Status Update
It is our focus on developing the user community for the next 18 months. At which time we should be able to shift into the development of the Preliminary Specification. This assumes that we are successful in convincing “someone” to fund our budget and proceed with these developments. It may appear that we are a significant distance from having our budget funded, however, watch and learn. The real priority right now is the development of the user community as this enables us to lose nothing in terms of time. If we had our budget now, we would be doing the same things, developing the user community. It is the critical qualitative difference in our software offering and will be the method in which the oil and gas industry solves its issues.
Oil and natural gas prices have shown some strength in the past month. The bureaucrats are thinking all is well and they dodged the bullet, so to speak. Others outside of the industry may be thinking the same thing. Why then would it be necessary to conduct such radical surgery as implementing the Preliminary Specification if everything is on the road to renewal. To me commodity prices are displaying characteristics of a classic dead cat bounce. Last week the EIA announced that natural gas storage levels are 65% higher than they were last year. One look at the production profile of the United States and it is clear that the storage capacity for natural gas will be reached this summer / fall injection period. Taking 100 to 110 bcf per week of demand out of the market, suddenly, will cause the natural gas prices to take a further step downward on a semi-permanent basis. And as for oil, there is no good news anywhere that can support $60.00 prices.
What needs to happen is a method in which producers can allocate production based on profitability. Only the Preliminary Specification provides our decentralized production model. The bureaucrats are conflicted against themselves by having to produce everything they can to offset their overheads. To determine which properties are profitable is impossible for each and every producer on each and every property. They use estimates of what the overhead at the property is and these are based on best guesses from the 1960’s. The actual overhead of the producer is capitalized into the ballooning asset base. Therefore to determine the actual cost of a property, forget it. The only number they can provide is the gross margin. And as long as the gross margin is positive then they will produce. However, don't be surprised if, in the future, the margins do turn negative.
Hope springs eternal. So the saying goes. The alternative is that the bureaucrats face the reality that they have failed and begin dealing with the consequences. Not something that anyone wants to see. So we assume that things will be alright when the commodity prices rise to these levels. We need to extract our emotions from the work that we have ahead of us. And focus on the job that we need to do. A very difficult and hard type of work in building the Preliminary Specification, the user community and service providers. Alternatively we will see the continued failure of the industry leading to the breakdown of its capabilities and capacities. Who knows, we might have to go there before anything happens with People, Ideas & Objects budget being funded. And we're prepared for that too.
The Preliminary Specification and user community provides the oil and gas producer with the most dynamic, innovative, profitable and successful means of oil and gas operations. 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.