dynamic capability to the industry in terms of addressing its future administrative, accounting and operational issues. It eliminates the “muddle along” strategy that is used throughout the current oil and gas industry and replaces it with specific capabilities that resolve those issues. One of the key capabilities that is gained is what we call the price maker strategy.

Our price maker strategy uses the fact that the oil and gas commodities are “price makers” in terms of the impact that they have in the marketplace. Excess production has a material effect on the pricing of the commodities. Instead of producing everything and expecting that the market will “balance” or some other such nonsense. The Preliminary Specification enables the producer to produce only profitable production. Profitable based on an actual, factual, historic and detailed accounting of the facts. Then producers who have properties that are unprofitable simply shut-in the property. Incurring a null operation, no loss but also no profit. Doing this ensures the producers profitable properties are not diluted by any unprofitable properties. Saves those reserves for the time in which they can be produced profitably. Removes the marginal production from the commodity markets. And keeps the cost of the property from having to carry the additional losses that would otherwise have been incurred as an additional cost to be recovered in the future.

Existing producers run away and hide when they hear the term “price maker strategy.” They don’t like to think in business terms. The industry is a science experiment that operates in the sense that everything it does brings more production on stream as soon as possible. When they hear “price maker strategy” they think collusion. If you chose to not produce a property because it is unprofitable that is called common sense. When that decision to not produce is based on the actual, factual, historical and detailed accounting of that property. I am at a loss to determine how that is collusion. What’s really going on is the inability for new ideas to permeate the stale existence that is the oil and gas industry. And the preference being to destroy the industry as opposed to consider these new ideas. Or, that calling it collusion is the only thing they can think of to offset their ridiculous behaviour of producing everything and destroying the industry.

Taking an industry with this twisted and convoluted means of logic. Establishing a new producer to compete with this insanity is the opportunity that is available to those that can see the value of implementing the Preliminary Specification. How could you lose with this bunch? And that is why this is the best business opportunity, ever.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part IV

I want to point out another issue that’s present in the oil and gas industry. That being the ability of the producers to focus beyond today’s headlines, or apply themselves in any direction for more than the extreme short term. They have the attention spans of hyperactive infants. Normally you would look to the leadership for the direction that the industry needed to take in order to resolve its issues. The only thing we see is the parade of cheerleading that today’s producers have come to be known for. Their attention spans are normally focused on the price of the commodities and only strike up the band when commodity prices are rising. When prices are falling, which of course is half of the time, they keep quiet and hide under the table.

The third quarter reports will soon be released. Based on the actions of the producers in these past three months they seem to expect that the difficulties as expressed in their second quarter reports of 2016, and 2015’s annual report are history. I suspect that the third quarter reports will be as bad if not worse than those presented in the second quarter. What’s changed? It may be difficult to fully understand the extent of the damage that has been done in the industry. As I’ve indicated both the competitive structure and the capital structure of the existing producers have been fundamentally destroyed, permanently. That means they are no longer cost competitive in terms of producing oil or gas. And the investors, bankers and bondholders are in the position where they will never receive anything of value from these producers, ever. Arguments could be made that the stock prices of these producers are up. I am talking about the business and its total financial failure. If a producer holds out their stock price increases as evidence that they are viable then they exhibit shorter attention spans than I give them credit for. As I stated, there is a difficulty in comprehending the destruction of the competitive and capital structures and that has not yet been fully realized in the marketplace.

I want to add another myth that the oil and gas producer has been deluded by. That being their balance sheets are “strong.” Nothing further from the truth could be the case. It has been our argument that the SEC prescribed full cost and successful efforts accounting methodology allow the producer to capitalize everything under the sun to the property, plant and equipment account on the balance sheet. The spendaholics like this because it makes them look “well capitalized” and their earnings are highly overstated when they never recognize the capital, in a capital intensive business. The question that should be asked is what is the value of the oil and gas industry today. Since it’s not profitable, and it demands cash to be injected into the business in order to produce. That cash drain being substantial. The value of the industry is therefore nothing. It takes the investors, bankers and bondholders cash to keep it alive. And this has been the consistent history of the industry for the past 40 years. A fundamentally failed industry that is incapable of building value. The leadership within the industry have a two hour attention span and see nothing wrong with this. Therefore any reasonable person is going to avoid any involvement in the industry. I think it’s therefore appropriate to take the account of property, plant and equipment and move it directly to the income statement. The assets of the business are not worth anything and should be written off. Evaluate the company on that basis and you’ll quickly come to my point of view.

Anyone who has read the Preliminary Specification can see the means in which our value proposition is generated. Valued in the trillions of dollars by simply choosing to develop the People, Ideas & Objects Preliminary Specification you would think an industry in such desperate condition would jump at the opportunity. You need to understand that the implications of implementing the Preliminary Specification do not help the status quo producers. So we are left with a scene where the closing chapter of the existing oil and gas producers is devastation and destruction. Armageddon came about as a result of poor accounting practices since 1979. Raising a generation of leadership that cannot discern what value is. Creative destruction is the process that we are using, and witnessing, to make the changes in the industry in order to address these issues. The destruction is complete in my estimation. Producers may think my criticism is over the top. However, who could support this level of destruction when the solution, the Preliminary Specification, has been in the market for as long as it has. The Preliminary Specification enables the creative rebuilding of the industry on the basis of it being the best business opportunity, ever.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. 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. 

Best Business Opportunity, Ever, Part III

My response to Opec’s announcement of an agreement that will be resolved before November remains one of belief that these Opec countries are trying to impress upon the North American producers that the commodities they produce are price makers. Nothing material has changed in the situation other than the tactical methods being employed by Opec. They are telling these North American based producers to look in their own back yard for the solution to oversupply and overproduction. In November when the agreement falls apart, then the North American producers will see that when markets see production increases, prices fall. The inverse of this past week.

The capital structure of the producer firms in North America no longer exists. It has been destroyed through bad policies and management over the past four decades. The only thing that would enable the North American producer to continue as a viable going concern would be the allocation of a trillion dollars to recapitalize these zombies. If you expect that we will achieve energy independence from this group of producers then People, Ideas & Objects have nothing for you. If you critically review any financial statement of any North American based producer the financial difficulties of each and everyone are unresolvable. Expecting a mouse to run like a horse is foolhardy, you’ll only be disappointed. Decisions need to be made. Do we pursue the best business opportunity, ever, or recapitalize these defunct organizations with additional capital for them to squander? People, Ideas & Objects are recommending that we proceed with the best business opportunity ever by starting with the development of the Preliminary Specification.

We have stated that the opportunity to establish a new oil and gas producer. One that avoids the debt and capital structure of the existing producers is the best business opportunity, ever. Providing profitability and growth in the production of oil and gas that these new startups would be able to generate is one aspect of the opportunity. Another is the upswing available to them as a result of North America achieving energy independence. People, Ideas & Objects value proposition of implementing the Preliminary Specification and following through with this opportunity is $25.7 to $45.7 trillion over the next 25 years. That is the vision that we are proposing here at People, Ideas & Objects. A new oil and gas industry, based on profitability and growth, that achieves energy independence. We are creating this new industry from scratch so to speak. Using the process of creative destruction to deal with the issues in the industry and establish a new foundation of profitable growth.

To help to define this opportunity more clearly it is necessary to dispel a number of myths that the current oil and gas producers are operating under. I have argued that the current industry is nothing more than excellent engineering and a science experiment. The business aspect of how the industry does what it does doesn’t exist. That the level of understanding of business by the producers is indeed very low and that accusations by them that our price maker strategy is collusion is the strongest evidence of this. The myths that we need to dispel today are that the producers costs have come down since the decline in energy prices. Another myth that operates throughout the industry is that the oil and gas commodity markets will clear themselves leading to higher prices.

With respect to the first myth we can state unequivocally that historical costs are fixed. There is no way in the world, if a producer has spent $15 million on a well, that any process can be undertaken to reduce that cost. Oil and gas is a capital intensive business. The cost of capital is the highest cost that is incurred by the producer. Having producing wells, from an operational standpoint, are not where the costs are incurred in the industry. Operating costs may have come down somewhat, and royalties are variable so there are those aspects of the cost are decreasing. But the historical fixed costs remain $15 million. If the producer is stating that they can now drill that well for $14 million then they are correct in asserting that their future costs are coming down. But to assert that their costs of production is decreasing in line with prices is kindly classified here as a myth. Some may find it to hold elements of misrepresentation. The industry operates on the mythical “recycle cost” which is not based on historical fact. To determine recycle costs to produce at today’s prices they would therefore need a recycle cost that falls under the prices realized. And so that is declared. That is how the industry is reducing its costs. By declaring that their “recycle costs” are lower than the prices realized in the market.

The next myth that we need to dispel is the idea that the “market” will clear itself. Producers have convinced themselves not to do anything in the face of declining commodity prices. That doing anything would first of all involve work and thinking. And secondly “markets” are magic things like dragons and wizards. Just wait for the “market” to reflect what you desire. This passive attitude has lead to what we call “willful destruction” and is the source of the industries financial destruction. The price system is how markets work. If you’re competitive and profitable at the price the market is offering then you produce. If the prices are unable to provide for a profitable operation you need to shut-in that production to conserve the firm's overall profitability, save the reserves for the time in which they can be produced profitably, remove the marginal production from the commodity markets and reduce the costs of your reserves by not adding the additional losses onto those reserves to be recovered in the future. That is how a market works. It is the price system, it's not a fairy tale. Markets don’t clear themselves unless people take action. What we have is producers continuing to produce irrespective of the financial consequences and refusing to act in their own best interests because the “market will clear.”

The deception that producers management kid themselves with is that their historical fixed costs continue to decrease and that they are therefore profitable at the current prices, and that eventually markets will clear. Can you see the circular logic that underlies their thinking? They continue to state they’re profitable but then produce financial statements reflecting they’re losing more money than they have ever had their hands on. So how does this make the best business opportunity ever? When you go into business you want to have your competitors logic and thinking this twisted.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Third Friday Off

No posting today.