To: The Board of Directors, Our RFP Response, Part I
A quick note to say we never received an RFP. We would never be included in the bureaucrats list and don’t expect one at any time. This blog series would be our response if we did.
We’re marking another milestone here at People, Ideas & Objects. A point in time that we have not achieved and have not been in a position to conduct until now. Today we begin the active marketing and sales of People, Ideas & Objects, our user community with their service provider organisations and our Preliminary Specification to the North American based oil and gas producers. What we’ve been upto these past few decades is a matter of discussion. I’ve been of the belief that we conducted the necessary research into the issues of the industry's poor financial performance. Brought about a robust discussion of the issues and opportunities involved and brought the fight to those that I felt were the culprits responsible for the damage and destruction that they’ve caused. We identified a historical process that industries have seen repeatedly when faced with the demise of their organizational methodologies. That process is in its final days as we expect the bureaucracy have achieved what we’ve hypothesised as their “managed industry” scenario where the appearance of normality allows them to slip into the darkness without the awareness of their destruction's culpability. Leaving others to the potential catastrophic results when the facade of the “managed industry” fades back to reality.
In the beginning we identified that the lack of real profitability in the industry was to be felt across the industry but also with everyone involved across the greater oil and gas economy. Without profits there is no value being generated and therefore the decline and destruction of the activities being conducted. This point is well understood and appreciated throughout the greater oil and gas economy. The efforts of everyone whether that be time, energy or money have been wasted by the self interests of the bureaucracy, who we’ve defined as the C suite of the producers. The capitalists focus on profits being earned by investors is therefore appropriate in any and all cases. When the investors are satisfied, they are there to provide for the future. When they’re not satisfied, they are quickly able to leave, sending the ultimate message of disapproval of the activities being carried out. It is our belief that investors, as were others, were duped by specious accounting that did not represent the situation on the ground. Aggravating the poor performance of the industry for a protracted period of time. Leading to the comprehensive exhaustion of value from the industry. What is represented today in the financial statements of the producers would not be something to be proud of. Producers' financial statements reflect they are in serious long term financial jeopardy. And none of these financial statements are representative, they are as specious as they’ve ever been.
Throughout People, Ideas & Objects history it has always been our objective to appeal to the investors of the oil and gas producers. This will continue and nothing has changed. The Preliminary Specification provides for the most profitable means of oil and gas operations, everywhere and always. We will not waver from what we believe to be our ultimate competitive advantage over our ERP software competitors. Investors are however not the decision makers that are able to influence the producers towards the selection of People, Ideas & Object et al. What we are now doing in this marketing shift is that our focus has moved to the investors representatives, the Boards of Directors of the producers. Ultimately they are the final decision makers that will be making the decisions as to which ERP system provider they’ll use within the producer firm. Based on the bureaucrats recommended list of vendors. Of which we most certainly would never be on any of these lists due to the creative destruction and disintermediation forces we have leveraged and focused on these bureaucrats. Therefore we are now seeking to exploit the sunlight that we see breaking through between the Boards of Directors and their bureaucrats.
If we are correct in our opinion of the situation on the ground as it stands today. Those being these three main components. The critical financial jeopardy the producers are in, the current state of the “managed industry” and the probable exit of the bureaucrats. There is much to be concerned about for these directors. We have discussed what we believe the financial situation in oil and gas to be and won’t revisit that. The “managed industry” is somewhat of a new hypothesis that I developed recently. It began last summer when we noted the legal jeopardy of both the officers and directors in terms of identifying their specific personal risks as a result of the long term issue of overproduction in the industry. Since July 1986 we’ve been able to document the fact that overproduction has been the source of a lack of real profitability throughout North American oil and gas. Secondly we noted that the Preliminary Specification addresses overproduction specifically with a direct solution to that issue and as a result generates profitability everywhere and always. It was published in December 2013. Noting these two facts would allow their insurance providers providing their Director & Officer Liability (D&O) insurance coverage to void the contract. The solution to this probability was a strategy that we were stating as “Issue Mitigated, Nothing Litigated.” Directors would be able to achieve the mitigation of their personal risk by adopting the Preliminary Specification and avoiding any claims of mismanagement. From Holland & Knight.
The Application Severability Provision (as an example provided from this website.)
Absent an “application severability provision,” if any insured had knowledge of a fact that was misstated in the application (regardless of whether the insured knew the fact was misstated in the application), coverage under the policy could be voided to all insureds. An application severability provision avoids this potentially unfair result by making it clear that the knowledge of an insured who knew of facts that were misrepresented in the application will not be imputed to any other insured for the purpose of determining whether coverage is available under the policy.
Coverage under this policy shall be void as to the following:
Clause 3. the company if any past or present chief executive officer, chief financial officer or chief operating officer of the organization knew, as of the inception date of the policy period, the facts that were not accurately and completely disclosed in the application.
Such a provision helps ensure that “innocent” insureds do not lose their coverage through no fault of their own.
However, in light of the fact this issue of overproduction was raised as early as July 1986. Has been the systemic cause of financial destruction in the industry for all but 5 of the past 35 years. The Preliminary Specification as the solution to overproduction was published in December 2013. How does one claim innocence? People, Ideas & Objects have also stated, repeatedly since May 2004, that software defines and supports the organization. Therefore any organizational change will have to be made in the ERP software first or the organization will regress to that which is defined in the current software. This has been used by the bureaucracy to secure their franchise by sponsoring no ERP software developments in the industry. Leaving them uncontested in their methods of “governance.”
Knowing today how bureaucrats think; they may have adopted our “Issue Mitigated, Nothing Litigated” insurance loss mitigation opportunity however, with their own plan. If they could make it appear that all was back to normal, in the form of a healthy and prosperous industry. That facade would provide them adequate cover to make their hasty exit and be able to state unequivocally that they left when the company was performing well and they’re not responsible for anything that may happen subsequently. People, Ideas & Objects hypothesis, unproven as it stands today, and undetermined if the current oil and gas industry is in a “boom” as alleged or a “managed industry” environment. Our “managed industry” hypothesis being roughly defined as the consolidation of peers at or above the listed book asset or reserves value through a further dilution of shares, stopping the pursuit of new production and aggressively buying back the remaining shares on any share buyback authorization.
It is true to a larger extent that the directors of the producers could exit just as easily as the bureaucrats. From what I noticed however, most of them were re-elected for the 2021 fiscal year and the opportunity to retire from the board may not arise for another three quarters. That may be too late. They could leave now however that would look bad if our hypothesis became valid. I see them being somewhat stuck as a result of the bureaucrats exercising their goodwill and good judgement that we’ve learned from them over the past decades. It is also true to a large extent that the shareholders are being provided with the opportunity to exit their positions with the higher valuations being realized by the producers in this “managed industry” scenario. To what extent this would be possible is and would be the question. I believe in either scenario, Directors need to consider the implications of their D&O Liability insurance.
It will therefore fall to the Boards of Directors to establish new governance and compliance methods, new organizational structures and start the rebuilding process anew. It is generally well known that the industry does not use first tiered ERP applications such as Oracle. The underlying base of the Preliminary Specification. This will be a mandatory requirement in order to win back the trust of the investment community in the future. The reputation of the specious accounting and systems obtuseness is well known and understood throughout the investor community and the need to address that today is the first priority of these directors. Our good friends the bureaucrats were well aware of these issues and it is not happenstance that the governance is as bad as it is. That none of the necessary software developments were undertaken were a result of our Preliminary Research Report published in May 2004 that stated ERP systems defined and supported organizations.
People, Ideas & Objects, our user community and service providers stand at the ready, with the well researched and functional business model of software and services defined in the Preliminary Specification needed by the industry. Ready, willing and able to deal with the issues and opportunities of the industry today and in the future. I would personally assert that September 1, 2021 is an ideal time to start an initiative such as the Preliminary Specification, however not the only time. People, Ideas & Objects uses the Joint Operating Committee as the key organizational construct of the Preliminary Specification. It is the legal, financial, operational decision making, cultural, communication, innovation and strategic framework of the industry. We move the compliance and governance frameworks from the hierarchy and align them with the seven frameworks of the Joint Operating Committee to achieve speed, innovativeness, accountability and profitability in the producer organizations.
It’s so good to have made the transition to a marketing phase of these developments. The difference in my writing is self evident isn’t it. I’ve never criticised a client as a policy of my business career. Today I don’t have any clients though. I’m therefore consistent with my policy and will continue to always be.
The only solution as it stands today, from a creative destruction 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 being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.
The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.