21st Century Marketplace Vision - Our User Community - Part XI

Our User Community Sources of Revenue 

Our user community members are independent businesses operating within North American oil & gas through advanced Information Technology in an Enterprise Resource Planning environment. Within that domain, there is effectively no limit to the business value they may create for producers and, accordingly, no fixed limit to the recurring revenues that may arise from that value. As our user community and their owned and operated service provider organizations are structured today, their principal sources of revenue are discussed.

The targeting framework (an introduction of which was provided in our previous paper pp. 14 - 22.) should include not only incentive mechanisms for value creation, but also formal accountability provisions designed to protect producers, Joint Operating Committees, and the marketplace from controllable non-performance. These provisions should apply only to matters that are measurable, attributable, and within the defined authority of the relevant member of our user community and their service provider organization. They should not apply to matters outside that party’s licensed scope or reasonable control. Where there is a clear failure in performance, compliance, documentation, support, control integrity, implementation quality, or other obligations within the relevant domain, the first remedy should ordinarily take the form of a reduction, deferral, suspension, or clawback of performance-based compensation, value-sharing, or other earned upside, rather than broad punitive sanctions. In this way, the targeting framework preserves innovation while ensuring that value creation and value protection remain inseparable.

User Community Performance Incentives
Software Development

Hourly compensation during software development.

Source: exclusively People, Ideas & Objects.

Bonuses During Software Development

Performance bonuses related to producer profitability, innovation, accountability, automation and autonomy.

Team-based bonuses related to module completion, overall completion, and team performance.

Individual bonuses related to project completions.

Source: exclusively People, Ideas & Objects.

Additional User Community Compensation

Exclusive domain rights over the operation of a defined process.

Authorized access to and use of Synallagi’s Intellectual Property.

Ownership and Operation of a service provider for the defined process.

Source: exclusively People, Ideas & Objects.

Service Provider Performance Incentives

Implementation Revenues

Initial implementation revenues and continuing implementation-related revenues. These will make up the majority of service provider hourly revenues.

Source: oil & gas industry.

Maintenance and Support Revenues

Ongoing maintenance and support services.

Source: oil & gas industry.

Dynamic Value Revenues

Recurring revenues derived from the business value created through Autonomous Asynchronous Transaction Orchestration and from software innovations developed through their user community members that may have a larger scope of application. (Subject to a 10 - 15% holdback, see Other.)

Source: oil & gas industry.

These represent the principal revenue sources available to a member of our user community by virtue of their license. They are not exhaustive. There are many areas of opportunity to be pursued, and any prospective member must consider how these or any sources of revenue may be developed within their user community organization over time.

The business scope for expanding this list is effectively unlimited. One qualifying condition under the license is that the expansion of work must remain within the defined scope of the authority granted. Most of these future opportunities will arise from further specialization and the division of labor. Within Synallagi, we define this as the search for gaps in the market offering that are not presently being served, and then filling them. Gap filling is the technical term, and it is, in the simplest sense, one of the central drivers of economic expansion over the past two and a half centuries.

User Community Performance Discipline

Disincentives and Accountability Provisions Within the Targeting Framework
The targeting framework must include not only incentive mechanisms for value creation, but also formal accountability provisions designed to protect producers, Joint Operating Committees, and the marketplace from controllable non-performance. A system that rewards value creation without addressing measurable failure would be incomplete. Value creation and value protection must remain inseparable.

Performance discipline should require our user community to prepare and submit, as one integrated specification, both the performance incentive and the corresponding performance discipline for each relevant process, function, or value stream. No incentive specification should be eligible for submission unless the associated discipline provisions have also been defined. This ensures that value creation and value protection are designed together from the outset, much as disciplined software development requires tests to be written alongside the code they are intended to validate.

These accountability provisions are not intended to discourage innovation, profitability, prudent experimentation, or the good-faith pursuit of improved methods. Their purpose is to preserve discipline, maintain trust, and ensure that authority granted within Synallagi is matched by responsibility for the quality, reliability, and integrity of the work performed.

Any disincentive structure must therefore be confined to matters that are measurable, attributable, and within the defined domain of authority of the relevant member of our user community or service provider organization. No person or organization should be subject to adverse adjustment for matters outside their licensed scope, for broader commodity conditions, or for outcomes beyond their control.

Disincentives should arise only where there is a clear and demonstrable failure in areas such as performance, compliance, documentation, accountability, support, control integrity, implementation quality, or the maintenance of service levels within the relevant process domain. Examples include persistent failure to meet agreed standards, avoidable rework caused by negligence or poor design, unresolved defects, inadequate support, breakdowns in compliance or control, or conduct that impairs the integrity of Synallagi, its Intellectual Property, or its operating method.

As a matter of structure, the first remedy should not ordinarily be punitive liability. The primary disincentive should instead take the form of a reduction, deferral, suspension, or clawback of performance-based compensation, value-sharing, or other earned upside that would otherwise arise through the targeting framework. This preserves commercial seriousness without creating a regime of arbitrary punishment that could inhibit initiative or distort conduct.

Where baseline standards have not been met, the targeting framework may also withhold certain incentive payments entirely, notwithstanding the existence of nominal gains elsewhere in the process. Innovation rewards, automation rewards, recurring value participation, and other forms of variable compensation should therefore remain conditional upon the stability, accountability, and operational integrity of the underlying process.

The objective of these provisions is not punishment for its own sake. It is the preservation of trust, fairness, and functional discipline within a highly specialized and highly distributed operating environment. In this respect, the targeting framework should be understood as a system of commercial governance. It measures not only the value created, but whether that value has been created in a manner that is sustainable, accountable, and fit for continued reliance by producers, Joint Operating Committees, and the marketplace.

Through this structure, Synallagi aligns authority, compensation, and responsibility. It rewards those who generate measurable value while ensuring that failures within Intellectual Property-defined domains of control carry direct economic consequences. That balance is necessary if the system is to remain credible, scalable, and commercially durable over time.

Other

What we know is that natural gas revenue losses incurred by the industry since the beginning of shale development now total $5.0 trillion in this century. That is the scale of the damage and destruction that current officers and directors have imposed upon the industry. On a go-forward basis (Gas to oil factor is currently 35:1), those values would be available to members of our user community who are able to implement our decentralized production model’s price-maker strategy and resolve these deficiencies. That is the scale of the industry’s present difficulty. It is also the scale of the compensation opportunity available to our user community and their service provider organizations.

People, Ideas & Objects will withhold 10 to 15 percent of the proceeds of any targeted, variable compensation paid to our user communities service provider organizations. These proceeds will fund a bonus system within People, Ideas & Objects that mirrors their own structure and aligns our staff's motivations directly with those of our user community and their service provider organizations. We will find that our leadership and all within our organization will be focused on the point of what should be all of our primary concerns. Which is our user community and their service providers interactions with producers.

Service Industry

It is here, as the final point below the “Other” section, that we arrive at the service industry. Which is unfortunate, because the subject warrants far more extensive treatment. The scale and seriousness of its issues are as comprehensive as those affecting producers themselves. These conditions were created by producers. If producers expect to retain any future capacity or capability to conduct field operations, they will need to begin rebuilding both that relationship and that industry on what is, in effect, a philanthropic basis. Accordingly, People, Ideas & Objects will publish a paper in 2026 addressing these matters directly. While reading, continue to ask oneself if the loss of natural gas revenues of $5.0 trillion may have been needed in industry.

The service industry is unique in its configuration. It extends the engineering and geological capabilities of producers into the field, providing geographic reach, technical execution, and operational capacity. It is therefore indispensable to the success or failure of any producer operation. If producers intend to meet consumer demand in North America, continuation of prior practices will no longer be acceptable. The relationship between producers and the service industry must be comprehensively reorganized.

Shale has introduced a production profile defined by demanding and distinctive characteristics. It requires costly and highly technical drilling and completion methods. It exposes dramatic volumes of petroleum reserves. It is marked by steep decline curves. It frequently demands expensive reworks, refracturing programs, or the drilling of new laterals. At the same time, the service industry no longer trusts producers and will not invest in the capacity or capabilities required under those conditions. It has endured years of delayed payment, accusations of greed and indifference, repeated exposure to the downside of the boom and bust cycle, and the forced cannibalization of fleets and equipment while producers carried on as though none of it mattered.

Oil & gas revenues support more than the personal financial comfort of officers and directors. The service industry has been central to producer success, yet it has been treated as a distant and expendable participant when the industry’s financial rewards are distributed. It is the service industry that invested, built, and maintained the capabilities producers required. For reasons that are difficult to discern, producers appear to have concluded that this was the part of the industry they could destroy most aggressively.

It is now time for this relationship to be rebuilt on something more immediate and tangible than trust alone. Trust will take too long to develop given the scale of the producers’ present difficulties. A philanthropic rebuilding of the capacity and capability they so carelessly destroyed would demonstrate real commitment. It would show that producers are putting skin in the game. Once that occurs, trust becomes secondary to evidence. Producers may then begin to treat the relationship differently because they will finally have contributed something meaningful to its reconstruction.

21st Century Marketplace Vision - Our User Community - Part X

Our User Community

People, Ideas & Objects set out a compensation plan in the January 20, 2025 paper, "Catalysts for Cultural Change: The Leadership Role of People, Ideas & Objects User Community." Which remains highly suitable for the industry's future needs. This compensation plan can be found in Appendix I of this paper. We anticipate some changes will need to be made to accommodate the Autonomous Asynchronous Transaction Orchestration of Synallagi. We feel those are best left in the hands of our user community in direct collaboration with industry. The details in terms of what those sources are can be found here.

Our user community will gain directly from their collaboration with developers. When they transition to leading their service providers, their compensation must be uniquely defined to reflect these specialized contributions. I propose that a full understanding of the dynamics and an accurate assessment of their value will only be possible after the commercial product release. Service provider fees should be structured to split the resulting benefits between the specific user community service providers' offering and the software's value proposition delivered to industry. Our user community members' motivation needs to be focused on how their process generates more innovation and profitability to the oil & gas producers, hence increasing their value proposition.

User Community Charter

We confront the reality of the North American oil & gas industry without illusion. Capital has been misallocated, profitability neglected, trust eroded across the service and tertiary sectors, and productive capacity weakened. Leadership has too often avoided accountability while value destruction accelerated and strategic control over financial resources remained opaque. The result is an industry that has compromised one of the greatest concentrations of wealth in modern economic history within a single generation.

Against this backdrop, People, Ideas & Objects user community is committed to a disciplined reconstruction of the industry. Our mandate is clear: to equip dynamic, innovative, accountable, and profitable North American oil & gas producers with the most profitable means of oil & gas operations. Profitability is not a secondary objective; it is our governing constraint and the organizing principle of all industry activity—everywhere and always.

The persistent absence of profitability has hollowed out the sector’s prospects. Shale represented an extraordinary endowment to the world’s most productive economy, yet over two decades its financial return has been structurally impaired. This outcome reflects systemic governance failures among producer officers and directors who have resisted performance transparency, avoided responsibility, and declined structural reform for decades. If the officers and directors of the producer firms are struggling to grasp the core issues of their own business, how can we realistically expect them to now comprehend the dynamics, interactions, and specific challenges associated with these new Information Technologies, particularly as applied in our Synallagi application?

Organizational reconstruction requires new leadership and new institutions. The pathway forward is defined through Synallagi, architected, designed, developed and implemented by our user community and their service provider organizations. Together, they are designing, building, and sustaining a revised industry culture grounded in resource preservation, measurable performance, and sustained profitability. This is not incremental reform; it is structural realignment.

Oil & gas delivers an unparalleled economic multiplier—10,000 to 25,000 man-hours of mechanical leverage per barrel of oil equivalent. There are no scalable substitutes capable of replacing this value proposition in the foreseeable future. Stewardship of this resource is therefore our fiduciary responsibility to future generations. Unprofitable production is waste. Waste is mismanagement. Mismanagement is a breach of obligation. 

Through the architectural design, development, and implementation of Synallagi, our user community is achieving a near-ideal position within this industry—a best-case scenario. The greatest risk is not outright failure, but falling short of the full scope of our original intention or potential achievement. My focus is on securing the necessary resources to ensure that the work of our user community is completed fully, correctly, and to the high standards they’ll establish. This perspective is echoed in a quotation from the Knowledge Project podcast.

Nonetheless our user community has the opportunity to take what is, in many respects, the absolute failure of an industry and rebuild it from the ground up, brick by brick and stick by stick.  It's all upside from here for us, considering we’re careful now. The purpose of that effort is clear. It is to ensure that producers are provided with the most profitable means of oil & gas operations, that North America remains energy independent in oil & gas production, and that consumers are supplied with abundant, affordable, domestic oil & gas. No contradictions there, just a healthy balance of conflicting objectives.

Our current state of affairs should be considered nothing less than a state of war with existing producers. What we can not do is take this situation and push too far too fast and expect to remain in control of the agenda. We’re in unseen territory as it is. My current primary concern is the maintenance of our user community members anonymity and career security. We have not begun to see these producers desire to fight. And if that’s the case we should assume they’ll have their ways to fight that are unknown and unknowable to us. Staying light on our feet and progressing forward quickly in our tasks is our best defence. What our user community has in front of them is the proverbial blank slate. Our charter below sets out an understanding of how we’ll achieve our objectives. And this 21st century vision shows the destination we’re heading to. 

Our charter is supportive and therefore explicit. Our user community exists to institutionalize these principles. It is the leadership mechanism Synallagi needs for its architecture, designs, developments and implementations; a profitable, prosperous, and resilient oil & gas industry. I present our User Community Charter. 

Purpose

It is incumbent upon our user community to provide the leadership necessary to navigate effectively and efficiently out of this crisis and toward the prosperous future that these oil & gas resources can offer. Synallagi has been specifically designed to fulfill this role. Current producer officers and directors have much to answer for: how has such a tremendous endowment of wealth been so comprehensively and swiftly diminished? In addressing this question, our user community finds its purpose.

Our user community exists to architect, design, develop, implement, govern, and continuously improve Synallagi in support of a dynamic, innovative, accountable, and profitable oil & gas industry. Its purpose is to provide North American producers with the most profitable means of oil & gas operations, everywhere and always.

Our user community is not an auxiliary feature of Synallagi. It is a foundational institutional structure through which Synallagi is defined, advanced, and sustained over time. Our user community are in fact People, Ideas & Objects customers, competitive advantage and focus.

Foundational Role

Our user community is one of the three competitive advantages of People, Ideas & Objects, alongside Intellectual Property and Research. Of these, our user community is the principal operational focus.

Synallagi is to be shaped through our user community. In that role, our user community is not merely consultative. It is the authoritative source of business direction for the processes, functions, workflows, controls, and operating logic embedded in Synallagi.

Authority

Members of our user community hold the exclusive license to prepare derivative works from the Intellectual Property of Synallagi, including Autonomous Asynchronous Transaction Orchestration.

Our user community has exclusive access to People, Ideas & Objects software developers who are licensed to seek our user community as their sole source of process, functional, and business input. This structure ensures that Synallagi develops from a single controlled source of domain authority and is not diluted by fragmented, inconsistent, or opportunistic direction.

Each member of our user community exercises authority within a defined process domain. That authority includes direction over priorities, control over budgets within that domain, and responsibility for the quality, usefulness, and commercial value of the work produced.

Scope

Our user community governs the evolution of the administrative, accounting, operational, compliance, governance, and marketplace processes embedded in Synallagi.

This includes processes relating to the Petroleum Lease Marketplace, Resource Marketplace, Financial Marketplace, Operations Management, Research & Capabilities, Knowledge & Learning, and the broader structural alignment of Synallagi with the Joint Operating Committee, markets and producer firms.

Our user community is expected not only to respond to current industry requirements, but also to anticipate future needs and prepare Synallagi accordingly.

Composition 

Our user community is composed primarily of individuals trained and experienced in oil & gas accounting and administration, supported by sufficient Information Technology capability to manage the technological environment intelligently and direct development effectively.

The purpose of this composition is clear. Business and industry expertise must govern system development. Technical work must support domain knowledge, not displace it.

Accountability

Authority within our user community is inseparable from accountability.

Each process area within Synallagi is to be attributable to an identifiable individual. Synallagi documentation shall identify the responsible author, that person’s role, and the relevant contact information for each defined process area.

Producers, service providers, and authorized users must therefore be able to identify the person with the authority and capability to evaluate an innovation, direct a correction, answer a question, or resolve an issue.

This principle ensures that neither our user community nor the developers who support them become blind, sleep-walking agents of whoever is prepared to fund the next request. Responsibility remains attached to authorship, judgment, and action.

Intellectual Property Stewardship

All work performed through our user community in connection with Synallagi must preserve the coherence, integrity, and exclusive control of Synallagi’s Intellectual Property.

Derivative works, improvements, reusable process designs, configurations, and development outputs arising from this work must remain within the controlled Intellectual Property structure of People, Ideas & Objects. Rights may be granted by license, but ownership remains centralized.

This is necessary to preserve system coherence, prevent fragmentation, and protect the long-term commercial value of Synallagi.

Intellectual Property is a constraint we’re able to place on Artificial Intelligence, Autonomous Asynchronous Transaction Orchestration or Agentic domain of operation. Constraining its authority to the limits of our user community members IP license.

Producer Interface

Producers shall have a direct point of contact for each relevant process, function, or issue within Synallagi.

That point of contact shall be the corresponding member of our user community, equipped with the authority and capability to act on innovation, resolve operational issues, and direct necessary refinement within the relevant domain.

This direct relationship is intended to compress cycle time, strengthen accountability, and ensure that producers can engage the responsible source of action without organizational ambiguity.

Economic Role

Our user community participates directly in the value created through Synallagi.

Its members are to be rewarded through structures tied to performance, innovation, profitability, accountability, automation, project completion, and other measurable contributions to producer value. In addition, members will own and operate service provider organizations under the licensing structure established by People, Ideas & Objects. Service providers will share with producers the economic value generated from their innovations, autonomous and automations developments and profit enhancing features. 

This economic design is intentional. It aligns authority with responsibility and aligns responsibility with value creation.

Standard of Conduct

Our user community is expected to act as a business leadership structure for the industry.

Its members are to exercise judgment, maintain high standards of quality, protect the integrity of Synallagi, and contribute to the reconstruction of the North American oil & gas industry in a culture grounded in reserves preservation, performance and profitability.

The standard is not passive participation. The standard is stewardship.

Institutional Continuity

Our user community, together with its service provider organizations, is intended to become the durable institutional mechanism through which Synallagi is developed, implemented, managed, and continuously improved.

This charter is therefore not simply a statement of participation. It is a statement of governance, authority, responsibility, and continuity.

Through this structure, People, Ideas & Objects intend to ensure that Synallagi endures beyond any individual author and remains capable of supporting the long-term reconstruction of North American oil & gas.

21st Century Marketplace Vision - Our User Community - Part IX

Preamble

It is rapidly becoming standard that Enterprise Resource Planning providers must compete on demonstrable value. If they cannot produce a tangible revenue stream above and beyond their cost, they will become uncompetitive in the near term. Gartner stated on April 2, 2026, that by 2028 more than half of enterprises will stop paying for assistive intelligence tools such as copilots and smart advisors and will instead prefer platforms that commit to workflow results. The same Gartner release also projected that by 2030, software companies that merely add bolt-on Artificial Intelligence to legacy applications, rather than redesigning for agentic execution, could face margin compression of as much as 80 percent. (Gartner)

Every move within Synallagi has been made with enhanced producer profitability in mind. For decades, People, Ideas & Objects have worked to enter oil & gas on the strength of a value proposition substantial enough to justify adoption. We have organized our user community as the primary vehicle for creating, developing, and implementing that value. We have equipped our user community with the authority, responsibility, capabilities, and commercial purpose through a strong organizing charter. 
Nothing will be resolved in terms of remediating the damage to industry from producer officers and directors more than generating profitability. As the primary industry producer, oil & gas producers must be profitable, everywhere and always. Synallagi provides what's needed.

Our user community is motivated through a shared bonus structure that rewards creation and development in the areas of performance, innovation, profitability, accountability, and automation during software developments. It also includes team-based incentives tied to overall project completion, module completion, and other measures intended to reinforce collaboration and coordinated execution. At the individual level, incentives include project completion rewards, exclusive Intellectual Property license domains, ownership and operation of service provider organizations. This structure is intended to align commercial upside with the creation of measurable value.

The third paper in this 21st Century Marketplace series will address our user community’s service provider organizations and will introduce a different incentive architecture. That structure will be built around Synallagi’s Autonomous Asynchronous Transaction Orchestration and automation’s architected, designed, and implemented through our user community. In that environment, people are progressively abstracted from the transaction layer of the marketplace, the producer firm, and the Joint Operating Committee. Their role shifts upward into the higher-order functions of accountability, assurance, supervision, and management.

By setting a new standard, individuals can attempt the process on a trial or part time basis and evaluate their knowledge and skills to assess their capabilities to operate within our user community and participate productively before having to fully commit. Initial prepackaged projects will be available for this purpose.

Service provider organizations (our user community) will participate in the value created for producers, Joint Operating Committees, and the marketplace. Across the industry, the aggregate yield from those benefits should be substantial, making the cost of sharing economically immaterial relative to industry’s gains produced. These benefit allocations will be governed through a targeting framework that measures value creation and records the compensation earned from it. That framework will allow both producers and our user communities to determine, in tangible terms, whether revenues and costs are being managed fairly and equitably. It will also provide an objective basis for reporting the overall performance of our user community over time, including the total benefits generated for producers, Joint Operating Committees, and marketplaces.

Our value proposition remains in the range of $25.7 trillion to $45.7 trillion over a twenty-five-year period. If value of that scale is available, why has it not already been pursued? The first reason is disintermediation. Officers and directors of producer firms are unwilling to proceed where doing so would disrupt their existing self-serving arrangement to correct what they already know is broken. People, Ideas & Objects have been unable to overcome this obstacle. 

In a recent X post on March 11, 2026, George Sivulka @gsivulka of @hebbia articulated a significant new perspective: "Productive Individuals Don’t Make Productive Firms." His commentary includes key observations such as:

Individual AI breeds chaos.

Institutional AI fosters coordination.

Contrary to the expectations of some producers—who believed we would open source the specification to limit the influence of People, Ideas & Objects—we have maintained control. We are confident they will appreciate the regulated environment that our user community can now provide under our Synallagi IP license. It is People, Ideas & Objects belief we need our Intellectual Property to define, support and constrain the work that is undertaken by Autonomous Agents. AI agents unable to expand outside of their IP driven license is a preferred methodology.

The destruction inflicted on North American oil & gas is tragic. Shale represents the greatest endowment of wealth ever placed within an industry, and to have that endowment emerge within the most powerful economy in history should have produced extraordinary results. Instead, in less than two decades, those entrusted with authority have accepted it as unprofitable, uncommercial, and incapable of generating acceptable returns. That outcome is all the more striking because many warned throughout that period that their prevailing methods were outdated and destructive. The investment community recognized the danger over a decade ago and withdrew support in order to limit its exposure and contain the scale of the damage. In that respect, the discipline imposed by investors may have prevented an even deeper collapse.

The earlier abdication of authority, responsibility, accountability, and control over industry resources has placed officers and directors in personal financial jeopardy. To persist with the same method of operation in the face of such clear damage and such an obvious need for change exposes them to even greater organizational dysfunction and compounds the failures already in evidence. Synallagi and our user community provide a means of resolving the issues identified in our March 27, 2026 paper. In practical terms, they offer a path by which those officers and directors may withdraw from this destructive position without further deepening the liabilities they would otherwise continue to incur.

Executive Summary

The preamble establishes the central theme of this paper: the business opportunity available to administrative and accounting professionals in North American oil & gas. These professionals can participate directly in rebuilding and reconstructing the industry’s culture around reserves preservation, performance and profitability. Their participation in our user community is instrumental to implementing the standards, expectations, aspirations, capabilities and authority required to achieve that outcome. Through our user community, they can establish their own organization, apply their oil & gas knowledge and contribute directly to the development of Synallagi.

The paper then turns to the configuration of our User Community Charter. It describes the business opportunity available to our user community, the revenue model supporting it and the work required to make it operational. It also addresses the critical role of Intellectual Property in the future of work and its application within our user community charter. The motivation of our user community must remain focused on providing for the most profitable means of oil & gas operations. In the Artificial Intelligence era we are entering, “blind, sleepwalking agents of whomever will feed them” is no longer acceptable. Our user community is business-focused, action-enabled and accountable.

The paper also details the multiple revenue streams available to our user community members and to the service provider organizations they own and operate. These revenue streams provide the foundation for developing businesses around Synallagi and oil & gas. Our user community also serves a critical bridging role between Information Technology and oil & gas, connecting software development capability with industry-specific administrative and accounting knowledge.

A historical review of the distinction between markets and firms is then undertaken through the work of Professors Elinor Ostrom, Oliver Williamson and Ronald Coase. The objective is to establish that transactions should occur at the lowest point of transaction cost. For the last century, hierarchies largely prevailed over markets. In the 21st century, however, stablecoins, crypto, Information Technology, Artificial Intelligence and other supporting institutions are creating a revolutionary dynamic in favor of market selection. This discussion is contained in Appendix III.

In a brief twenty-minute presentation, George Sivulka of hebia.ai outlines the Seven Pillars of Institutional Intelligence. People, Ideas & Objects has integrated these pillars into Synallagi as the Artificial Intelligence framework within our Information Technology Organizational Construct. This paper reviews these concepts for our user community to provide a foundation for discussion and to guide their development efforts. While the academic analysis in Appendix III examines the historical relationship between markets and firms, the hebia.ai Seven Pillars provide the forward-looking Artificial Intelligence perspective.

For our user community, Intellectual Property is foundational. As a licensee of Synallagi, our user community acquires a secure platform on which to build its organization. Intellectual Property is also an Organizational Construct of the software. It supports, defines and constrains the boundaries of each exclusive process domain. Those boundaries, in turn, constrain the environment in which Artificial Intelligence operates. Artificial Intelligence is the killer application for Intellectual Property. Our user community and its service provider organizations will operate with these advantages.

Throughout its work, People, Ideas & Objects has maintained that the oil & gas industry has been pursuing a destructive business model and strategy. That model would inevitably cause the industry to suffer. The consequences, however, extend beyond the industry itself. The societal dependence on oil & gas is far larger than the balance sheets of producers.

Warren Buffett’s description of the “institutional imperative” is directly relevant. He observed that rationality frequently collapses when managers mindlessly imitate the behavior of their peers or when the leader’s preferred business craving is supported by internal studies, regardless of its merit. People, Ideas & Objects have made this argument consistently. Synallagi provides every producer with the means to produce most profitably. Once that level of performance is achieved, each producer is endowed with the resources necessary to pursue its own independent strategy, lead its own firm and compete on its own merits. The industry’s repeated shifts from shale, to clean energy, back to shale, then consolidation and now international expansion are indicative of Buffett’s institutional imperative.

The industry now lacks the capacity and capability to conduct operations at the scale necessary to sustain productive deliverability. There is also an unwillingness by many parties to engage with North American producers for standard business activities while current leadership remains in place. Yet officers and directors continue to suggest they can resume prior production volumes, and they have convinced politicians and the public of that claim. This creates the conditions for industry damage to escalate into a broader societal disaster for North America. We have reached critical points in reserves deliverability before. We have not, however, reached them with shale representing the largest share of productive capacity. Avoiding that outcome is the purpose of People, Ideas & Objects’ work.

It is one thing to criticize the current structure. It is another to offer a solution. Our user community, its service provider organizations, Synallagi and People, Ideas & Objects are components of that solution. Together, they address the administrative and accounting failures that have had a detrimental financial impact on the industry. Through administrative and accounting reorganization, overhead costs can be converted into variable costs based on profitable production. Our user community and its service provider organizations represent a reallocation of resources away from producer-owned overhead structures and toward specialized, market-based process organizations. Each service provider can manage a defined process on behalf of the oil & gas industry, benefiting from advanced specialization and division of labor.

This structure does more than convert overhead into variable cost. It also enables the sharing of Cloud Administration & Accounting for Oil & Gas software and services across the industry. This eliminates the need for each producer to build and maintain the same non-competitive administrative and accounting infrastructure as every other producer. The benefits of competitiveness, specialization, division of labor, shared infrastructure and variable overhead are significant. Yet they are secondary to the larger advantage: the ability of our user community to produce standard, objective, factual, high-quality and accountable reporting for each and every Joint Operating Committee.

Appendix II extends the Material Balance Report example introduced in our March 27, 2026 paper, 21st Century Marketplace Vision for Oil & Gas — Issues, and its related podcast. That paper discussed the influence of automation on the overall Material Balance Report and, specifically, the Systems Balance. This paper extends that work by addressing the autonomous elements of the Material Balance Report and their involvement in producing the report. It also includes a brief discussion of the Material Balance and Partnership Balance components of the Material Balance Report.

21st Century Marketplace Vision - Issues - Part VIII

Capital Asset Reporting

For more than two decades, People, Ideas & Objects has emphasized the importance of accurate reporting of property, plant, and equipment (PP&E) in oil & gas financial statements. Since at least 2004, we have argued that the current treatment of capital assets obscures the true financial condition of many producers. A review of producer financial statements today quickly reveals the issue: the PP&E account is disproportionate—often logarithmically larger than any other asset category on the balance sheet. Accepting these statements as representative of accountable and financially stable firms is difficult.

The magnitude of these capitalized assets raises a fundamental question regarding measurement and discipline. In the late 1970s, the U.S. Securities and Exchange Commission (SEC) through the implementation of the Full Cost accounting framework and the Ceiling Test for oil & gas producers. The principle was straightforward: the value recorded for property, plant, and equipment should not exceed the commercial value of the reserves, as determined through an independent reserve report. The Ceiling Test mandates a write-down of the asset base if the recorded capital surpasses the economic value. This test establishes the absolute maximum capital and indicates the point at which a producer ceases to be a commercially viable operation. Producers are permitted to recognize capital costs at any value below this limit. This raises a crucial question: how frequently have we heard that a producer's assets are impaired due to the Ceiling Test?

The logic behind this rule is clear. When capital costs are overstated, the distortion carries through the financial statements. Every dollar of excess capitalization effectively inflates reported profitability. Apparent profitability then attracts additional investment capital seeking those returns. That influx of capital finances additional development activity, expanding production capacity. In commodity industries such as oil and natural gas—where producers function as price makers—excess capacity inevitably leads to overproduction and downward pressure on prices.

Shale development began accelerating in 2009. By 2026, nearly every producer is claiming substantial reserves of oil and natural gas. The volume of reserves booked from shale is considerable and it dwarfs the value of property, plant, and equipment. A critical point is that these booked reserves rely on incurring significant future capital expenditures to drill laterals etc and frac to complete what is currently classified as 'proven.' The ability to finance these large capital expenditures, or to operationally complete them when needed may become substantial issues when the high costs of shale are allocated over such significant volumes.

Overall industry performance has been so weak that much of the capital invested has been destroyed rather than compounded. This contradiction highlights the underlying problem: the capital base itself has been over-misrepresented.

People, Ideas & Objects therefore believe that a substantial pro-forma adjustment to PP&E is necessary to accurately reflect economic reality. Our assessment suggests that approximately 80 percent of the capitalized asset base should be recognized as depletion on a pro-forma basis to properly represent the condition of any producer. Our earlier estimates placed this adjustment closer to 65 percent. Our revision reflects the deterioration in commodity pricing structures. Natural gas has become a global commodity market, much like crude oil. Restoring pricing discipline after years of overproduction—particularly from North American shale development—will likely take many years. Making asset performance further degraded and reflected accurately on a pro-forma basis.

When the SEC introduced the Ceiling Test, it was intended to establish a limit on asset capitalization relative to commercial reserve value. In practice, however, many industry participants appeared to treat the Ceiling Test not as a constraint but as a target to be met each year. Achieving that target encouraged the capitalization of virtually every possible cost associated with operations. This included capitalized interest, capitalized overhead, and in certain cases even operating costs—practices the SEC identified in enforcement actions involving producers such as PennWest.

The broader implication is troubling. Accounting systems designed to enforce discipline have instead been used to maintain the appearance of asset growth and financial viability. When that occurs, transparency and accountability are compromised, and capital markets receive a distorted view of industry performance.

Time

Time is a central issue in oil & gas, although it is rarely recognized as such. In practical terms, time is inseparable from speed, and speed is inseparable from cost. The ability to act quickly—or the inability to do so—ultimately determines both financial performance and competitive position. For years, producers have been encouraged to move decisively. Instead, the industry appears to have entered a state of declining institutional inertia. Decisions are deferred, initiatives stall, and organizations operate largely on autopilot as market dynamics move far faster than internal processes. By the time a decision is made, the opportunity has already passed.

Organizationally, the industry appears almost petrified—perhaps even fossilized. The culture has long been described as “muddle through,” and the description is remarkably accurate. In practice, this means that if nothing is done, nothing changes. Any initiative proposed by employees is quickly neutralized through bureaucratic de-prioritization. After several such experiences, individuals learn to conform to the prevailing culture rather than challenge it.

Yet time also requires reflection. The industry must devote sufficient time to identifying the structural issues that now confront it. One of the most significant signals an organization can receive occurred more than a decade ago when investors withdrew their support from much of the sector. Producers have largely failed to recognize the severity of that signal. Since then, the pace and cadence of events—across regulatory, financial, operational, and political environments—have accelerated well beyond the capacity of existing organizational structures to respond. Leadership, however, has remained immobile, effectively cementing its position despite mounting consequences.

Time presents a second and more urgent challenge: velocity. The transition toward new technological and economic environments is occurring at unprecedented speed. Two factors must therefore be addressed simultaneously. First is the pace at which these changes are unfolding. Second is the speed at which organizations must operate once these technologies are in place. Rarely in history has a technology diffused across the economy as rapidly as the systems now emerging.

Within this context, Autonomous Asynchronous Transaction Orchestration becomes a critical architectural solution. It provides the operational velocity required for a modern business infrastructure while dramatically reducing costs relative to current systems. When combined with Synallagi’s framework of specialization, division of labor, and shared infrastructure, variable administrative and accounting overhead costs may decline to a small fraction of present levels—potentially falling to single-digit percentages of current expenditures. Against this backdrop, the persistence of existing producer leadership and its established business model becomes increasingly difficult to justify.

In many respects, the future operating environment will function as though time itself has disappeared. Transactions, decisions, and operational processes will occur continuously through autonomous systems rather than through sequential human intervention. Organizations and individuals must therefore be structured to benefit from these technologies rather than obstruct them. This requires a level of trust in automated systems and the ability to supervise them at a distance. In many cases, a hands-off operational philosophy will become the governing principle.

Autonomous systems are highly sensitive to human interference. Even minor interventions can degrade their performance or invalidate the integrity of the data they rely upon. For this reason, governance must be carefully structured through our user community and its service providers, ensuring that every change is deliberate, authorized, and systematically evaluated. Data integrity must remain uncompromised; even the perception of unauthorized intervention can undermine system reliability.

Meanwhile, operational speed in the field will continue to increase. Demand for oil & gas—particularly in North America—shows little sign of slowing. As the world’s largest economy expands, its consumption of energy resources will grow accordingly. At the same time, the most accessible reservoirs are gradually depleted. The geological and engineering effort required to produce each additional barrel becomes progressively more complex and costly.

These realities place increasing pressure on the administrative and accounting infrastructure that supports exploration and production activities. Those systems must evolve to match and support the speed, complexity, and scale of modern oil & gas exploration and production operations. Without comparable advances in administrative capability, bureaucratic processes will increasingly constrain operational performance.

In other words, the oil & gas industry must develop administrative and accounting systems capable of operating at the same velocity as exploration and production activities. If it fails to do so, time itself will become the decisive factor—rendering today’s cumbersome bureaucracy almost efficient by comparison with what lies ahead.

Conclusion

This paper represents the principal issues that People, Ideas & Objects identifies within the North American oil & gas marketplace today. They are, in effect, the industry’s material issues. Some have persisted since 2009; others have emerged more recently. It is reasonable to expect additional challenges as we enter what many are describing as a new industrial era shaped by Artificial Intelligence.

Measured in terms of mechanical leverage, oil & gas has already delivered extraordinary benefits to society. Each barrel of oil equivalent represents roughly 10,000 to 25,000 hours of human labor. That achievement alone marks one of the greatest economic transformations in history. Yet it may only represent the beginning of what we can do with mechanical leverage.

Artificial Intelligence introduces a comparable form of intellectual leverage. Just as mechanical leverage amplified human labor, AI has the potential to multiply human decision-making, analysis, and coordination. The combination of these two forces—mechanical and intellectual leverage—signals the early stages of a new era of discovery.

This transition will not be gradual. It will likely unfold over the next few decades through highly disruptive change. Entire industries will be forced to adapt rapidly as new technologies generate value at unprecedented speed. Much of that value will accrue at the technological frontier where innovation is occurring. Oil & gas must now reposition itself at that frontier. The industry’s importance extends beyond its own economic interests; it remains fundamental to the energy systems that sustain modern society.

In this environment, inaction is no longer a viable option. Nor will the absence of perfect information justify delay. Decisions must be made and acted upon despite uncertainty. The speed of events demands it. Traditional approaches—designed for a different economic context—are no longer sufficient.

Progress will require a willingness to confront failure. Discovery is rarely linear. Failures must be examined carefully: determining whether they represent a terminal outcome or an opportunity for corrective action. Resilience, analysis, and persistence become essential capabilities. In practice, every meaningful success is preceded by numerous unsuccessful attempts.

The risk-mitigation frameworks developed during an era of perceived energy scarcity are poorly suited to the current environment of relative energy abundance created by shale development. New operating models and cultures must reflect this changed reality.

One conclusion is becoming increasingly clear. The emerging economic structure is less dependent on traditional hierarchical organizations and more dependent on individual expertise collaborating across distributed global networks. In this environment, assets—not organizations—become the primary units of economic activity. Ownership and coordination of those assets may increasingly occur through digital mechanisms such as tokenization, including tokenized interests associated with the Joint Operating Committee framework. Individuals organized through Synallagi and our user community which support the commercial operations of oil & gas Joint Operating Committees.

Recent commentary from the Hoover Institution’s Senior Fellow John F. Cogan, through his short podcast series The Grumpy Economist, highlights the role of stablecoins in this evolving financial architecture. These instruments offer extremely low transaction costs and operational efficiency that conventional financial systems will struggle to match. That structural advantage alone gives them significant competitive potential relative to existing monetary technologies.

The economic landscape is rapidly evolving. This presents substantial opportunities for those who are prepared to engage with it, but equally significant consequences for those who resist adaptation. Success in this environment, as in life, favors the prepared.

The current opportunity before the industry is arguably the most challenging—and potentially the most rewarding—it has ever faced. With Synallagi in hand, the industry would have the tools to capitalize on this potential. The only question is whether it will seize the moment.

References 

People, Ideas & Objects - Bibliography.

Glossary of Terms

Synallagi Summary

I'm Not Buying It.

People within the oil & gas industry need to ask themselves a direct question: given the facts as they stand today, why have producer officers and directors not been held accountable for the damage they had the authority, responsibility, and resources to prevent?

In 2015, oil & gas producer investors lost faith and trust in the industry’s ability to be accountable and profitable. They actively withdrew further financial support. Rather than address the substance of those concerns, producers continued promoting their supposed performance, discipline, and accountability while doing little to remedy the structural failures that caused investors to walk away.

They were warned of the consequences of inaction. They were offered a solution in the form of Synallagi. Yet as the damage and destruction spread across the industry, producer leadership watched it unfold and carried on with little more than a shrug. Capacity deteriorated. Service sector confidence collapsed. Accountability weakened. Competitiveness continued to atrophy. Profitability remained subordinate to excuses, narratives, and the preservation of executive control.

This past weekend, that failure appeared to reach a new level of disqualification. Both Exxon and Chevron were in the news warning consumers that oil prices were likely to rise. The audacity of that message is difficult to overstate. After years of blaming others, generating excuses, and assigning scapegoats, producer leadership now appears to be telling consumers, in effect, not to look to them for reliable oil & gas supply.

That is not leadership. That is an abdication of responsibility.

The industry should not accept this narrative. Producers know they are increasingly unable to meet market demand and are using war and geopolitical instability as convenient explanations for a price structure they created. Oil & gas is a price maker industry. People, Ideas & Objects has stated repeatedly that unprofitable production should not be produced in low-price environments. Those reserves should be preserved until higher prices make production commercially justified. Theoretically those volumes would be available today.

Instead, producers sold all their production at massive economic losses, obscured those losses through inadequate property-level accountability, preserved their positions and personal compensation while the industry’s and most particularly the service industry's productive and industrial capacities were materially weakened. Now, as prices become profitable, after they consumed valuable reserves in weak markets, they now warn consumers about the consequences of their self serving inactions.

This represents the fundamental breakdown of leadership. Producer directors and officers possessed the necessary resources, authority, and responsibility to intervene, yet they chose to disregard investor anxieties and spurned the proposed Synallagi solution. By doing so, they inflicted significant harm on the service sector and elsewhere. 

I’m not buying their warning to consumers. No one else should either, we must no longer tolerate these justifications; instead, we must insist on true accountability.