Best Business Opportunity, Ever, Part XXXVI
It’s Monday, I forgot if we’ll get good news or bad news coming out of Opec today, never can remember. With last week's commentary regarding Opec’s decision. The commentary coming from industry unlike that of People, Ideas & Objects, did not look to the downside of a negative announcement. It was all focused on the upswing in drilling activity and production increases that shale producers will be able to provide. Even if Opec does agree to a production cut, this doesn’t resolve the overproduction and oversupply issue. Producers are not financially healthy and will still attempt to deal with their issues by overproducing. Their only source of cash. Creating today’s situation once again down the road.
Also why is there no attempt at a resolution outside of Opec actions anyway? For four months we’ve sat and watched Opec put a deal / no deal together with nothing being done here! Whether or not the Opec’s deal goes through, is the status quo acceptable? We can’t leave the industry in the hands of these bureaucrats. Why aren’t they planning and dealing with the issues at hand? All that we’ve heard are assumptions that shale producers will pick up any production cuts that Opec makes. Rig counts have increased each week since August. And, unfortunately there have been discussion regarding the opportunity of attaining energy independence. Producers don’t have the financial resources or capabilities to achieve energy independence. They don’t understand the term profits and there is not enough investors in the world to continue on even with their current operations.
Waiting for these irrelevant Opec events is not how you manage an enterprise. Active management has to overtake the “muddle along” strategy in order to deal with shale, as a minimum. Last time we waited this long for Opec to make an agreement, when they finally did make the decision, and it was a negative decision, producers suggested Opec doesn’t mean anything anyway. Attempting to redirect the conversation to other topics that would distract people away from the producers mismanagement. Last time this redirection involved production declines due to events such as the Alberta fire in Fort McMurray, Nigeria conflicts etc. as the reason that prices would soar. What will be the diversionary topic this time?
When no agreement is put in place, prices will drop and the producers will be left in desperate condition. Those in control will have nothing in place to remediate the situation and I think that those in authority will just walk away. The current cash crisis is critical. Payrolls will be missed and the people will be without their paychecks. With no one in authority showing up for work, who will they turn too? What is left in these producer firms to hold on to. Production is consuming cash. Their financial performance is reflecting losses. No investors, and certainly no bankers will touch them. Who is going to stand up and sacrifice more money, time and energy to make this industry function. Those people whose paychecks are bouncing?
“Brace for impact.” This will get ugly. After four decades of deceptive accounting these producers were hollowed out carcasses, and I’m talking about during the boom times of a few years ago. Then they discovered shale and the commodity prices dropped too low to even report profits on the basis of “full cost” or “successful efforts.” Now they’ve cleared out all of the value through successive, massive and tragic losses through 2015 and 2016. Scaring the daylights out of the investors and bankers. Yet still sit on massive piles of “assets” on the balance sheet, or what we at People, Ideas & Objects call unrecognized costs and future losses. Producers can’t generate any cash, can’t stop producing for the shear fact that the losses would grow exponentially. Soon those “assets” will be moved to the income statement and will continue to reflect the industry is a lost cause financially. Showing investors and bankers that the competitive and cost structures of the industry are so fundamentally destroyed that there is nothing that anyone can do.
No one want’s to think about such dire consequences. Certainly no one wants to live through anything so difficult, although times are certainly bad today. That doesn’t provide the justification for producers to ignore the problems and hide under the desk. However, in this cheery scenario we see the fact that the startup producers can come in and poach these assets from these producers, remediate them into real profitable operations. Use the Preliminary Specification and gain the trillions of dollars that our value proposition provides. And then earn the trillions of dollars in additional value that would be available by achieving energy independence. This is creative destruction at its most violent, rapid and opportunistic.
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.
Also why is there no attempt at a resolution outside of Opec actions anyway? For four months we’ve sat and watched Opec put a deal / no deal together with nothing being done here! Whether or not the Opec’s deal goes through, is the status quo acceptable? We can’t leave the industry in the hands of these bureaucrats. Why aren’t they planning and dealing with the issues at hand? All that we’ve heard are assumptions that shale producers will pick up any production cuts that Opec makes. Rig counts have increased each week since August. And, unfortunately there have been discussion regarding the opportunity of attaining energy independence. Producers don’t have the financial resources or capabilities to achieve energy independence. They don’t understand the term profits and there is not enough investors in the world to continue on even with their current operations.
Waiting for these irrelevant Opec events is not how you manage an enterprise. Active management has to overtake the “muddle along” strategy in order to deal with shale, as a minimum. Last time we waited this long for Opec to make an agreement, when they finally did make the decision, and it was a negative decision, producers suggested Opec doesn’t mean anything anyway. Attempting to redirect the conversation to other topics that would distract people away from the producers mismanagement. Last time this redirection involved production declines due to events such as the Alberta fire in Fort McMurray, Nigeria conflicts etc. as the reason that prices would soar. What will be the diversionary topic this time?
When no agreement is put in place, prices will drop and the producers will be left in desperate condition. Those in control will have nothing in place to remediate the situation and I think that those in authority will just walk away. The current cash crisis is critical. Payrolls will be missed and the people will be without their paychecks. With no one in authority showing up for work, who will they turn too? What is left in these producer firms to hold on to. Production is consuming cash. Their financial performance is reflecting losses. No investors, and certainly no bankers will touch them. Who is going to stand up and sacrifice more money, time and energy to make this industry function. Those people whose paychecks are bouncing?
“Brace for impact.” This will get ugly. After four decades of deceptive accounting these producers were hollowed out carcasses, and I’m talking about during the boom times of a few years ago. Then they discovered shale and the commodity prices dropped too low to even report profits on the basis of “full cost” or “successful efforts.” Now they’ve cleared out all of the value through successive, massive and tragic losses through 2015 and 2016. Scaring the daylights out of the investors and bankers. Yet still sit on massive piles of “assets” on the balance sheet, or what we at People, Ideas & Objects call unrecognized costs and future losses. Producers can’t generate any cash, can’t stop producing for the shear fact that the losses would grow exponentially. Soon those “assets” will be moved to the income statement and will continue to reflect the industry is a lost cause financially. Showing investors and bankers that the competitive and cost structures of the industry are so fundamentally destroyed that there is nothing that anyone can do.
No one want’s to think about such dire consequences. Certainly no one wants to live through anything so difficult, although times are certainly bad today. That doesn’t provide the justification for producers to ignore the problems and hide under the desk. However, in this cheery scenario we see the fact that the startup producers can come in and poach these assets from these producers, remediate them into real profitable operations. Use the Preliminary Specification and gain the trillions of dollars that our value proposition provides. And then earn the trillions of dollars in additional value that would be available by achieving energy independence. This is creative destruction at its most violent, rapid and opportunistic.
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.
