Our Value Proposition: Joint Operating Committee

 Once People, Ideas & Objects' Preliminary Specification aligns the seven frameworks of the Joint Operating Committee with the corporation's compliance and governance frameworks, it creates synergy and alignment across all industry and producer processes. Partnerships have been essential since the industry's inception and will continue to be so until its end. The Joint Operating Committee is the industry's standard for organizing partnerships, with a comprehensive understanding reflected in Operating Procedures and Accounting Procedures. These procedures are maintained by independent industry associations that publish and study the methods necessary for operating a partnership in oil and gas.

In our Preliminary Research Report, People, Ideas & Objects hypothesized that the introduction of computers in the 1960s caused a divergence between the accounting and administration perspectives and the operations perspectives of firms. Accounting and administration became focused on the information capabilities of computers, while operations remained centered on partnerships as represented by the Joint Operating Committees. This divergence was exacerbated by tax regimes, regulations, and SEC requirements, which directed the attention of accounting and administration towards the corporation rather than the business operations within the Joint Operating Committees. As a result, the operational information captured at the property level by accounting is now often inadequate for decision-making, which instead relies primarily on independent reserves reports.

Value or Construct?

Does making the Joint Operating Committee the key Organizational Construct of the Preliminary Specification qualify as part of our value proposition? If so, how?

We believe it does. A producer firm has to balance two different organizational focuses and objectives. The technical side is centered on the business of the business, while the rest of the firm is focused on regulatory requirements, reporting, corporate compliance and governance demands.

The first issue involves data inconsistency. Producers often see the same or similar data captured across different parts of the organization, but the data is inconsistent. The needs and requirements for data vary, particularly when it comes to production-related data. For instance, is the data monthly or daily, gross or net, spec or raw, natural gas or oil, actual or accrual, nominated or produced, sold or inventoried? What’s the chromatograph on that stream? These complexities often lead to confusion and inefficiency, as highlighted by the common response, “I just want the number we get off that monthly fax from such and such. I don’t know what number it means. I was told to use it when I started this job.” This situation is unfortunate and needs to be remedied. Production-related data is complex, difficult to manage, labor-intensive, and subject to numerous amendments and accruals, typically finalized within 60 to 90 days after the production month closes. People, Ideas & Objects believe there has to be a better way.

Therefore, we developed the Material Balance Report, part of both our Partnership Accounting and Accounting Voucher modules. The Material Balance Report standardizes the reporting of production to establish certain objectives. First, the volumetric balance is subject to the same rigor as debits and credits in the financial system. Second, it ensures volumetric balance within the partnership itself. All aspects of every production transaction are contractually defined and secured through agreements. Third, the report will be system-balanced and reconciled in terms of the larger system of industry production.

Different users need different perspectives and uses of the data. This is achieved through the Preliminary Specification Material Balance Report. E.F. Codd’s Relational Theory shows that different uses of the same data are one of the attributes of relational databases. Engineering the Material Balance Report as People, Ideas & Objects suggest provides the means to identify and accommodate these different uses. When we consider technologies, such as the Internet of Things, that are just beyond the grasp of what’s available today, and understand that the purpose of the Material Balance Report is to automate follow-on processes from the production data being generated, we can see how oil & gas employees can alleviate themselves from the tedium of manual processes. They can then invest time in capturing their tacit and explicit knowledge in the software and services of Cloud Administration & Accounting for Oil & Gas, focusing on the difficult, time-consuming, and critical work needed to make the industry dynamic, innovative, accountable, and profitable. This approach keeps the industry moving forward and achieves what we know must be done.

But a Rebuilding?

Why discard everything when some aspects are still functional? People, Ideas & Objects believe that North American oil & gas producers are currently operating at about 25% of what would be considered competitive. The industry has spent decades considering spending as inherently profitable, leading to homogeneous and indistinguishable financial statements across producers. These statements typically feature large property, plant, and equipment, minimal working capital, high debt levels, overstated assets, and shareholders who face diluted interests and fake profitability.

If the industry believes it is prepared to tackle the next 25 years with the current structure and leadership, this perception is misguided. The endowment of shale resources is beneficial, but rebuilding the service industry is crucial. The service industry, mistreated for decades, will require long-term proof and free industry cash to support their rebuilding efforts.

Our research taught us that when compliance and governance are aligned with operational decision-making, accountability results. This is intuitively understood. We believe this to be a source of conflict throughout the oil & gas industry, creating an atmosphere and culture of unaccountable decision-making. The contradiction occurs when operators assume the responsibility of managing the Joint Operating Committee. This is based on the need to have the requisite capabilities available to conduct necessary field operations. The Joint Operating Committee holds operational decision-making authority, which is then delegated in the Operating Procedure to an operator based on voting by its producer participants. A threshold percentage is established for any decision to pass. Let's assume 60% is required for approval, and the operator has a 33% working interest. Decisions are then made on this basis, AFE’s are issued, funds are spent, and the initiative fails. Who’s responsible and accountable for the difficulties—the operator or the Joint Operating Committee? 

We believe this to be the root cause of a related issue we identified in our discussion regarding Specialization and the Division of Labor. When producers have never been held accountable for day-to-day individual field decisions during their tenure, why would they be held accountable for decisions when they’ve assumed officer or director roles in the firm? Just “muddle through.” The industry culture developed over the past six decades underpins this unaccountability. In its place, a culture of excuses, blaming, and the generation of what we call viable scapegoats has emerged. To resolve this, the Preliminary Specification aligns and implements the Compliance & Governance module to the operational decision-making framework of the Joint Operating Committee, establishing an organizational culture of accountability for decisions.

The next point is related to the accountability issue and to other issues around resource restrictions in the earth science & engineering technical resource supply. Professor Richard N. Langlois was an extensive source of primary research we used throughout the Preliminary Specification. His research in industrial and innovation economics raises what he calls the agency issue or rights assignment problem in his working paper “Modularity in Technology and Organization.”

The question then becomes: why are capabilities sometimes organized within firms, sometimes decentralized in markets, and sometimes coordinated by a myriad contractual and ownership arrangements like joint ventures, franchisees, and networks? 

Explicitly echoing Hayek, Jensen and Meckling (1992, p.251) who point out that economic organization must solve two different kinds of problems: "the rights assignment problem (determining who should exercise a decision right) and the control or agency problem (how to ensure that self-interested decision agents exercise their rights in a way that contributes to the organizational objective)." There are basically two ways to ensure such a "collocation" of knowledge and decision making: "One is by moving the knowledge to those with the decision rights; the other is by moving the decision rights to those with the knowledge." (Jensen and Meckling 1992 p. 253). p. 27.

Moving the decision rights to where the knowledge exists was the appropriate decision to be made in the 1950s. However, this is inadequate today due to the difficulty for the producer as operator to maintain the full suite of just-in-time engineering and geological capacities and capabilities in the ever-expanding sciences. The solution therefore is specialization and the division of labor, which only exacerbates the difficulties and demands more from the operator. People, Ideas & Objects suggest we’ll soon reach the point where these capacities and capabilities will grow beyond what the commercial producer can support. Our solution to replace the operator definition is called Pooling.

Therefore, what rebuilding will be done? The current administration doesn’t understand there are issues. They wouldn’t know how to correct them, nor how to fix them. Consolidation is the principle they’ve hitched their wagon to, and already it's having severe consequences for both the service industry and the people who work there and in oil & gas. The only other alternative is the Preliminary Specification, designed specifically to rebuild the industry on these issues, as detailed in May 2004's Preliminary Research Report. The Preliminary Specification, published in August 2012, offers our solution: rebuilding the industry on the basis of a new culture of preservation, performance, and profitability.

The Joint Operating Committee 

Identifying, supporting, and aligning producers' processes within the Joint Operating Committee provides real value to producer firms, enhancing their performance and enabling progress in an industry that has at best stalled at a critical point in its history. People, Ideas & Objects don't believe consolidation is the answer and offer the Preliminary Specification as an insurance policy in case of its failure. Today, half of the producer firm utilizes the Joint Operating Committee. The engineering and earth sciences are deeply rooted in the traditions and culture of the industry's partnerships. However, they operate without the support of accounting information tailored to the oil & gas business, which instead caters to external interests like tax authorities, the SEC, and regulators. These external entities understand the communicated corporate related data because they define it, but engineering and earth science professionals are unaware of the flexibility and value of performance reporting that can help them determine what works and what doesn't. For four decades, they've been told that spending money is profitable—”just look at the balance sheet and income statement!”

Unaware of which property is profitable and which is not, they cannot determine where and why they may be losing money. They don't understand the financial impact of any actions taken or what measures can mitigate issues. They live by two truths: spending is profitable, and field costs need to be pared down.

Aligning the corporation’s compliance and governance frameworks with the Joint Operating Committees legal, financial, operational decision-making, cultural, communication, innovation, and strategic frameworks resolves the issue of “two separate organizations” operating within the producer firms. Although the value in doing so is inherent in the alignment, the quantifiable benefits are incalculable. Starting with the same actual, factual, balanced, and reconciled data used throughout the organization, the People, Ideas & Objects user community can make changes to the software to accommodate innovation. This reduces the redundant, costly, and non-competitive tasks of each producer building and maintaining accounting, administrative, and systems capacities and capabilities.

Focusing the culture of the rebuilt oil & gas producer around the Joint Operating Committee centers the focus on individual assets and their performance. There will be no ambiguity about the financial consequences of any action taken when actual, factual, standard, and objective accounting is conducted through the Cloud Administration & Accounting for Oil & Gas. This provides an understanding of these changes. All modules of the Preliminary Specification focus on the Joint Operating Committee. Engineers will be able to prepare pro forma financial statements based on their planned changes. They'll have access to the Artificial Intelligence, Performance Management, Resource Marketplace, Research & Capabilities, and Knowledge & Learning modules focused on the same Joint Operating Committee or whatever domain they define. The alignment of the financial and operational domains of oil & gas producers should have occurred long ago. We’ll soon discuss why this hasn’t happened and how it has contributed to the industry's downfall.

Conclusion

The concept of alignment may have been popular among technology enthusiasts a decade ago, but many such initiatives failed to deliver the promised business value. At People, Ideas & Objects, we address business issues by enhancing productivity and performance through specialization and the division of labor, supported by automation. This approach can significantly impact the industry's performance if the internal conflicts within organizations are eliminated. The current structure of having two distinct organizations within one firm creates independent silos working against each other, and consolidation only entrenches and prolongs these issues.

NVIDIA will soon breach a $3 trillion valuation. Tesla doesn’t appear too far behind if I’m reading what their future may look like. What we can say today is that Information Technology is mature in terms of its offering. As an investment it’s behavior is similarly mature. There are more exciting and dynamic industries to be involved in. The value that is being generated remains spectacular and will continue to the foreseeable future. What we have in North American oil & gas is analogous to an individual who’s been living in a homeless shelter for a few decades. Scratching out a living between the free food and currency they can get their hands on. On the periphery there are a group of people who are doing quite well through their schemes and manipulations of those less fortunate. But outside of this dystopian landscape the industry has been there so long that no one expects anything of it. Clean energy, yeah sure why not. Consolidation, yeah why not. Name me one initiative in the industry that has worked in the 21st century. And don’t mention shale, a resource known to always be there, a resource that is only produced as a result of the innovations that the service industry developed in order to access those reserves. Innovations the producers fought the service industry for years before they even tried them. Just as People, Ideas & Objects fight them daily for the past decades to enhance their profitability. What galaxy are these officers and directors from?

The future we envision is a highly competitive oil & gas industry thriving in North American capital markets. Consolidation, as a strategy, merely seeks to manage inefficiencies on a larger scale. In contrast, People, Ideas & Objects see immense potential in this industry. The path forward lies in embracing our Preliminary Specification, fostering a culture where the industry is dynamic, innovative, accountable and profitable. Leveraging specialization and automation to unlock the true value and competitiveness of North American oil & gas.

Our Value Proposition: Information Technology

Before the final stretch of our campaign, we started a series in mid-January that breaks down the individual elements of our value proposition. Now that we can return to our regular writing schedule, I'll wrap up the remaining posts on this subject. You can find the previous entries grouped under the label "Value Proposition:" which includes posts titled:

• Introduction
• Capital Component
• Hyper-Specialization and the Division of Labor
• Intellectual Property
• New Growth Theory
• Markets
• Innovation

Today, we'll proceed with our discussion on Information Technology.

Information Technology and Its Impact on Business

Over the past few decades, information technology has dramatically transformed business landscapes by enhancing productivity, performance, and fostering innovative business models. As these technologies have matured and become more integrated, they promise even greater performance and productivity enhancements. A pivotal technology in this evolution is cloud computing, which introduces a cost-effective model for users by shifting large capital expenditures to manageable operating costs. This model is particularly embraced by People, Ideas & Objects in the context of the oil & gas industry, where it revolutionizes access to state-of-the-art IT capabilities at low, variable costs.

This approach extends beyond just IT infrastructure to encompass software, services, and support within the oil & gas sector, using the shared cost methodology. Our model, termed "Cloud Administration and Accounting for Oil & Gas," applies cloud computing principles across oil & gas administrative and accounting processes. This is crucial, especially in a regulatory environment where building and maintaining necessary administrative capacities is costly. By sharing costs, oil & gas producers can avoid these high overhead costs that traditionally hamper profitability.

The traditional model where each producer independently incurs these costs does not offer a competitive advantage. Instead, through our shared and shareable model, producers will achieve state-of-the-art administrative capabilities at reduced costs with lower, variable overhead costs based on the producer's profitable production profile. 

Moreover, the adoption of Oracle Cloud ERP applications in our framework allows senior management to continuously adapt to technological advancements with minimal disruptions. The Preliminary Specification, integrated into our model, will handle future Oracle upgrades and adaptations, ensuring that the producers' needs are effectively met by our user community and service providers.

Finally, our approach with Oracle Fusion Applications avoids the pitfalls of traditional ERP customization. By embedding industry-specific features into the Oracle Fusion Middleware using object-oriented principles, we ensure that our customizations are both sustainable and adaptable to ongoing changes without significant redevelopment. This methodology aligns with Oracle's best practices, accommodating rapidly changing needs that support dynamic, innovative, accountable and profitable producers.

People, Ideas & Objects Information Technology Strategy

At People, Ideas & Objects, our strategic advantages lie in our user community, research, and intellectual property—not in software development. As such, we own and manage the software code derived from the Preliminary Specification and our Intellectual Property, while contracting the software development work to Oracle Corporation. Oracle's expertise in implementing their software products ensures high-quality development, eliminating the need for us to spend years assembling and training a capable team.

Since the first quarter of 2014, we have prioritized the development of our user community, recognizing this as the key differentiator in the quality and value of our offerings. In the oil & gas industry, time is a critical resource. Therefore, focusing on community engagement and intellectual property—rather than internal software development—maximizes our use of time, resources, and expertise. This strategy aligns with our belief in the importance of specialization and division of labor across the economy.

If oil & gas producers consider developing ERP solutions internally, they must face the reality that such undertakings would require immense scale and cost, likely duplicating efforts and expenses that could be more efficiently managed through our collaborative model. Sharing development costs through People, Ideas & Objects is far more economical than what would be spent on achieving comparable depth and functionality independently within each producer's firm.

Moreover, the dissatisfaction expressed by producers' shareholders and banks in 2015 highlighted the industry's broader issues with performance, accountability, and transparency. Despite this, the subsequent inaction over the years underscores the challenges and inefficiencies of working without a unified, effective business model. Our approach not only addresses these inefficiencies but also leverages shared resources to foster innovation and accountability in a sector that demands transformation. Using Oracle will cut many years off the development time. Years the producers can ill afford.

Oil & Gas ERP and Accounting Challenges

In our extensive discussions, we have consistently pointed out that the accounting practices of oil & gas producers over the last forty years have often been questionable. Mismanagement of overhead and capital costs raises significant governance concerns, which have not gone unnoticed by the investment community. We assert that these dubious accounting practices are facilitated by inadequate ERP systems, leading to critical issues in governance and financial oversight that should have become pressing matters for boards of directors.

Despite the essential role of ERP systems in ensuring effective accounting, the oil & gas industry suffers from a lack of effective systems. Currently, there are no tier 1 ERP providers that offer systems specifically tailored for oil & gas, which further exacerbates the problem. Although SAP provides ERP solutions to some major producers, their systems do not cater specifically to the unique needs of the oil & gas industry, often resulting in inefficient workarounds.

Our involvement with Oracle began in May 1991 when we initiated a collaborative development of an oil & gas ERP system, formalized by a contract in 1992. Despite Oracle's support, my initial venture into the oil & gas ERP market ended in failure in February 1997. This failure highlighted a broader issue: competitive ERP vendors have generally met the industry's needs without sufficient financial support from producers. This lack of investment has led to a situation where the personal gain of officers and directors contrasts sharply with the industry's overall financial underperformance and investor dissatisfaction.

Our May 2004 Preliminary Research Report incorporated insights from Professor Anthony Giddens and Professor Wanda Orlikowski, who have explored how technology, organizations, and society interact through Structuration Theory and the Model of Structuration. This theory suggests that any disparity among these elements can lead to conflict and failure. In this context, we've argued that the prevalent use of outdated, bespoke ERP systems in the industry serves to maintain a lack of accountability in financial reporting, allowing corporate leaders to avoid scrutiny and keep their methods unchallenged.

While acknowledging the significant efforts of my competitors under challenging conditions, it's important to note that since May 2004, there has been a deliberate lack of support for further ERP development. This has led to a market once populated by over 20 providers now dominated by a few, like P2, who have survived by absorbing others. Meanwhile, the IT market has matured significantly, but this evolution is largely ignored by oil & gas producers in their administrative and accounting practices. Instead, they often opt to highlight the latest IT trends—like the Internet of Things, Artificial Intelligence, and Machine Learning—as progress, regardless of the actual applicability or impact on their operations.

Oracle CloudWorld 2022 and 2023 Conferences Overview

At the 2022 Oracle CloudWorld conference, Oracle unveiled significant innovations in corporate ERP systems that enhanced business process automation. A standout feature was the advanced expense report process, which allowed employees to directly allocate expenses to specific cost centers using a partnered credit card company. This process, governed by Oracle’s automated policies, streamlined approvals and minimized administrative tasks, offering substantial time and cost savings across organizations.

In 2023, Oracle took another leap forward at their conference by integrating Generative Artificial Intelligence into their platform. This development further automated complex processes, enhancing efficiency and reducing the need for manual intervention.

Despite these advancements, there remains a notable distinction between consumer-facing and corporate applications, particularly in user interface (UI) design. The complexity of enterprise applications has historically made UI development challenging. However, Oracle has initiated improvements in this area with the development of their Redwood Platform, specifically tailored for enterprise applications. These changes are promising, and I recommend reviewing two specific videos that discuss these updates further. (Here and here.)

At People, Ideas & Objects, our primary focus and competitive advantage is our dedicated user community. Since 2014, we have emphasized the importance of involving users in the development of quality enterprise applications—a rigorous and essential process. Guided by our User Community Vision, we equip our users with the necessary tools to tailor applications that meet the unique demands of oil & gas producers, ensuring optimal profitability and operational efficiency.

Our approach to resolving challenges in the oil & gas sector is defined by a commitment to quality. Partnering with Oracle enables us to stay at the forefront of technological innovation. Our user community benefits from a vast array of Oracle’s resources, including access to diverse communities of developers and user groups. Once funding is secured, People, Ideas & Objects, along with our user community and service providers, will fully leverage Oracle’s products and services to realize our ambitious goals.

Our Value Proposition: Innovation

 People, Ideas & Objects et al need to worry about the startup to junior sector as much as any other classification within the industry. And we provide them with the most cost effective solution possible. This is purely because of the fact that the industry’s rebuilding will be done on an innovative basis. Innovation is the basis of the Preliminary Specification. It enables People, Ideas & Objects, our user community and their service providers to achieve our two opposing objectives of providing oil & gas producers with the most profitable means of oil & gas operations everywhere and always, and providing consumers with the lowest possible cost of an abundant and reliable domestic energy supply. With our decentralized production model and price maker strategy, we ensure that all production is profitable. Including Exxon's, Shell’s and that startup oil & gas firm that began this morning. And to do so innovatively to ensure that the ever escalating costs of oil & gas remain affordable to consumers. In addition, the commodities production profile and reserves continue to expand. Achieving profitable North American energy independence.

Enter two variables not available in prior decades and centuries. The cloud computing era coincides with the maturation of the overall technological infrastructure represented by the Internet. We are in the infancy of the Internet. Second, there is the "service" aspect of our user communities' service providers. We found that the level of innovation attributable to the small and medium sectors of an industry was as substantial as the larger sectors. Although the larger sectors contributed large amounts in terms of total expenditures, their impact was no greater than that of what the other sectors contributed. People, Ideas & Objects et al provides our solution for all sectors of the North American oil & gas industry and for all producers. Professor Giovanni Dosi was one of the key sources of research we used to determine the framework necessary for an innovative oil & gas industry. Innovation within a science and engineering-based business is therefore an inherent part of both profitable operations and consumer affordability. Professor Dosi’s paper “Sources, Procedures, and Microeconomic Effects of Innovation” September 1988, discusses and asks what are “the sources of innovations opportunities, what are the roles of markets in allocating resources to the exploration of these opportunities”?

People, Ideas & Objects research in oil & gas focused on these points: 

The main characteristics of the innovation process. 

• The factors that are conducive to or hinder the development of new processes of production and new products.
• The processes that determine the selection of particular innovations and their effects on industrial structures.  (p. 1121). 

According to Professor Dosi, there are two major issues that need to be addressed: 

• The first issue is the characterization in general of the innovative process.
• And second, the interpretation of the factors that account for observed differences in the modes of innovative search and in the rates of innovation between different sectors and firms, and over time. (p. 1121). 

Professor Dosi then states that: 

Typically, the search, development and adoption of new processes and products in market economies are the outcome of the interaction between:

• (a) Capabilities and stimuli generated with each firm and within the industry of which they compete. (p. 1121). 

The purpose of People, Ideas & Objects research in oil & gas focused on the organizational capability and capacities of the producer firm. Specifically in the earth science and engineering disciplines. It was also emphasized that innovations are based on both the firm and the industry. Coordination of the capabilities and stimuli of both the firm and the industry would therefore need to be advanced through changes in the organizational structure of both.

(b) Broader causes external to the individual industries, such as the state of science in different branches, the facilities for the communication of knowledge, the supply of technical capabilities, skills, engineers, and so on;  (p. 1121). 

Additional issues include 

(c) The conditions controlling occupational and geo-graphical mobility and or consumer promptness / resistance to change, market conditions, financial facilities and capabilities and the criteria used to allocate funds. Microeconomic trends in the effects on changes in relative prices of inputs and outputs, including public policy. (regulations, tax codes, patent and trademark laws and public procurement.) (p. 1121) 

People, Ideas & Objects propose that innovation represents a critical Organizational Construct which compels organizations to either flounder or flourish. Innovation serves not only as an Organizational Construct in its own right but also, as we have defined in the context of the Joint Operating Committee, it is one of the seven key frameworks of this construct. From this perspective, innovation is seen as a defined and replicable process, which can be systematically established through thoughtful organizational design. Crucial to this design is the integration of ERP software, tailored to identify and support the specific needs of the organization and its industry. In the 21st century, innovative organizations are fundamentally reliant on such ERP software systems. The Preliminary Specification lays the groundwork for these innovative producers. It is up to the competitive nature of the officers and directors to harness their innovative potential, coordinating their earth science & engineering capacities and capabilities effectively.

Our second source of primary research material regarding innovation came from Professor Richard N. Langlois. Throughout our review of his work we determined the appropriate nature of the organizational design of the producer firm and the oil & gas industry itself. Selecting specific areas of the firm or market where the process and its management should be. Where capabilities should reside. By fully implementing the Internet and using Professor Langlois' research, which included Professor Carliss Baldwin's determination of where exactly that transfer between firm and market should occur. We designed the appropriate software tools, such as our task and transfer system. This will enable our user community to define which processes to undertake and manage in their service provider operations. Introducing enhanced efficiency in oil & gas administration and accounting. 

Building on other innovations that provide value generation such as cloud computing. People, Ideas & Objects, our user community and service provider organizations can accomplish this through the introduction of Cloud Administration & Accounting for Oil & Gas. A service that turns the fixed producer overhead into a variable industry-based overhead that can be provided to any producer no matter what their size or production profile. It is possible for producers to shut-in unprofitable production and produce only profitable properties, increasing shareholder value as a result. A substantial portion of our published value proposition of $25.7 to $45.7 trillion over the next 25 years is attributable to introducing this production discipline. This is to eliminate the known $4 trillion in damage and destruction caused by overproduction in natural gas since 2007.

The Preliminary Specification has captured this understanding of innovation and incorporated it within the culture of the industry we are rebuilding in these Organizational Constructs. It is also part of the Joint Operating Committees innovation framework. Each of the fourteen modules of the Preliminary Specification is materially affected when we identify the Joint Operating Committee as the key Organizational Construct. Which provided us with an opportunity to incorporate this understanding of innovation into the design and reorganization of the oil & gas producer firm and industry. These can be identified by several major processes of innovation within the Preliminary Specification. One of these ensures that failed innovations and experiments, and their underlying processes are not repeated in separate and distinct areas of the organization each year. Using the same failed “ideas” repeatedly is not innovation. Another major process of innovation is to enhance the scientific basis of producer firms and the industry as a whole. Moving forward on the basis that an idea that generates a dollar today will only produce ten cents tomorrow. We therefore must increase the volume of ideas generated and incorporated into our work processes to continue increasing our value. Various other innovation processes have been incorporated throughout the Preliminary Specification based on primary research conducted by Professors Giovanni Dosi and Richard N. Langlois. Enabling producers to earn the unquantifiable value that needs to occur throughout each producer firm and all tiers of the oil & gas industry in the decades to come. Value that will need to fund the innovation for tomorrow.

Oracle Cloud Infrastructure (OCI)

Continuing our discussion regarding the recent Oracle CloudWorld 2022 & 2023 conferences. Producers can generate incremental and continuing value from enhanced innovation through the development and implementation of the Preliminary Specification. Oracle’s products are the premier technologies in database systems development and their ERP systems are the base of the Preliminary Specification. Oracle is now partnering with service providers to enhance their products with a variety of services in order to bring about the innovation-based benefits we have discussed throughout the Preliminary Specification. Theirs will be in the domain of generic business processes such as banking etc, or the non-oil & gas specific processes that we handle through the 14 modules of the Preliminary Specification. 

Our proposed combination of Oracle Cloud ERP, People, Ideas & Objects, our user community and their service provider organizations are designed to deliver the foundation in which the producers, the oil & gas industry and all the tertiary industries can succeed in the 21st century. Without these facilities and capabilities the question we would ask is how will the industry “muddle through” so many of these issues and opportunities otherwise?

Since Oracle’s beginning they have pioneered the development of their technologies to be the premier tier 1 provider in all categories of their offerings. Oracle has been a critical and essential innovator in each of their products and markets. They continue today with products such as Oracle Cloud ERP and Oracle Cloud Infrastructure that continue that heritage. Recently with the Oracle CloudWorld 2022 conference we saw an innovative direction beginning with their development of service providers to augment their products. These enhanced products and services bring tremendous incremental value to oil & gas users. And are consistent with the work People, Ideas & Objects has undertaken on behalf of North American producers. 

Innovation throughout the business and industry specific process management, built upon the premier tier 1 Oracle products. This augments the dynamic, innovative, accountable and profitable nature of what is demanded of North American oil & gas producers. This is not a static environment. It will be through our user community and their service providers that producers will be able to interact with all aspects of business and industry specific process management. To make changes, innovate and develop these further which is an inherent part of People, Ideas & Objects and our user communities permanent software development capability. But there’s more.

A production configuration oriented toward this innovation Organizational Construct. With the Joint Operating Committee, that Organizational Construct holds innovation as one of its seven frameworks. Not only oil & gas producers, but the entire oil & gas industry and its tertiary industries and supporting institutions will be culturally aligned and oriented through Oracle Cloud ERP and People, Ideas & Objects Preliminary Specification towards innovation in the earth science and engineering disciplines. Providing the means to rebuild the industry in this configuration with software that defines and supports these objectives. Where the industry's approach to its next 25 years can be the most dynamic, innovative, accountable and profitable in its history. A future that is the most demanding, challenging and exciting in its history.

Our Value Proposition: Markets

 Three modules of the Preliminary Specification are “market” modules, including the Resource, Petroleum Lease, and Financial Marketplace modules. Each establishes a marketplace where producers can engage in the markets they need.The marketplace modules mimic the three markets producers participate in. They are designed to deal with the day-to-day activities of each producer, service industry member and others. Supporting them with the contractual, transaction processing and other capabilities of Oracle Cloud ERP and People, Ideas & Objects Preliminary Specification. We also support our user community and their service providers in our Cloud Administration & Accounting for Oil & Gas. Enabling producers to apply their competitive advantages and strategies in the greater oil & gas economy. 

North America has advanced its overall quality of life through markets and price discovery. The Preliminary Specification will act as a part of the structures that define and support the oil & gas industry. Our decentralized production model price maker strategy relies on the principle of oil & gas commodities being priced based on the price maker principle. Producers need to produce only profitable production, after full consideration of all their actual costs on a timely and accurate basis. This is how they’ll operate with Cloud Administration & Accounting for Oil & Gas. Using all of the information contained within the commodities market price (production, inventory, consumption, reserves) to determine profitability and ultimately what will and will not be produced. It is these same mechanisms that are involved in every transaction of a free market. 

From the Preliminary Specifications Resource Marketplace module we quote from a paper written by Professors Richard N. Langlois and Nicholas J. Foss entitled “Capabilities and Governance: the Rebirth of Production in the Theory of Economic Organization.” they note.

The organizational question is whether new capabilities are best acquired through the market, through internal learning, or through some hybrid organizational form. And the answer will depend on (A) the already existing structure of capabilities and (B) the nature of the economic change involved. p. 20.

And

If by contrast, the old configuration of capabilities lies within large vertically integrated organizations, creative destruction may well take the form of markets superseding firms. History offers many examples of both. p. 20.

And

Either way it boils down to the same common-sense recognition, namely that individuals - and organizations - are necessarily limited in what they know how to do well. Indeed, the main interest of capabilities view is to understand what is distinctive about firms as unitary, historical organizations of cooperating individuals. p. 13.

In terms of the Resource Marketplace module we first need to discuss two components of how operations are conducted in oil & gas. Field service industry providers extend producers' capabilities and capacities into their regions of interest. If producers owned and operated their field infrastructure it would otherwise be an impossible impediment and constraint towards progress. The second component is the history of abuse and disrespect producers have displayed and presented to the service industry over forty years. And particularly since 2015 when producers recognized their financial difficulties were amplifying. 

The status quo long ago accepted the assumption that oil & gas is a boom / bust industry. All other industries sought to work these issues out of their businesses and industries many years ago. It is this continuing acceptance by producers that has left us with a legacy of maybe six good years out of the past thirty six. Officers and directors don’t understand this argument as they’ve experienced thirty six years of superior executive compensation. Producers assumed the service industry would adjust to the boom / bust trend in lock step with them. There is an implied assumption that the service industry, like the oil & gas industry itself, enjoys revenues as a primary industry. Therefore, it continues business as usual during bust cycles. The diversity of the service industry offerings, and their coverage across the various regions of their operations throughout North America spread them thin operationally. As secondary industry participants they are not as resilient as producers believe. Scaling back from 1,900 active drilling rigs during 2015 to 400, forcing 50% price reductions on the drilling operator or they would use another vendor, the producers induced a collapse of their revenue streams into the low and below teens in terms of percentages of prior levels, which has been devastating on the financial health and viability of the entire service industry.

Now in 2024 the repercussions of this downturn have decimated much of the service industries capacities and capabilities that were once available to producers. The largest service industry providers have left the continent due to this abusive treatment. Therefore for producers to work out the boom / bust cycle through our price maker strategy will contribute to rectifying this issue in the long run. Through profitability everywhere and always, the oil and gas industry will build a stable infrastructure. Providing a stable environment, or a constant level of demand for which the service industry would be able to budget, plan and prosper. 

After this and similar treatment over the past four decades investors in the service industry are unwilling to participate in the rebuilding of their much needed field operations. They invested in good faith and were abused by the producer firms. They’ve witnessed the equipment they invested in being cut up for scrap metal to pay the light bill and taxes on the shop or horsepower sold off to other industries. This was due to the producers determining they could get away with leveraging additional field activity by not paying their bills for 18 months after the jobs were completed. Producers should have alerted the service industry representatives to these plans beforehand. The dilemma today is who’s willing to provide the financial resources for the service industry to recapitalize itself. The funds that would enable it to reestablish the capacities and capabilities necessary for a self-sufficient and profitable oil & gas industry? The service industry believes that producers broke it, they can fix it. Maybe when they have some skin in the game they won't be so abusive.

This is what’s known and understood in the market today. It's not news. Producers expect the service industry to resume normal operations, yet fail to consider the consequences of their prior actions. A similar example is the history of oil & gas ERP providers over the past thirty years. I can report there’s still no consideration of a second chance these first tier ERP providers will ride to the rescue of the producer firms. Why? They feel the industry is too complex, too costly and there are not enough producers to negotiate sales prices fairly. SAP is a custom implementation for each sale. The last two ERP providers left in 2000 and 2005, as documented on page 17 of our White Paper. This was due to producer officers and directors' inability to pay for software development in advance. The only method by which these vendors would approach the industry. 

Producers have had ten years to invest in the Preliminary Specification to make their organizations profitable and accountable. They also had the opportunity to avoid this inevitable, predictable and fatal outcome but didn’t do so. Not a penny has been spent on People, Ideas & Objects at any point. The need for skin in the game was the apt approach when so many oil & gas ERP investors and vendors were betrayed three decades ago. This has now been done to the service industry. People, Ideas & Objects are instilling market principles in the producer firms, however, this does not imply that those who support them have the inherent trust in producers as a result of their prior actions to rely on market mechanisms at this time. Industry culture will need to have been proven to be changed. We’ve heard the promises before. 

Producers sit on primary industry revenues. They will show a thumbs down to this idea as if People, Ideas & Objects is the only vendor they’ll be faced with who has this ludicrous prepayment idea. Officers and directors' actions have consequences that are wholly detrimental to everyone else in the industry. Officers and directors will argue this does not remind them of what markets and price discovery should look like. Correct, it's what’s necessary after their destruction of markets. 

These facts on the ground are what officers and directors refuse to consider or admit. Until they do the industry will be beset with problems of the scale and magnitude of trillions of dollars. These issues need to be dealt with and I am unaware of another solution. The need to rebuild the industry brick by brick and stick by stick must be financed by the only means now available. The primary industry revenues of the dynamic, innovative, accountable and profitable oil & gas industry. It is facilitated through the Preliminary Specifications Resource Marketplace module and the price-maker strategy in the decentralized production model. Granted there will be those within the service industry that will continue to scrounge for the pennies falling from the officers and directors' pockets. However, that does not create the dynamic, innovative, accountable, profitable and energy independent oil & gas industry that we need. 

The Financial and Petroleum Lease Marketplace will also implement market organizational structures in the Preliminary Specification. This will provide the organized interface necessary to access and interact with these markets. Modules in which the full transactional power of the Preliminary Specifications ERP system supports these markets. We’ll also discuss the Marketplace Interface we're building. I believe COVID provides the opportunity to adjust one's opinion to this feature. I have suffered the slings and arrows, the ridicule for it in the past. There is little that disagrees with what I haven't heard. In my opinion it is revolutionary and needs to be seen in the context of the changes that occurred in 2020 - 2022 covid era. At a minimum it adds an element of serendipity to working from home. One point I may not have been clear about is that the Marketplace Interface is a virtual representation. Users will be able to access it through any screen on any of their devices. The person does not wear a headset.

The Petroleum Lease Marketplace module is exactly what you could imagine. An opportunity to post, bid, purchase, and sell mineral rights and producing properties in the marketplace that exists and is replicated virtually within the Petroleum Lease Marketplace module. Everything from the opportunity to participate in a joint venture to establishing surface rights payments is fully supported by the ERP system of the Preliminary Specification. Our product sits on top of Oracle ERP Cloud which includes their tier 1, Oracle Fusion Applications which Gartner rates as the highest quality offering. Oil & gas markets include Federal, State, Provincial, Freehold and offshore leases. An opportunity for industry to consolidate on a dynamic platform which uses proven tier 1 technologies with the constant support of service providers. This platform maintains transaction administration and accounting in a standard and objective manner. (Note: People, Ideas & Objects maintain the policy, and it is written into our user community and service provider licenses.) 

We will keep arm’s length distance from all royalty administrations. We operate in the long-term interests of the oil & gas industry. To ensure that they are provided with the most profitable means of oil & gas operations. There will be no compromise on this anywhere within this community.) This will be enhanced with the constant iterative design and development being undertaken by the People, Ideas & Objects user community and developers on a permanent basis. Whereas if a jurisdiction reviewed and changed their royalty rates at some point, in terms of either the rate or method calculated, producers would not need to concern themselves with the administrative or accounting aspects of those changes. The user community, developers and service providers would handle them and ensure that the software and services are updated on time. Producers would only need to deal with any issues regarding revised royalty costs. 

Producer firms do not have competitive advantages in administration and accounting. Thankfully that is one of the statements we have no pushback on. However, these areas shouldn't be slapped together in a haphazard manner. There’s no reason why the industry doesn't have access to state of the art ERP systems within their firms. That producers haven’t, has led to many questioning not only the integrity of accounting but also the systems used by the industry. This questioning should never have been necessary and implementation of Tier 1 ERP systems is now an explicit demand of the investment community. Oracle Cloud ERP is the premier Tier 1 ERP system on the market. 

And why is it that the issue of overproduction, or as we define it as unprofitable production, can be documented to have existed in the North American marketplace as far back as July 26, 1986? The solution we propose to the overproduction issue, in addition to aligning all seven Organizational Constructs, has been available since August 2012. In terms of markets, it is estimated that there is double the amount of oil needed by 2050. This capacity overhang forces North American high cost producers to assume the swing producer role and produce only profitable production. During the next 27 years, Saudi Arabia will be able to produce profitably at any price with its production costs of $3.00 and probable $0.00 in capital costs. They could use the money, and the markets in 2050 are too far away and unpredictable for them to sit back and wait for. 

The third marketplace module is the Financial Marketplace module. With the Preliminary Specification, the Joint Operating Committee becomes the key Organizational Construct of a dynamic, innovative, accountable and profitable producer. In the Joint Operating Committee section we noted that the movement of knowledge, which includes the detailed actual, factual accounting information for that specific property, to where the decision rights are held, which is the Joint Operating Committee, enhances accountability. 

It's here that the Financial Marketplace enhances accountability through the board of directors' interaction with their current and prospective shareholders and bankers. A review of the Financial Marketplace module specification would be the most comprehensive source of information to capture an overall understanding of the module. With the standard and objective nature of the accounting conducted throughout the Preliminary Specification and the service providers. Would that satisfy some of the issues investors and bankers have raised regarding their investments and loans in the industry? Where everything being produced is profitable and producers seek to maximize profits by shutting-in unprofitable production? Would People, Ideas & Objects, our user community and service providers help producers satisfy their shareholders and bankers to the point where they’d invest in the industry again? 

Our Value Proposition: New Growth Theory

 People, Ideas & Objects Preliminary Specification will take the administrative and accounting resources of North American producers and reorganize them for independent, individual service providers. This has allowed them to focus on one process and turn producers' overhead costs variable, based on profitable production. In turn none of the producer's costs are fixed in the Preliminary Specification. Creating at least six substantial value propositions that are tangible and clearly evident. Which include:

• Maximize producer profitability by not diluting corporate profits through the production of unprofitable properties.
• Save the producers petroleum reserves for when they can be produced profitably.
• Reserves would no longer need to recapture additional costs of previous losses as future profits.
• Reserves are seen as a cost-free means of inventory and storage.
• Removing marginal production from markets ensures commodity prices dictate market activities. 
• While shut-in producers can focus their innovative efforts on increasing production, reserves, and cutting costs to return their properties to profitability.

Secondly and perhaps more importantly in terms of building value for the greater North American oil & gas economy. Specialization and the division of labor which has proven to be the primary method of building all of the tangible value for western civilization since 1776. Is one of the service providers competitive advantages. Based on these principles, we have reorganized administrative and accounting resources to build value to ensure profitable operations, everywhere and always. The ability to further enhance the industries productivity through specialization and the division of labor will add unknown, unquantified and unqualified means to do so. We will facilitate this through our permanent software development capability, our user community, and their service provider organizations implementing these principles.

We have adopted an incremental method of building value on top of these two methods through Professor Paul M. Romer’s “New Growth Theory” of non-rival costs. In a December 1, 2001 Reason article he summarized his theory as “People, Ideas & Things.” I adopted this principle and named this initiative People, Ideas & Objects as we are object-based software developers. We’ve applied “New Growth Theory” and non-rival costs throughout the Preliminary Specification and elevated it to an Organizational Construct. Standing on the shoulders of giants and especially Adam Smith’s Specialization and Division of Labor. Professor Romer has elevated business thinking in this direction and it is the next frontier in building value for organizations through the mitigation of costs in substantial yet unquantifiable ways to enhance the performance of those that use these methods. 

Professor Romer’s theory is the basis of how cloud computing has brought value to our economy. Users can share the costs of the heavy capital investment in technology, the capacity, capabilities, resources, maintenance and support costs on a variable basis, based on usage. Conversely our user community’s service providers can enhance their service offering through specialization and division of labor that would otherwise be unavailable to individual organizations. We have extended this thinking to include not only Oracle Cloud ERP but also our Cloud Administration and Accounting for Oil & Gas Software and Service to the managed shared and shareable resource. Eliminating the need for each producer to build, resource and maintain the necessary non-competitive Information Technology, accounting and administrative infrastructure they need as dynamic, innovative, accountable and profitable oil & gas producers. Providing a standard, objective and value driven service that shares the sole objective of ensuring oil & gas producers achieve the most profitable means of oil & gas production, everywhere and always.  

The capture and implementation of Professor Romer’s theories is one of the seven Organizational Constructs of the Preliminary Specification. All seven are focused on building value for producers and providing tangible means to do so. Establishing a culture based on preservation, performance and profitability to replace the failed “muddle through.” In this configuration, they are available through the Preliminary Specification, our user community, and their service provider organizations. They’ll be established with permanent software development capabilities and a user community that will iterate on these principles to bring further value over time. 

Professor Paul M. Romer

Published in October 1990 “Endogenous Technological Change” became the foundation of “New Growth Theory” in economics that has developed and provides value throughout the economy through its application. In a Reason Magazine interview Professor Romer explained many of the points.

Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is neither a conventional good nor a public good; it is a non-rival, partially excludable good. Because of the nonconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth. S71.

Professor Romer won, or maybe best described as shared, the 2018 Nobel Prize in economics for these principles. They are an incremental value-add to the traditional specialization and division of labor that has carried that weight exclusively until now. It is this principle of sharing non-rival costs that will mitigate what we believe to be the secondary reason for the systemic lack of profitability in oil & gas. High overhead costs are currently at the corporate level. We have shifted those to charge the actual, factual overhead costs incurred by service providers' billings directly to the individual Joint Operating Committee. There they become a cost of the property's product that is captured in the profitable commodities sale price. Through the sale, these funds are recaptured and returned to the company, which are used for overhead costs for the following months. Currently producers capitalize their overhead and therefore sell their product below cost and are not recovering the cash spent on monthly overhead expenses. As they indeed state, they are “putting cash in the ground.” Having to source new cash to finance their overhead expenses each month.

By sharing the administrative and accounting infrastructure, turning these costs variable based on profitable production, applying specialization and the division of labor and returning the cash consumed by monthly overheads to the administrative and accounting areas. As is done through the development of People, Ideas & Objects user communities and their service providers. And delivering to industry our Cloud Administration & Accounting for Oil & Gas Software and Service. People, Ideas & Objects are adding real value to North American producers in terms of resolving what can be described as their largest impediments to profitability. Chronic overproduction, or unprofitable production as we describe it and high overhead costs. Which leads to their unique characteristic and phenomenon of “putting cash in the ground” and “building balance sheets.”   

Oracle CloudWorld 2022 & 2023 Conference

It was during this conference that it became apparent that Oracle was pursuing the incremental value adding process that Professor Romer defined in his paper “Endogenous Technological Change.” Augmenting their generic business processes with service providers such as banks and logistics companies with fully optimized and integrated services with Oracle Cloud ERP, just as People, Ideas & Objects are approaching the unique oil & gas attributes. We all have an extensive software development workload ahead. I see at least 20 years of work in this area. Incrementally and iteratively building value upon prior innovations in the service industry, earth science and engineering, the Preliminary Specifications development and Oracle Cloud ERP. 

The most impressive example provided during the 2022 Oracle conference was the expense reporting features with J.P. Morgan Chase. If the user uses their credit card for business, they can choose the type of expense charged to be classified into an account within their employer's system. Oracle Cloud ERP would evaluate the charge based on the company's policies and determine its eligibility. If eligible it would be processed and payment made to the employee or the credit card company. Eliminating the massive number of hours and costs incurred in expense reporting by organizations during the year in their current systems. This is reduced to a few milliseconds of processing time. While the cost to the organization to use Oracle Cloud ERP is incidental in terms of the time spent on Oracle Cloud Infrastructure. In addition, the engineering costs to develop the specific system, these software engineering costs are amortized across the global population of Oracle Cloud ERP customers using the feature. To a lesser extent People, Ideas & Objects provide this level of service to North American producers for their unique oil & gas attributes. The lesser extent is due to the smaller population of oil & gas users for which this development and implementation, and its costs, will be targeted. As such, North American producers have the opportunity to realize both Oracle and People, Ideas & Objects innovations concurrently and at substantially reduced costs. These are due to Professor Paul Romer's theories. 

Increasing the value that oil & gas producers gain from the use of Oracle Cloud ERP and incorporating it in our value proposition. Their 2023 CloudWorld Conference built upon the innovations they introduced in 2022. Generative Artificial Intelligence is now generally available throughout the Oracle Cloud ERP suite of applications. This takes these automations and their incremental capabilities to a more substantial level with tools that users were unaware of that will be able to generate incremental revenue from. If we consider just the producers Research & Capabilities and Knowledge & Learning modules, how they will be enhanced through Generative AI this is the method People, Ideas & Objects feel that the scope and scale of the issues and opportunities that oil & gas are presented with can be approached. 

If we consider the timeframe, the technology and the state of the industry. The scope and scale of the repair becomes untenable in the hands of those Keystone Cops who seem to have few original ideas and then go about proving them wrong in the public market. My example would be the recent discussion of production discipline where it was uniformly interpreted to mean they needed to sign new LNG export contracts. Indicating that traveling in unison ensures no company is singled out for their accountability in the matter. 

When it comes to resolving these issues we therefore have three options. 

• The first is to continue to repeatedly travel down each and every blind bunny trail in unison. Only to discover the bandit the Keystone Cops are searching for is now at the bank.
• Have each individual producer deal with the details of the development of their own Intellectual Property. Then undertake the scope and scale of software development that is commensurate with People, Ideas & Objects Preliminary Specification at each producer location. 
• Or share in the cost of development and focus on our user community to deal with the specific issues and opportunities as their distinct competitive advantage. Where they’ll have the understanding and resources, including access to the Intellectual Property and developers to make changes to the software code.

Seeing the broad scope of this challenge and the approach of “muddle through” makes sense to the officers and directors. 

Professor Romer’s "Endogenous Technical Change" leverages specialization and the division of labor in material ways. It is revolutionary and applied throughout the Preliminary Specification to the benefit of the oil & gas producer and greater oil & gas economy. To choose otherwise in this highly technical and complex society. Where the speed and pace of business has proven to be far beyond the capabilities of the officers and directors. Where the scope and scale of the issues are existential in their magnitude, such as what the industry has been faced with over the past few decades. To misunderstand the business, the direction, the vision and strategy of what to do, when and where to do it. As displayed by the officers and directors in 2024. Leaves one asking how is it that consolidation will do anything but accelerate the demise of the oil & gas industry in North America?

Our Value Proposition, Intellectual Property

 There are two undeniable truths that producers state in unison.

• They’re profitable.
• They’re innovative.

It takes significant imagination to comprehend the points being made here. I believe the meaning is implied in “muddle through,” if they state it then it must be true. People, Ideas & Objects find these statements particularly offensive and part of the motivation as to why we’ve been developing our solution. However, these have taken on a more deliberate and devious meaning these past few years. First we were treated to their summary statement that Shale would never be commercial. Then secondly, clean energy was the industry's future. Bringing forward somewhat of an admission that they could not make a profit. Falling back on their cultural propensity to abandon what was “the next great thing” instead of attempting to commercialize the asset or make it perform. That would have required innovation in order to do so. 

I’ll add to these allegations that from a business perspective these officers and directors have absolutely no understanding of what it is they’re doing. When they continue to do the same thing over and over, possibly expecting different results, at least others hold that expectation of them. The most aggravating aspect of the proven $4.03 trillion dollar loss of revenues from the collapse of natural gas prices. Is their segue into clean energy due to Shale being “uncommercial.” When your shareholders are dissatisfied with your performance for almost a decade, and you did nothing to mitigate that revenue loss. When others were offering solutions to eliminate that loss, and you did nothing. It provides further evidence of officers and directors willful misconduct.

To the issue of this blog post and how Intellectual Property becomes an Organizational Construct in the Preliminary Specification. The 21st century business value is mostly derived from business models supported by software. That software is supported and ownership is determined by Intellectual Property. There are other forms of Intellectual Property involved in oil & gas since it is a science based industry. Much as anywhere you look in North American oil & gas, anytime you look behind the door, there are issues hiding in plain sight.

Oil & gas producers have maintained a poor man’s strategy in terms of how they access IP from vendors, their secondary and tertiary industries. They don’t recognize any claim and certainly will not attribute any value to IP, and as a result have not paid any monetary compensation for the hard work that has gone into any research and development. Outside of research and development in terms of geo-technical innovations and IP, producers are not responsible for any of the innovations that they’ve claimed in the past decades. All of their benefits have been gained as a result of the hard work of individuals, mostly, in the service industry. Once they do discover a product or service that generates significant value to the oil & gas producer. Their trouble begins. 

First it is not accepted until the vendor is willing to have the product or service reverse engineered to better understand the actions taking place. No commercial acceptance of this will occur until such time as the service industry representative capitulates on the point of reverse engineering. Then surreptitiously the product innovations are clearly discussed with the innovators competitors in order to sponsor competition of the type that will price their products with no inherent costs of the research & development. Forcing the innovator to compete based on price. Rendering further Intellectual Property development and innovation moot. 

People, Ideas & Objects finds this style of “innovation” particularly vile. The Preliminary Specification establishes a solid foundation for which the Intellectual Property of individuals within the greater oil & gas economy becomes available to those original authors, innovators and entrepreneurs. This is provided through the Resource Marketplace, Research & Capabilities and Knowledge & Learning modules that were published in final form in August 2012. The interaction between these three modules is comprehensive and beyond this discussion. I recommend a full review in order to appreciate the implementation of our solution. 

Another key point is the tearing down of the basis of Intellectual Property (IP). An industry such as oil & gas is based on earth science and engineering needs. To expand the industry's capabilities in science and innovation we will need to overcome many difficult problems. And as we progress, the volume of ideas needed will be an order of magnitude greater than what is required today. These problems cannot be solved in an environment where there is no upside for individuals to solve them. Addressing the motivation to solve these problems and enabling people to earn the rights to their Intellectual Property through the People, Ideas & Objects application modules is the first step in making the necessary industry-wide changes. This will, in turn, turn the oil & gas industry into a more dynamic, innovative business.

With the state of the industry as it is, its IP is in disarray, and the capabilities and capacities derived from it are deteriorating as we speak. Making this an IP gold rush in the industry, in order to save it. Producers' difficulty is that none of this is published and publishing is how copyrights are earned. Let me pass on one more pertinent fact that I have learned since I’ve been so reliant on copyright. Patents and trademarks are defensive in nature in that they protect your IP. Copyright is offensive and allows expansion of one's Intellectual Property. Building on the shoulders of giants. Copyright does not secure rights to an idea. It only provides you with monopoly rights to expression of that idea. In other words, it must also be pursued and maintained in the same manner that I do here at People, Ideas & Objects. Until the Resource Marketplace and other modules of the Preliminary Specification are built I see this IP of earth science and engineering as unclaimed property. Therefore the first thing we must do for the dynamic, innovative, accountable and profitable producers in the oil & gas industry is change their competitive advantages. They'll now read: 

Coordination of the earth sciences & engineering markets' capabilities & capacities, as well as their land & asset base. 

One of the most promising forms of IP today is software and algorithms, Artificial Intelligence and Machine Learning. What if these were also the foundation of a producer firm as competitive advantages? This would generate revenues for producers and the people who developed them in the form of service revenues, license fees and royalties etc. Helping to establish the new and innovative oil & gas industry. Supporting that second source of revenue of the producer we’ve established through our Work Order system.

Business changes quickly. Intel's dominance in the chip market is now a constraint that causes them to lag in that market in consequential ways. As the dominant processor manufacturer, its processor architecture has been deemed redundant for future purposes. Business value is no longer in processor manufacture, it's in design. Contract manufacturing is a commodity business where others find profits and opportunities in that area where Intel does not compete. Design is now valued. Read the summary of Ampere Computing’s Leadership Team that now has one of the most powerful processors available in commercial volumes. Oracle has declared they’re moving their cloud offering to Ampere processors, which Oracle’s Cloud is offering today, and People, Ideas & Objects will run the Preliminary Specification exclusively on Ampere which will provide better cost / performance than Intel based cloud computing can offer. 

This is the changing business world and these are the revised business rules. It comes down to one word, the individual. If you don’t see what the Intel rebels did when they established Ampere. Your most promising opportunities may remain with the established organizations. Individuals in technology, oil & gas and everywhere are facilitated by that remarkable innovation, the door. 

The Internet demands one thing which is difficult to achieve. Software to organize. To organize society today, with its global reach, cannot be done spontaneously. There is no serendipity when individual A meets individual B 2,000 miles away on the Internet. This is done through software providing them with the means to conduct their business. Software defines and supports an organization. Without People, Ideas & Objects none of this oil & gas vision will come about by sitting and waiting for the phone to ring. At least it doesn’t appear to have happened.

The question also needs to be asked: why does Apple innovate consistently? Although their products are more costly, they bring incremental value to their customers through the innovation they provide. They too rely on Intellectual Property as the basis of their value. They consider themselves a software company that sells hardware to bring about customer value. Software defines and supports organizations. 

It’s no longer enough to just own the oil & gas asset. You must also have access to the software that makes the oil & gas asset profitable. We now believe as a result of the Oracle CloudWorld 2022 & 2023 conferences that all firms in all industries will have distinct competitive advantages by using Oracle Cloud ERP. These benefits should be seen as incremental to People,Ideas & Objects et al. 

The importance of IP in the oil & gas industry organizes innovation. The most productive innovation is when it’s organized under a structure that allows the market to focus on its development. The North American marketplace established IP centuries ago and we have reaped its benefits. The United States included copyright in its Constitution. Copyright must be published to earn it. Exposing it to the market where it can be built upon and enhanced by others. It reduces the “me-too” phenomenon that producers have created in the past to generate price competition in the service industry and elsewhere. Ensuring everyone was rendered “blind sleepwalking agents of whomever would feed them.” Is this how an innovative industry is going to be built, with producers sitting on top of a primary industry and using its revenues to endow their favors with the rewards of a penny or two here and there? Will the oil & gas issues we are faced with going to be resolved on this basis?

The proposed organizational structure of the oil & gas industry, including People, Ideas & Objects, will be built with innovation as a core Organizational Construct. Additionally, it will be grounded in the law of the land, which will define the permissible scope of innovation. Since the law does not permit copyright violation, adherence will ensure the absence of violators. A self-policing mechanism will reduce the costs associated with unnecessary and endlessly repeated duplication of innovation in the industry. This approach provides incentives for those with original ideas, thereby fostering the motivation necessary for the challenging work ahead. Knowing their work will now be trusted and respected. To do so not just today, but always and everywhere. 

These copyrighted publications enable understanding of how things are done. Building upon that understanding with additional innovations elsewhere. Intellectual Property thus offers a robust legal framework that promotes innovation and eliminates costly redundancies and duplicated efforts. It educates and motivates us to do the difficult and challenging work we agree is the foundation of the industry. This applies across the greater oil & gas economic structure and includes the secondary and tertiary industries. The 21st century will be known for leveraging Intellectual Property, or intelligence. Much as the last century was about the leverage of mechanical effort. Avoiding this reality or attempting to opt out would be foolish in the extreme.

What motivates people to develop these 'ideas'? Is it not a blend of self-interest and the aspiration to contribute value to the industry? Officers and directors have been well compensated and the industry has been destroyed. A further contrast is the fact that they've not been motivated by discovering ways to generate value. Intellectual Property is therefore not only an Organizational Construct that can control the innovation process throughout the industry. The participants are motivated to build value through incremental profitability, cost reduction, improved production deliverability or reserve expansion. It is the law, and most importantly, it has been proven. The reason the United States dominates the global economy in terms of performance is because their Intellectual Property laws provide the motivational and organizational principles of how their economy and society operate. It assumes people are intelligent beings, not serfs like officers and directors assume. It is productive, constructive, focused on generating value and benefits society. As a science and technology business, oil & gas is second only to the space industry in terms of complexity. Under their business model, what have these officers and directors been doing?

The next 25 years will be comprehensively difficult for the greater oil & gas economy. By far the most challenging time period in its history. How will industry resolve these challenges? Are we structured appropriately to meet these demands? Who today is motivated to undertake the difficult task of approaching the multitude of issues and what will be their motivation?

Intellectual Property in Oil & Gas Today.

I believe the business model of producer firms is based on having a pool of knowledge readily available at no cost. They require this access whenever and wherever needed, aligning with their interests. Therefore they couldn’t have anything published in this environment as it would be counter to their interests in terms of availability and access to this pool of Intellectual Property. And therefore nothing has been documented in the industry from the point of view of earth science and engineering science and technology. They are leaving themselves fully exposed to any author who publishes IP at this time.

Two other aspects of Intellectual Property are first, safe harbor provisions. Why don’t producers just turn around and sue the copyright holders? This would be an unfortunate world where “big” ruled the earth and we serfs would be the drones who were forced to comply with their every command. The safe harbor provision states that you cannot sue the copyright holder. Secondly, the division of tacit and explicit knowledge. Tacit knowledge cannot be captured or written down. Only explicit knowledge can. Therefore it is up to people to take the explicit knowledge they have, earn the copyright, and apply their tacit knowledge to generate their value as a service. Intellectual Property services are as critical as the IP itself. Just as People, Ideas & Objects have our user community heading up their service providers which will deliver our software and their tacit knowledge as services to the producer firms. As a consequence, the tacit and explicit knowledge underlying the Preliminary Specification can be delivered effectively and efficiently. 

These efforts of ours to use the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable oil & gas producer began in August of 2003 with a research proposal to industry. People, Ideas & Objects subsequently conducted that research ourselves which was completed with the August 2012 publication of the Preliminary Specification. A decade of rigorous research reflected and absorbed throughout this blog and elsewhere. And now that the obvious need in the market for this ERP system has come about, Boards should be aware that the time taken by People, Ideas & Objects to conduct this research, to effectively deal with these issues and resolve them has offset what would be the industry's largest cost of all. The time needed to generate a sustainable, viable, and workable business model. We enable them to yield untold value creation in the short term and not have to undertake the minimum ten years of research themselves. Our user community, research, and Intellectual Property make up our three strategic competitive advantages. Anyone offering similar aspects to the Preliminary Specification in their ERP software would violate our Intellectual Property and we would expect, as law abiding citizens, the oil & gas producers would adhere to these principles of law, recognize that and refuse to use any software that violates our IP. Any violators might be discovered through our recently announced Whistleblower Program. Therefore producers would have to invest the decade of research and avoid any aspect of the Preliminary Specification within their solution. 

It is People, Ideas & Objects, our user community and their service providers that channel these Organizational Constructs towards innovation, productivity and profitability through software. Software defines and supports an organization. The only solution as it stands today, from a creative destruction and disintermediation point of view, is People, Ideas & Objects, our user community and their service provider organizations' implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are directly promoting the status quo behaviors that are and have been proven to be disastrous. This has been the motivation behind the officers and directors lack of action. Avoidance of their disintermediation in order to maintain their creative personal compensation continues.

Our Value Proposition, Specialization and the Division of Labor

 Since 1776 the only basis for increased value generation has been the expanded definition and use of specialization and the division of labor. Adam Smith proved in his research that by reorganizing a pin factory around specialization and the division of labor between individual workers, augmented through proficiency, automation and mechanical advantage, the factory output increased 240 fold. Today the opposite is true. Software and most particularly ERP software has sealed organizations to a definition that is unchangeable through any means other than changing the software’s process definition. This aids producers' status quo configuration when they don’t sponsor or initiate any change in ERP software. Instead, focus on engineering tasks such as cost cutting to generate business value. If we are to achieve profitable energy independence and meet consumer energy demands in the 21st century it will be the result of an “all of the above” energy strategy. For the next several generations the largest component of energy makeup will be oil & gas. Therefore, dealing with these issues and opportunities demands that we increase the industry's throughput substantially in order to meet the increasing demands of the North American marketplace. 

It is therefore necessary to ensure that we proceed from this point forward with the defined capability and capacity to enhance the ERP software used in North American oil & gas. And to do so to facilitate an increased level of specialization and division of labor that is iterative and constantly evolving. People, Ideas & Objects provide for this and are configured specifically to ensure this. Our business model depends on change. We generate revenues from software development changes initiated by our user communities interactions with industry. Our user community will be available everywhere and always to work with our developers to make the changes they’ve identified while working in their service provider operations. These service providers will be configured to deliver the explicit knowledge captured in our software and the tacit knowledge provided by their services. Our user community members are therefore on the ground in the industry on a day to day basis in the administration and accounting of producer firms. They are the exclusive, licensed individuals authorized to change our software's Intellectual Property. Our developers are licensed to accept no one else's input. In other words, our user community members have the power necessary to ensure that the processes they manage ensure the most profitable means of oil & gas operations everywhere and always. Only our user community members own and operate service providers. If anyone in the industry wants to know who they need to resolve their issue, they only need to contact the relevant user community member. 

For Whom?

People, Ideas & Objects Preliminary Specification brings significant advantages to all producers. This is a solution that should be used by all producers in the North American industry. Whether that is Exxon or the producer firm that originated at breakfast. This also applies to any and all other types of secondary and tertiary industry firms involved in the greater oil & gas economy, no matter their size. While we provide advantages to junior and startup oil & gas producers, we put their organizations in a position to succeed and grow. They’ll have distinct competitive advantages over today's business model. These are brought about through the reorganization of producer firms' administrative and accounting resources into our user communities service provider organizations. And the implementation of our Cloud Administration & Accounting for Oil & Gas Software & Service provided by them. 

The producer organizations that we define and support in the Preliminary Specification employs and deploys higher levels of specialization and division of labor. We feel the overhead costs of producers demand these be dealt with by making organizations more efficient through the application of advanced, and continually advancing, specialization and division of labor. We also turn their overhead costs from a fixed, producer based capacity and capability, into a variable, industry based capacity and capability, their variable behavior being decided upon a Joint Operating Committee's ability to produce profitable production. 

Our Preliminary Specifications support a reallocation of the producers' administrative and accounting resources into individual service providers headed by members of our user community. Our user community and their service providers are independent businesses that specialize in one administrative or accounting process. They conduct that process on behalf of the entire industry as their client base. If a Joint Operating Committee produced that month, under our decentralized production model price maker strategy, we can reasonably assume it is profitable. Upon production the processes administered by each service provider will be invoked through our task and transfer network. The processes undertaken and their associated billings will be charged directly to their Joint Operating Committees. If it’s not profitable, the property would be shut-in and none of the service providers would receive any data from our task and transfer network. Therefore, no processes will be conducted and no service provider billings will be rendered. The shut-in property does not incur a profit or loss, but is a null operation. Under either scenario, overhead costs will be covered in the current period through profitable operations or by the fact that costs will be variable under the Preliminary Specification. Meaning they won't be incurred when a property is shut-in.

• Producers will benefit substantially from beginning operations in this manner. 
• First they will reach their optimum profitability when losses stop diluting profitable properties. 
• Corporate profitability whether that is at 25% or 100% of the producer's production profile. 
• This will preserve their oil & gas reserves for a time when they can be produced profitably. 
• Those reserves will no longer have to carry the incremental costs of losses otherwise incurred if they were to have continued producing unprofitably. 
• Keeping the commodity as reserves can be seen as an affordable means of storage where the subsequent costs of production and storage are zero. 
• Commodity markets will find their marginal price when unprofitable production is removed from the marketplace. 
• Increasing the value of all producers' production by realizing marginal prices across their production profiles. 
• Providing for the replacement value of exploration and production.

Producer officers and directors assert this is collusion. If making independent business decisions based on detailed actual, factual, standard and objective accounting information at the property level that determines profitability is collusion, it is no wonder producers are incapable of profitability? 

Our decentralized production models price maker strategy engages North American oil & gas producers in disciplined production. Achieving maximum profitability can only be achieved when unprofitable properties stop diluting corporate earnings. Therefore the need to ensure they are fulfilling their primary task of maximizing profitability becomes the predominant method of production discipline. 

People, Ideas & Objects has pointed out the natural gas revenues lost over the past sixteen years as a result of a lack of production discipline. Noting $4.0 trillion in revenues that were rightfully belonging to the producers were allowed to pass to others who took advantage of officers and directors poor management. The same might be true for the oil side of the business however there is no objective way to measure what the price should be. What we can determine however is the skill that has been involved in “building balance sheets” has taken away from maximizing profitability. Although only $5.7 trillion of our $25.7 to $45.7 trillion value proposition was attributable to regaining these revenues through our decentralized production models price maker strategy. It is reasonable to assume that in the next 25 years we’ll be able to attain at least that amount. 

With our clear objective of rebuilding the industry brick by brick, and stick by stick. This is in a style of rebuilding that involves a dynamic industry based on a decentralized, connected environment such as the Internet provides. People, Ideas & Objects et al don’t have to break down oil & gas to rebuild it. The rebuilding is necessary due to the damage and destruction the chronic mistreatment industry has experienced at the hands of the officers and directors of the producer firms. Hierarchical strata of advanced paper shufflers define future failure. Consolidation of these will only seal them more permanently. To bring about an ERP system for the industry such as the Preliminary Specification provides, we must consider the opportunity of disintermediation. 

We will need to consider the cultural propensity to “muddle through” and its destructive ways. This culture needs to be replaced by one based on performance. Changing that culture can not be done from within, especially when the issue can not be readily accepted for several decades. We can accurately predict that producers will do nothing. 

The nature of this rebuilding process is the cannibalization of the processes that have occurred since investors sent their message of dissatisfaction to producers in 2015. Being solely dependent upon investor cash meant organization cuts were necessary. This was when the producers' sole source of value generation, the investors' annual injection of additional capital, was no longer available. Keeping production processes in place was the priority and those processes involved in the early stages of oil & gas exploration and development were subject to layoffs. Assuming that the situation is alleviated in the following year and those resources would be recalled. Since the inactivity and abstinence of the officers and directors has continued for eight years, we can assume that the process management has been cut well into the eighth year of the exploration and development cycle. Therefore either way it needs to be rebuilt. The comment that I find appearing in what I’m reading and hearing today that concerns me the most. Is the statement “gradually then suddenly” from Ernest Hemingway in terms of how change occurs. Or how change is forced upon those inactive participants.

However, bringing one of the most complex systems, Oracle Cloud ERP, into one of the most complex industries into the environment of the small and startup, or any producer, is a risky proposition to consider. How could that ever be a commercial software product? Or be provided to a commercially viable small or junior oil & gas producer? And that is the fact of the issue we are facing today as a result of the officers and directors “consolidation as a solution.” We need to ensure the future of the industry is in the hands of oil & gas men and women. They will knock down the barriers that stand in their way, just as so many have done before. The constraints and reality of regulatory, compliance and investment demands are real impediments to these needs. That is, if producers could not access the kind of systems necessary to operate in that environment, no matter their size, capital markets would remain forever closed. Today’s business model makes this an untenable barrier, and it will be even more so in the near future. Investors have explicitly requested Tier 1 ERP systems be implemented. Therefore all producers need to understand that the production discipline provided by the Preliminary Specification is necessary across all classifications of producer firms.

Under the Preliminary Specification a startup or junior producer would no longer need to establish the point where they’ll have to generate the full $3 to $5 million of free cash flow necessary to offset the annual base overhead of the producer firm. For administrative and accounting purposes, they will only incur the variable overhead costs of the service providers fees that they use. Accessing the explicit and tacit knowledge of the service providers process management through our Cloud Administration & Accounting for Oil & gas Software and Service. In addition, they will incur the costs of software development assessment by People, Ideas & Objects each year. As we noted earlier, not only are these overhead costs variable, but if they’re charged, that denotes profitable production. This indicates these costs are covered. In contrast, if the property is not producing it does not incur any overhead costs. And there are more attributes of our system that benefit the new oil & gas industry we are rebuilding. The ability to have your working interest partners within the Joint Operating Committee participating in the same ERP software developments and implementations will bring substantial advantages to all producers of all sizes. Our user community and their service provider organizations are a reorganization of the industries administrative and accounting resources. Focused on an individual process they maintain the software and service for that process across the North American continent. Using software and specialization to organize a producer's administration and accounting in a standardized, objective manner.

The Preliminary Specification also implements specialization and the division of labor across the producer firms, particularly in the earth science & engineering capabilities and capacities. As a first step in our solution for startups and junior producers, we listed this as the first step. These capacities and capabilities are becoming increasingly burdensome to each producer firm due to their unshared and unshareable nature. However, they are for different reasons than the administrative and accounting difficulties mentioned. The costs incurred to maintain these capabilities are growing as a result of the advancement of their science and technological development. This requires further specialization of the producers' capabilities, and critical competitive advantages. We believe that all producers have reached the point where the demands to maintain these capacities and capabilities have expanded beyond the usable population of these technical resources. Or will soon. With the retirement of the brain trust of the industry, and the universities not producing anywhere near the replacement number necessary, a critical shortage will soon demand that these technical resources will become too rare, too costly and too unavailable to maintain, not to mention, expand the deliverability of the North America-based industry. 

Consolidated producers will have particular difficulty managing this technical resource when entrepreneurs see the startup opportunities we’re defining here. That is, if only there was an ERP system that provided a solution for oil & gas startups to deal with the finance, compliance, governance and regulatory environment. This would enable them to access funding! In addition to this limited technical resource supply we also believe that producers' firms are reaching a point where the costs of their scientific engineering and geology needs are beyond their commercial grasp and necessary to maintain their just-in-time operator status. Even so, a higher level of specialization and division of labor will be needed in earth science & engineering. It is the unshared and unshareable characteristics of these capabilities that we find the nascent difficulties to overcome. As operators, producers require these technical resources for a variety of just-in-time purposes. If we assume that across the industry the utilization rate of these technical resources is 75% due to organizational inefficiencies. Then by releasing that other 25% and deploying that unused and unusable capability more effectively we’ll have what I believe to be the second aspect of the solution to these pending and most certainly future difficulties. A one-third increase in capacity with higher output from enhanced specialization and division of labor, providing a good start to solving this pending critical resource shortfall.

Instead of letting another issue manifest itself as a crisis level issue, People, Ideas & Objects et al have implemented a variety of changes within the Preliminary Specification. As soon as the Preliminary Specification becomes operational, the producer firm will have two revenue streams. Their oil & gas sales are augmented by their earth science & engineering capabilities being deployed and used for revenue generation. The individuals can consult with one of the producers' own Joint Operating Committees or with other producers / Joint Operating Committees, as their clients. Due to the specialization and division of labor demands producers will need to choose to specialize or acquire specific capabilities and competitive advantages. These producer revenues will then offset engineering and geological costs incurred and charged to Joint Operating Committees or other producer clients. And through this enhanced specialization and division of labor, we achieve the same benefits of the 240 fold increase in productivity that Adam Smith experienced in his pin factory.

The second source of revenue should be seen as the starting point of oil and gas industry startup revenues. The startup's capabilities and competitive advantage will be less specialized than those of more advanced companies. The additional costs of head office operations not considered in the administrative and accounting category will be offset by these revenues. And this will apply to all producers no matter their production profile. When producers specialize in their distinct competitive advantages, and all producers including Exxon, Shell and Chevron will need to do so, the demand for outside technical resources will be required to augment their needs.

In a world where software defines and supports organizations. This is some of the what, how and why we can provide when the Preliminary Specification is delivered to all producers in the North American industry. Instead of being mere serfs as the officers and directors wish to continue treating the engineers and geologists, they’ll be able to take control of their careers from this point forward. The facility most responsible for this capability of making direct labor charges to the Joint Operating Committee is what we are implementing in the industry. This is our Work Order. Officers and directors may claim that charging labor directly is already available through their systems. Which is true, they can allocate some of these labor costs to the field. However, some are assumed to be captured in overhead allowances which the Preliminary Specification eliminates the use of. However their methods do not provide the necessary features of raising it to the point of making it a defined revenue stream for the firm. Its ability to interact throughout the industry is also a benefit. Allowing for interactions between resources and where they need them. Subject to appropriate approvals and governance. Theirs does not enable the second purpose of our Work Order system, which promotes industry-wide innovation through the establishment of working groups etc. Our Work Order system bills its costs at all times to corporate overhead, Joint Operating Committee overhead, an AFE or to a lease. Therefore the billable time of the individual engineer or geologist should be deployed within the producer 100% of the time or not be working for the producer. A fundamental component of this is requiring these people to establish their own producer firms. These firms are based on their earth science and engineering competencies, capabilities, and Intellectual Property. An industry where it will be less about who you know, but what you know and what you're capable of delivering, what is the value proposition that you’re offering? Preliminary Specification facilitates dynamic, innovative, accountable and profitable oil & gas producers, whether they are startups, juniors, intermediates, seniors, or multinational companies.

Hyperspecialization

We live in a time of significant change, collaborative work and a specialized work environment. Hyperspecialization is breaking processes down further to the point where the aid of software automation provides enhanced productivity through the division of labor between humans and computers. The future holds that Generative AI will enhance these. Our user community and their service provider organizations are configured to enable these attributes for the oil & gas administrative and accounting aspects of the producer firms and industry. 

In late 2023 People, Ideas & Objects undertook the task of building our third and final competitive advantage, research. Our other two are our user community and Intellectual Property. This was a result of beginning a comprehensive review of hyperspecialization and finding we needed more capacity and capabilities in order to undertake the task. What we were able to determine at this time was our belief in the market would need to be preeminent in how these specialized services came about. And what we have chosen to do in our research is to provide an understanding of the issues and opportunities of hyperspecialization to our user community for their guidance in forming. 

In Summary

Producers gain substantial value through the Preliminary Specification when the reorganization of the administrative and accounting resources is reconfigured into our user community and their service provider organizations. Instilling a fair and reasonable means of production discipline can only be achieved through profitability. If a property is profitable, it produces; otherwise, it constitutes an economic waste. Earning the replacement value of what it will cost to explore and produce a new barrel of oil or gas equivalent is what is reasonable. All of these depend on a more accurate accounting. This involves providing each property with comprehensive financial statements based on actual, factual information every month. Financial statements that are objective and standard across the industry so that every producer will know when their property reports a loss there is no question as to the next step. This ensures that the assessment of profitability is consistent with that of other North American producers. Would any other producer trust the “objective” nature of an industrialized version of Exxon’s ERP system?

Unfortunately industry has now placed itself in a position where it has limited its options to People, Ideas & Objects, our user community and their service provider organizations. With that they have also imposed the fact that failure will not be an option. If the industry seeks profitability to achieve: 

• Energy independence for the rest of the century. 
• Provide consumers with abundant, affordable and reliable energy.
• Prosperity for all concerned within the industry, 
• A dynamic, innovative, accountable and profitable industry everywhere and always.

Today officers and directors do not have the culture, understanding or ERP software to do so. It does not have the capacity to change. An incapacity which has proven itself persistent over the long term. Despite the consequences of trillion of dollars of damages. Despite being faced with the most challenging future. Despite the desperate conditions the energy industry has been managed under them. A leadership that has proven itself unaware of existence outside of its own skin. Doesn’t care about profits, doesn’t know how to earn them and can not earn them from the remainder of what is left and the culture they’ve instilled. A leadership prone to erratic decision-making without clear reasoning. Never listening to shareholders who’ve expressed serious disenchantment. Declaring their past decades efforts uncommercial without a moment's thought as to how to remediate them or make them profitable. Wandering off into unrelated industries, only to return to what was declared uncommercial 18 months earlier. 

Specialization and the division of labor are the only means in which value has been gained. It has been argued that Adam Smith’s 1776 work in the Wealth of Nations was the turning point of western civilizations rapid expansion. People, Ideas & Objects believe software has stifled the ability of organizations to change. They cement the organization within the definition and without the capacity to change the software first, the organization remains static. Eliminating any future benefit from specialization and division of labor. People, Ideas & Objects also sees the capacity and capabilities we’ve built into our software development, especially our user community, we’re able to generate value in two material ways. The first is through the decentralized production models price maker strategies ability to instill production discipline across North America. And secondly, change enabled opportunities and capabilities that specialization and the division of labor have for generating value.