OCI Request for Proposal, Part X

 Our User Community & Their Service Provider Organizations

People, Ideas & Objects primary focus and priority is on our user community. They are the means by which we can ensure a quality Cloud Administration & Accounting for Oil & Gas ERP system is delivered to North American oil & gas producers. Our objective is to ensure that we provide the most profitable means of oil & gas operations, everywhere and always. 

Our user community and service provider organizations have the following competitive advantages. This is a fundamentally different basis of competition and one that adds significant value to the producer firm. This value is provided throughout the entire oil & gas economic structure. Approaching producers' overhead costs in a systematic and analytical manner and breaking down the individual processes into standardized, objective methods provides the industry with the overall value proposition of the Preliminary Specification. Each individual user community member will work in a part-time capacity with our development team defining, designing, developing and implementing their understanding and the input of producers into derivative software products based on the Preliminary Specification. Building out the Tier 1 ERP system necessary for North American producers. Our user community members are the principal individuals of their service provider organizations that operate the accounting or administration process on behalf of the industry. 

What will not be found in our user community is price-based competition. Service providers set their own prices for their services. And receive exclusive licenses to manage their specific processes. All human endeavors are motivated by self interest and our user community and service providers are no different. In the end, their self-interest can be achieved if they ensure that oil & gas producers are provided with the most profitable means of oil & gas operations, everywhere and always. And not worry about other service providers offering comparable services based on price. Where this comparable firm did none of the heavy lifting in terms of determining “how and what” was needed, and will continue to be needed, to provide oil & gas producers with the most profitable means of oil & gas operations. The competitive basis of our user community enables them to get their heads in the game and fight to ensure producers are profitable everywhere and always. This is done by using their distinct competitive advantages.

Our Cloud Administration & Accounting for Oil & Gas service has changed the structure of producer overhead, making fixed overhead costs variable. Variable based on profitable production. Overhead costs are therefore recovered in the current period. The cash incurred to fund producers overhead will be paid by the consumer and returned within the current business cycle. Replacing the present twenty-year process of capitalizing overhead and using depletion to recapture these costs. Creating producers' heavy reliance on investors for cash. It is these competitive advantages that provide substantial value to the producer firm. Getting to the root of value generation requires deep analysis and complex work. It would be difficult to achieve this in an environment where price-based competition was the main concern for our user communities and their service provider organizations.

The following classifications will be used by our user community for competition. These will be the basis of a shared understanding between our user community. This understanding determines how one user member leveraged specialization to enhance productivity in their process by using this method or that, etc. When we factor in the time and sense of urgency at which this product must come to market, this will be highly appropriate. This sharing will be collaborative and competitive. Seeking a performance and quality product for the long term. This is the effective way our user community and service providers have been configured. 

I want to mention the updated direction Oracle is taking in their products and services. What was discussed in their 2022 CloudWorld Conference regarding the developments they were undertaking has a direct impact and benefit to the oil & gas producers that will use our Cloud Administration & Accounting for Oil & Gas software and service. They are introducing higher level process automation by partnering with banks and shipping companies, etc. In the example provided, it is their agreement with J. P. Morgan Chase that attracted our attention. By integrating credit card processing into Oracle Cloud ERP at a high level. Oracle Cloud ERP software allows employees to designate their credit card charges to the account and project the expense belongs to. Then Oracle will evaluate the charge to ensure it falls within the customer companies policies and if so process the charge. The employee will have no further expense reports to complete, their immediate supervisor will have no further expense reports to review etc. In addition, they will have all of the follow-through normally conducted on firm expense reporting. Saving untold thousands of hours per year in the process. 

This sharing of software development and integration of the process with various partners is wholly consistent with the work we do on People, Ideas & Objects. The benefit to the oil & gas producer is that they will gain these advantages for oil & gas attributes through us and our user community. But they will also gain Oracle's generic business benefits. Software development and integration for the J. P. Morgan Chase process will be expensive. Where the costs are allocated across Oracle's entire customer base. However it will also be a distinct competitive advantage that Oracle provides its customers. These developments will be iterative and continuous as are the People, Ideas & Objects permanent user community and software development capabilities. 

The last point refers to our user community and their service provider organizations' competitive advantages. And describes the distinct specialization and division of labor between computers and this community. Computers excel at processing and storing data and information. People on the other hand have the distinct advantages listed below. This is a unique perspective on today’s oil & gas producers' ERP systems implementation.

Accounting & Administration Expertise

Well trained and experienced in their fields, our user community members provide administrative and accounting expertise as their primary value add to the process. This applies to their service provider organizations. Our Cloud Administration & Accounting for Oil & Gas service is a sub-industry between the oil & gas industry and technology. Filling a gap between the two as we feel they’re not communicating effectively. 

Analysis of Conflict & Contradictions as Analytical Tools

Conflict and contradiction indicate the issue's source. Analysis of these two factors will reveal alternative solutions. When we apply these to the business world, behaviors, communication methods and other factors can provide insight and understanding into an issue and its resolution. These are part of the more advanced style of tools that will be needed to resolve the many exceedingly large issues the industry and our user community will encounter. 

Application of AI & ML

Artificial Intelligence is overrated in the marketplace at this time. AI is a module in the Preliminary Specification where we establish effective and efficient AI algorithms from our user community. These algorithms can be shared and are shareable across the industry through Cloud Administration & Accounting for Oil & Gas. Offsetting the inordinate cost of each producer involved in the difficult business process of developing, testing and proving AI algorithms. 

Machine learning is a far more effective tool that will be valuable to our user community due to their unique perspectives on industry data. They will manage the entire industry's data through individual processes. This data set would be interesting to analyze from the point of view of its unknown unknowns. 

Automation

Automation will be used to ensure that the most effective and efficient operations are provided to producers participating in these developments. Relieving administrative and accounting resources to pursue higher level, value added opportunities. Reduction of costs in this sense is worthwhile, not just from a cost reduction perspective. Reduction of costs implies high automation levels. Automation does not just reduce costs directly it does so indirectly through error reduction. Error reduction reduces time. What admittedly is becoming a more critical resource as we enter the 21st century. Through People, Ideas and Objects, producer firms would benefit from these competitive attributes in both the oil & gas domains. And in the generic business domain through Oracle Cloud ERP. 

Collaboration

As I noted earlier a collaborative, collegial environment would be the basis of the competitive environment between our user community and their service provider organizations. The basis of collaboration and cooperation is the importance of the work they're undertaking and their critical role in rebuilding the oil & gas industry.

Compromising

Finding the solution in a world of difficult and complex issues requires creative solutions that meet the needs of those parties. Although we are rebuilding brick by brick and stick by stick there are established industry methods, regulations and processes that need to be adopted. We need to find creative ways of implementing and organizing them under the Preliminary Specification. This demands that our user community members offer industry solutions that work for all concerned. 

Creativity & Design

Some may struggle to imagine creativity in administration and accounting. However there is nothing that will be more critical in the discovery, testing and implementation of effective and innovative procedures that provide value to the oil & gas industry. We published the Preliminary Specification in August 2012 and soon after, in March 2014 began the development of our user community. As a result people within the larger oil & gas industry have had the model in the form of the Preliminary Specification and our user community vision in their minds for more than a decade. Understanding what their involvement could be, should they decide to join our user community based on the principles set out in these documents. Assuring that they are prepared directly and indirectly for the development and implementation phase. It is here that People, Ideas & Objects have work to break down the motivational and behavioral paradoxes. And introduce radical cognitive dissonance. 

Creative Destruction, Spontaneity & Serendipity

Each of these established economic principles has been eliminated from the 21st century business landscape through software development. It is the unchanging methods and procedures that software defines in organizations, especially ERP systems, that lock organizations into unchanging and unchangeable situations. Creating the bureaucratic nirvana we experience across the economy today. People, Ideas & Objects have shown through our user community and service providers that they can make the effective changes necessary to ERP systems. These changes will be derivative of the Preliminary Specification. Establishing a permanent user community and software development capability is necessary for businesses to evolve throughout the 21st century. 

Explicit and Tacit Knowledge

Providing software in the marketplace is a small part of the solution today. Software captures explicit knowledge and codifies it within software processes management. It is the service associated with that software where the value is derived. A service offering such as our Cloud Administration & Accounting for Oil & Gas must include tacit knowledge. Software and services must be able to make the changes necessary to accommodate the accelerated pace of change in today’s market, and what we can only assume will be the case tomorrow. The leadership and independence of our user community ensures producers remain on the optimal business model. This ensures producers continue to have the most profitable means of oil & gas operations, everywhere and always.

Ideas

The uniquely human element that will be in demand. An idea that generates a dollar today will produce a nickel tomorrow. The need to have exponential volumes of ideas will be a demand of the future in everything we do. How these are captured and implemented in software and services will be necessary. And with the shared and shareable model these ideas, once proven, tested and appropriately implemented will be leveraged throughout the industry. Building and leveraging value for everyone. 

Innovation

People, Ideas & Objects at al’s Preliminary Specification our user community and their service provider organizations are structured around innovation. Our research into the Preliminary Specification determined that innovation is a defined and replicable organizational process. These have been incorporated throughout the sub-industry we're building. Importantly our user community and their service providers can affect the changes needed to facilitate innovation in efficient and effective ways through the design of the producer organization. Our Preliminary Specification is structured on the Organizational Construct of innovation. To ensure producers fulfill their dual role of profitability everywhere and always, while providing abundant, affordable and reliable energy.

Integration / Implementation

Integration or implementation falls under the responsibility of our user community and their service provider organizations. These are the critical components and the final steps in ensuring the quality of software and services we’ll provide. Integration begins on day one of development in terms of planning and preparation. Our user community members will ensure that their service providers are appropriately implementing process management. As the principal owner of the service providers they’ll be duly authorized and the responsible parties, therefore motivated appropriately. 

Issue Identification & Resolution

“Muddling through” is over. There can be no more ignoring oil & gas issues. People, Ideas & Objects provide the tools, methods and Organizational Constructs to address and resolve issues. We see that software seals organizations in concrete. Which is commendable from a governance perspective, however it must be innovative and capable of change to achieve the high level performance trajectory of a dynamic, innovative, accountable and profitable organization in the 21 century. This will be an order of magnitude more difficult than what the oil & gas culture is currently familiar with. As difficult as the industry situation appears today. Consider how simple it was only a decade or two ago. What will it be like in a decade regarding the issues and opportunities these firms face? To be as unprepared as we are today, for what is unquestionably the most challenging future the industry has ever faced, is dangerous. 

Judgment

Computers do not have a distinct competitive advantage in judgment. A uniquely human characteristic that will be the basis of understanding for the remainder of this century and as long as we choose to. Oil & gas is valued in the consumer marketplace purely on cost. Unfortunately, not for its risk of shortage or the potential impact on civilization. Setting the proper landscape for a dedicated environment in which oil & gas can prosper and conduct its business operations. What is our judgment regarding current producer organizations' capability and capacity to realize these opportunities?

Leadership 

I expect that our user community will provide the leadership necessary for the administration and accounting of North American oil & gas producers. The expectation of how and why the industry earns its profits, along with the development and evolution of its business model. To provide the industry with the tools it needs to evolve at the capacity and speed necessary to meet its future demands, the greater oil & gas economy needs an objective and standard basis for evaluating that. 

Negotiating

Negotiation and compromise in response to the interactions between producers and our user community will occur frequently. Compromises and negotiations on the Preliminary Specification however cannot and will not occur. The business model is integrated and heavily dependent on it functioning together. Changes at the Preliminary Specification level may have implications unknown in other areas of the system. If these changes are necessary, they can be analyzed and corrected based on the most comprehensive understanding, once developed.

Observation 

Since everything always turns out as planned there are no unexpected consequences. This may have been the case in prehistoric times. When unintended consequences do occur they can be invisible and fall into the category of unknown unknowns. Awareness of these possibilities needs to be at the forefront of our user community and service provider organizations. This is to ensure that errors and omissions are not manifested as difficulties. As complex as it is today, there may be increased difficulties due to the speed and complexity of what needs to be done. 

Planning

Planning in a dynamic environment is a futile activity at times. It however communicates to participants the information necessary to begin the process. It is the first step. 

Quality

Define it, clarify it, communicate it and ensure its implementation. It used to be driving downtown to work in the morning, and returning at night. 2 - 3 cars were broken down on a 15 mile trip. Japan exploited this opportunity to enter the North American auto market. They introduced reliability. As the cloud computing era secures a software and service operating environment, software is experiencing increasing reliability. Phones are far more sophisticated than people realize due to Steve Jobs starting in the mid 1980s when he was fired from Apple. And Sun Microsystems with its first commercial release of Java in 1994. Cloud Administration & Accounting for Oil & Gas, standardization, objective accounting and other methods will provide higher reliability on top of these technologies. A duly authorized and capable user community can do so much more. 

Research

Primary research has become abundant in the 21st century. We can choose to stand on the shoulders of giants, or recreate it again if we like. The amount of primary research unused at this point is probably larger than what has been implemented. There is rich ground here for value generation for those that can leverage these ideas into reality in oil & gas. In light of all the competitive advantages listed under our user community, putting research under their domain is a natural fit. We see this as highly complementary to the research People, Ideas & Objects lists as their competitive advantages. 

Specialization & the Division of Labor

We’ve covered this extensively in all areas of this RFP Response. It has been the source of all realized economic value generation since 1776. However, software disables this natural development process of “gap-filling” when it has no capacity for change, and the organization has a vested interest in the status quo. Producers have relied on “cost cutting” in field operations to generate value for decades and have nothing to show for it but a fundamentally destroyed service industry. Specialization & the division of labor in terms of the development of our user community and their service providers will continue to be a priority. And they will introduce the same understanding throughout the greater oil & gas economy.

Thinking

The contrast between “doing” and “thinking” may grow more significant as we proceed through the 21st century. Writing is thinking. In today's world, organizations' ability to provide basic functions, such as oil & gas, is at risk. More may not resolve the issue. Getting ahead of the game may be a thing of the past and a luxury we can tell our grandchildren about. The environment we're working in today requires testing hypotheses based on various scenarios of possible outcomes. Determine what is right based on what generates value for the firm. An environment where what an individual gets out of it depends on their generated value.

OCI Request For Proposal, Part IX

 Competitive Advantages

We turn now to the three distinct competitive advantages of the People, Ideas & Objects offering. These consist of our user community, including their service provider organizations, research and Intellectual Property. These combine to form a sub-industry we’ll create between technology providers such as Oracle, oil & gas and the service industries. Each element of our competitive advantage contributes to our Cloud Administration & Accounting for Oil & Gas software and services. 

People, Ideas & Objects

In order to match our competitive strengths, we selected our user community, intellectual property, and research as our competitive advantages. 

Our User Community 

Quality in a product or service, like profitability, is difficult to achieve. Implementing a Tier 1 ERP system for an industry on a revolutionary, disintermediated basis is ambitious. A rebuilding of a dynamic, innovative, accountable and profitable North American, energy independent oil & gas industry is needed for the long term. We’re not trying to tear down the industry to rebuild it. This destruction has been done by the officers and directors of the producer firms. Delivering the Preliminary Specification to all producer classifications brings additional challenges not previously attempted in any industry. Now add quality. Can this be done? Not on the basis of the industry's current point of view, attitude or method of operation. Our failure rate would be 100% due to cultural inertia against our success. A 100% exhaustion rate and a high probability of systemic mental health difficulties for all concerned. It would leave the producers the viable scapegoat that they’re the only solution, all else failed. People, Ideas & Objects and our user community must secure our budget to ensure our independence from producers. Otherwise we’ll become producers “blind sleepwalking agents of whomever feeds us” to demonstrate that we failed and theirs was the only solution and opportunity.

The point needs to be made that oil & gas producers haven't satisfied today’s market needs. As with the Soviet Union's inability to feed its people, organizations eventually exhaust their ability to meet the demands of what they’re established for. The structured hierarchy can no longer operate effectively or efficiently enough to meet the needs of any aspect of the greater oil & gas economy. The producers, service industry, and critical resources of the financial, operational and political frameworks are all structurally and financially depleted. This is due to long term unaddressed issues created by producers' officers and directors. Our proposed method of rebuilding the greater oil & gas economy, brick by brick and stick by stick, is therefore the constructive approach. 

It is here that we can look to our user community for leadership in the business aspects of this rebuilding. People, Ideas & Objects have provided our user community with the power and control over this rebuilding process through our user community vision. There we find three distinct policies that enable them to instill the quality and leadership such an initiative requires. 

• Only our user community members are authorized to prepare derivative works to the Intellectual Property of People, Ideas & Objects. 
• Our development team is authorized to look only to our user community for their direction and needs. They are operating at the behest of our user community and are otherwise deaf, dumb and blind to all others. 
• Our user community has direct influence over their budgets.

Therefore if anyone from industry needs or desires to have any aspect of the Preliminary Specification dealt with at any time. They will only need to speak with the appropriate member of our user community responsible for that area. Providing a resource for all those in the industry to have input and a say in what they need to do their jobs. A permanent resource, along with our software development capability to provide the changes and enhancements producers require and desire. This will enable producers to continue to achieve the dynamic, innovative, accountable and profitable objectives their investors set for the oil & gas producers.

I’m only briefly introducing our user community's competitive advantages. There is a section directly below detailing and describing their specific attributes and how they’re applied.

Intellectual Property

We’ve covered this area fairly extensively in the Organizational Construct section of this RFP document. Intellectual Property forms the basis of our strategic and operational approach to the industry. We do not see Intellectual Property being as much of a legal construct as it is the political and cultural foundation of how the western economy and its civilization now operate. With software dominating industries, or having the potential to do so, the underlying value and protection of this intangible asset class is held in the Intellectual Property that software is derived from. This western cultural economy involves law-abiding citizens who uphold software companies' rights. This is especially the case with software companies where other firms' Intellectual Property is carefully managed and only used in contractual agreements. Intellectual Property is best described in what we describe… 

It's no longer enough to own an oil & gas asset. It's also necessary to have access to ERP software that makes the oil & gas asset profitable.

While we operated in the 1990s this was not the case. Intellectual Property was more like the wild west in terms of whoever had the largest arsenal had the largest opportunity. Intellectual Property development and respect in the 21st century, particularly in the software industry, has been necessary and dramatic. Innovation, intellectual development, and leveraging of our economy have been needed to provide the much-needed leverage to our economy. Much as mechanical leverage benefited society in the 20th century. 

We will continue to apply our Intellectual Property in the manner we have. It is our desire and we are pursuing the opportunity to resolve the issues in oil & gas as an operational software and service related sub-industry through our Cloud Administration & Accounting for Oil & Gas. North American producers' actions are highly consequential. We see the industry making a decided move towards SAP’s ERP offering as it is the only other Tier 1 ERP offering on the market. Producers may do so to satisfy their investors. If this scenario continues, this would preclude People, Ideas, & Objects from remaining an operational software organization for many years. 

Research

Our capacity and capabilities in the area of research into oil & gas administration & accounting are of value to the industry. The issues we identified in our May 2004 publication and resolved in the Preliminary Specification in August 2012 have now become the primary concerns of the industry. As we suspected and were concerned at that time, if the issues the industry faced remained unaddressed, they would lead to an existential crisis for the industry. With devastating fallout consequences for society due to the mechanical leverage of up to 25,000 man hours derived from each barrel of oil. Officers and directors run their firms in their own interests. Having no regard for their fiduciary responsibilities and the broader responsibility of running a profitable company. 

It should be noted that we were ridiculed by these individuals who said profits don’t matter. Profits always matter. Running a profitable business is fundamentally different from taking investors' money and spending it. It is difficult and challenging. It takes skill, courage and fortitude to achieve, persevere and lead. None of the characteristics or culture of what we’ve seen from those who claim profits don't matter. They’d “muddle through.”

I’ll also note that today the consequences of running a profitable operation are not within the domain of understanding or the culture of the oil & gas industry. The litany of excuses, blaming, viable scapegoats, “muddle through,” “put cash in the ground,” and other nonsense permeates the culture. A culture that fails to meet market expectations of its needs. Maybe not today, Europe is our warning, but we’re headed in that direction. Running a profitable operation is the only unlimited source of capital. Limited only by one's imagination which answers why we’re in this existential crisis. If the organization pursued profitability everywhere and always, they would meet investor demands and have the financial resources to fulfill market opportunities. If the industry wants to do this or that, if this is the direction they want to move to then a profitable operation will provide them with the opportunity to pursue those areas. If the proposed investments fail, they will suffer severe consequences of diminished profitability and difficulty moving forward with their next initiative. Such are profitability perils. There are far more capital resources available to those running a truly profitable operation than any investor class. This fact is either lost in the cultural malaise, conveniently ignored through bureaucrat mismanagement or they're just busy coming up with more excuses. 

My frustration is that this societal mess we find ourselves in was unnecessary and avoidable through the adoption of the Preliminary Specification in August 2012. People, Ideas & Objects provide a mid- to long-term solution to marketplace problems. Those that had the responsibility and authority to act and deal with this appropriately did nothing but fight this initiative with underhanded, cheap tactics. It is not that they did not fully comprehend the issue or the solution that People, Ideas & Objects promote. If they didn’t understand the issue or our solution why would they have undertaken these tactics towards People, Ideas & Objects? 

Based on our research today, we found the following. Society lacks time in this fast-paced world. To satisfy the personal concerns of the chosen few officers and directors at the cost of their fiduciary duties. This is done by fulfilling one's roles, responsibilities, authority and accountability. People, Ideas & Objects' concern is that we're well behind on the time necessary to turn this around. Seven years before we can do so. Which may be more time than our issues allow. And in that seven year time frame the development and implementation of the Preliminary Specification is a small fraction of the total work and effort needed across the entire North American oil & gas industry.

OCI Request for Proposal, Part VIII

 Information Technology

Our next Organizational Construct that defines how oil & gas producers operate in the Preliminary Specification of People, Ideas & Objects, our user community and their service provider organizations is the Information Technology environment. In terms of increased productivity, performance improvements, and leveraging a firm's business model, these have had a revolutionary impact on business. The promise of additional performance and productivity enhancements is available as these technologies mature and become more integrated. When applied to other Organizational Constructs such as specialization and the division of labor and Professor Paul Romer's shared or non-rival costs. Extensive leverage between the three can generate value for oil & gas.

The key technology today and the one we leverage throughout oil & gas administration and accounting is cloud technologies. Introducing a shared and shareable cost model for its users. This is how People, Ideas & Objects perceive Information Technology affecting producer firms' performance. With cloud computing, instead of incurring large capital, infrastructure and operating costs to acquire IT capabilities, users can access these needs for a variable monthly operating cost. This is a variable cost based on usage. The shared and shareable cost model doesn't end there. Producer users are supplied with the latest applications and technology service and support is enhanced. This is done through an enhanced and constantly evolving definition of specialization and division of labor. Cloud computing is expanding throughout the business community due to IT resources access. One that provides a lower overall cost, yet provides the full value of IT that would otherwise demand that each company invest in unique capacities and capabilities outside of their competitive advantages, and consume significant corporate resources and focus to build, achieve and maintain. 

If we look at the difficulties of “what, how and why” producers are consistently unprofitable. We see high overhead costs incurred within each producer that are the secondary cause of a systemic lack of corporate profitability. Building the necessary administrative & accounting capacities and capabilities, particularly in this regulatory environment, is costly to achieve and maintain. These costs are also incurred individually by each and every producer on an independent and isolated, or unshared and unshareable basis. These are not core strategic competitive advantages. We are faced with the same issues that earth science & engineering resources are faced with as a result of their advancement of specialization and the division of labor. The need for resources to cover each and every aspect of corporate administrative and accounting demands has or will soon exceed the commercial capacity of all producer firms. I would say it happened decades ago. People, Ideas & Objects' multi trillion dollar value proposition should show that the need for attention in the area of managing the business more effectively and efficiently is necessary, desirable, achievable and tangibly valuable. A shared and shareable business model through our Cloud Administration & Accounting for Oil & Gas will offer variable administrative and accounting state of the art capabilities and capacities. Providing lower costs from many distinct perspectives unavailable in the current business model. From an overall industry and individual producer perspective, a lower cost is due to the shared and shareable nature of these services. Conversion of fixed overhead to variable overhead, variable based on profitable production. Specialization and the division of labor increase the producer and industry throughput from the same resource base. These are just a few of the methods we use to provide oil & gas producers with the most profitable means of oil & gas operations. 

When we listen to customers who have implemented Oracle Cloud ERP applications within their organizations there are a number of consistent messages coming through that I find interesting. The first change is that their roles as senior management and officers change in response to the quarterly releases and upgrades of Oracle Cloud ERP. These now number around 200 additions per quarter. When the Preliminary Specification becomes operational, additional changes will be added to these Oracle changes.

People, Ideas & Objects would ask, based on the selection of which ERP solution is determined by producers' Board of Directors, how many of these quarterly changes will be the concern of producers' senior management and officers, or be handled on their behalf by our user community and their service provider organizations. The majority of these changes would be handled by our user community under the People, Ideas & Objects et al model. Service providers would implement, maintain and support them. With input from the producers funneled through to our user community, consolidated and optimized from the producers' point of view. This is a task that will be shared and shareable among producers senior management and officers. Ensuring effective and efficient producer process management, both from a time, effort and cost perspective. Which brings up a pertinent question. Who can effect change in this ERP ecosystem as proposed by People, Ideas & Objects et al? It is the greater oil & gas economy and most specifically our user community members that provide producers with the means to change the software and services. Our user community members will look for input on any and all information provided by the oil & gas industry. Our developers are deaf, dumb and blind to everyone except our user community members. Our user community members are the only ones licensed to develop derivative works from the Preliminary Specifications Intellectual Property.

The traditional approach to having an ERP system that caters to a specific industry is to customize the Tier 1 vendor's application to do so. Oracle frowns upon this and advises against it. People, Ideas & Objects have adopted Oracle’s policy on our user community and service provider licenses. Stating that application customizations are to be avoided at all costs. This certainly seems at odds with what we're doing. The point is subtle and distinct to Oracle Fusion Applications. Other than Workday they are the most recently developed applications for all ERP systems. Oracle Fusion Applications were the first to be written in the Java Programming Language which introduced the full object model to those applications. Providing inheritance, encapsulation and polymorphism on top of Oracle Autonomous Database as People, Ideas & Objects development environment. (Note: we are database developers.) Oracle Fusion Applications are supported by Oracle Fusion Middleware which is an enhanced Java Server with expanded functions and process management. It is generic and developed by Oracle Fusion developers. It is also the base of any "additions" written to provide industry specific application capabilities to Oracle Fusion Applications. Enabling People, Ideas & Objects to embed oil & gas industry features directly into Oracle Fusion Applications through Oracle Fusion Middleware as “additions.” 

This is opposed to industry customizations which traditionally sit on top of ERP applications. Oracle’s method avoids a key difficulty in an environment where users' needs are dynamic and changing. Any system changes at the Oracle Cloud ERP, or Fusion Application ERP level will not break customizations that sit on top of the Preliminary Specification, as there will be nothing there. Oracle quarterly releases will be embedded with "additions" from People, Ideas & Objects' own scheduled releases. Therefore, as they too are Java object-based, independently updated with their own enhanced and unique features, Java’s encapsulation leaves them unaffected by Oracle changes. Yet, I am satisfied that our application code base is separate and distinct from Oracle Fusion Middleware and Fusion Application code. Maintaining full control over our Intellectual Property that drives People, Ideas & Objects' competitive advantage. Oracle Fusion Applications and Middleware will soon have another unique feature. A feature called "Fusion - Zero Down Time.” Seems self explanatory. 

This next point is one of contention between the IT community and the business community. It is a method of implementation that is becoming increasingly the norm and the more successful method of ERP implementation. It is known as “rip and replace.” I subscribe to it for the time element of the roll out of the Preliminary Specification when completed in its commercial release. Please note it is the domain of our user community and service providers who will plan and conduct the implementations for each of their individual processes. Of course, this includes the producer firms. At this time rip and replace is the most appropriate implementation methodology for our rebuilding process.

We have implemented a policy not to map, provide product features, services or implementation for producers who have selected SAP in the market. Implementation of the Preliminary Specification will be conducted as written and prepared by our user community. There will be no shortcuts. Our competitive advantage relies heavily on Intellectual Property for People, Ideas, & Objects. Respecting other firms' Intellectual Property is necessary in the 21st century. We will also avoid those individuals who were involved in prior SAP implementations and or developments in prior work engagements. The latter being a minor change in our policies as we do not accept those Integrators who were “blind sleepwalking agents of whomever fed them.” Firms such as the major accounting firms, Accenture, Cognizant and the like. We are interested in solving oil & gas related issues, not arguing about cultural differences between the Preliminary Specification and the way it may have been done before. As we hold the officers and directors accountable for the damage and destruction caused to the North American producer population and service industry. We also see these groups share minor responsibilities for blindly doing what they were told. The people we're interested in participating in our user community are those who choose to work and have extensive experience in oil and gas administration & accounting. Can evaluate right from wrong and know intuitively the appropriate course of action. With the powerful tools provided in our user community vision, they can make the necessary changes.

Time is the demand that should focus producers on dealing with their shareholders' issues of accounting integrity, accountability, Tier 1 ERP systems use and the melting down of their financial position due to absolutely no capital structure. Time is People, Ideas & Objects' primary concern across North American producer markets. Therefore the need to focus the energies of the industry on this task will need to be a priority. Both from a software development and implementation perspective. Otherwise the industry will melt down and oil & gas will have failed in its primary role of providing affordable energy to the North American consumer. North Americans will become dependent on foreign energy sources to meet consumers' needs. And as we’ve noted, the most powerful economy in the world is also the largest energy consumer. These foreign sources of oil may hinder our ability to fulfill our traditional economic role. 

People, Ideas & Objects have chosen to pursue our user community, research and Intellectual Property as the three areas of focus for our competitive advantages. Note that none of these involve developing software code. We’ll own and provide the software code derivative of the Preliminary Specification and our Intellectual Property. We have contracted all of our software development to Oracle Corporation. Their services division is well versed in ERP products and ready and capable. We believe we would need to dedicate at least a half decade to assembling a team large enough to accomplish this project. We would then need to spend an unknown amount of effort to turn them into a functioning capable team competent to produce the quality of software necessary. Instead, we've been working on our user community development since the first quarter of 2014. A task we’ve prioritized since then. One that differentiates our product offering by quality. Time is not a commodity available to producers at this stage. The time we’ve invested in developing our Intellectual Property and most importantly our user community will offset industry needs tremendously. Contracting with Oracle in this manner leverages our time advantage. Focusing on the IP and user community aspects of this project will be a better use of our time, resources and skills. It is also where we see value in the software business. It is consistent with our belief that specialization and the division of labor will need to be applied to all aspects of the economy. By doing so we can do a better, more productive job.

If directors believe these ERP developments can be done within their organization, why haven’t they happened? Our scope of application development in the Preliminary Specification would be considered equal to what each and every producer would need to undertake. This is if they choose to continue going it alone in the unshared cost model. The main difference is scale. To acquire just the depth of understanding and detail necessary of the Oracle ERP Cloud offerings would require the same costs replicated across the industry in each and every one of the producer firms, assuming producers had a timely, oil & gas, workable, profitable business model. I could read things differently in terms of producer investors and bankers' timing and expectations. 2015 was when investors expressed their discontent with the industry at large. They identified lack of performance, accountability and transparency as issues at that time. I would never have assumed that a decade of inaction was a tolerable amount of time.

I should state here that the bulk of this RFP is a derivative of the one I wrote specifically “To the Board of Directors, Our RFP Response…” in late June and July of 2021. I raise this point as after 18 years this blog receives a high distribution across the North American producer population. Yet not one phone call or any other method of communication was used by any producer at that time to contact People, Ideas & Objects. Producers continue to declare us persona non grata.

I personally have worked on ERP systems in the oil and gas industry for thirty two years. Our first attempt in 1991 failed in 1997. This initiative began in 2003 and has been unsuccessful to date. There are few ERP providers available today and nothing else specifically designed for oil & gas from a Tier 1 provider. The benefit of this latest initiative is that copyright law is now upheld in all marketplaces and I’ve secured what I've developed. My point is to suggest that oil & gas companies have mistreated oil & gas ERP systems vendors in the three decades I’ve been involved. Much as it has mistreated the service industry, its investors and bankers. The need to financially support these initiatives from oil & gas sales revenues is now a result of this mistreatment. Producers must realize this reality. Just as there are no oil & gas producer investors, there are no investors interested in anything associated with oil & gas ERP systems. This is until these producer issues are resolved. 

To the point of Intellectual Property. It is the basis of all software. No software vendor will violate another's Intellectual Property. SAP or any other reputable company would adhere to those principles as that is the basis of their firm's value. It is detrimental to violate others' IP. Therefore the producers will be left to develop their own systems and may, or may not adhere to respecting the Preliminary Specification and People, Ideas & Objects Intellectual Property. That would be their choice and we would transition from an operational software company to one where our IP is respected. On the other hand, the producers could come up with their own methods of ERP software development and fight it out among themselves as to who owns what. This is after the money necessary to fund all those developments has been spent. The IT resources consumed in the process are sent on to their next industry with all the other service industry resources to find gainful employment elsewhere. It should be noted, as I have said, that accounting and administration are not distinct competitive advantages for producer firms. 

Although I feel highly productive today, that will not be the case in thirty years. Who’s coming into the field with the scope and scale of opportunities presented in the marketplace that these producer bureaucrats have created? What Intellectual Property will those that enter in thirty years bring, and conversely after consideration of People, Ideas & Objects et al, what IP can they bring? Producers may be surprised to learn that there are other dynamic and exciting industries right now. I can conclude that I am stuck with the consequences of my choices and can live without regrets about what I’ve done. I doubt those that follow me will feel the same after they’ve put in the three or more decades of effort necessary to generate that first penny of revenue from oil & gas producers. And that assumes People, Ideas & Objects reach that point. Producers today have no one to turn to for funding as its proven directors didn't care about their organization's profitability, or even oil & gas? It's clean energy!

Throughout our writings we have alleged that producers' accounting over the past four decades, and particularly the profitability reported, is specious. This is due to the phenomenon of “building balance sheets,” “putting cash in the ground,” overhead and other expenses that are not handled appropriately. Depleting cash chronically and raising serious governance issues that resonate throughout the investment community and elsewhere. This accounting allegation of ours is that the specious accounting methods conducted throughout the industry have been obscured through poor ERP systems that were deliberately created through producers' bureaucratic mismanagement. Governance over the quality of accounting and management systems has become an issue at the board of directors in recent years. Due to a direct request from their investment community. There are no tier 1 ERP systems providers selling oil & gas systems today and more importantly, outside of People, Ideas & Objects et al no interest. SAP sells to producers, but it is inadequate for oil & gas. How many producer issues are attributed to poor SAP systems? It has not been the case that producers have not been able to participate in the development of People, Ideas & Objects. 

A purpose-built oil & gas ERP system will need to be developed on a Tier one systems vendor platform to implement a governance model that satisfies the investment community. People, Ideas & Objects use Oracle Cloud ERP. The market leader in ERP systems according to Gartner. Based on our Preliminary Specification, our user community, and their service provider organizations we’ll provide a comprehensive and complete oil & gas solution in our Cloud Administration & Accounting for Oil & Gas software and service offering. One that provides a comprehensive value proposition in reducing producer overhead costs. Turning what remains of those costs into variable costs based on profitable production.

People, Ideas & Objects - Sales Commission Program

People, Ideas & Objects are moving into the next phase of development due to the changes in the oil & gas market space. Our inability to move to an operational software development organization has been hamstrung due to what we perceived as an essential direction being communicated to us. This was necessary before we could advance. Although today we may be reading too much into this situation, we feel it is very late in the day for our software to have attained operational development status. We are therefore confident and moving forward. We believed investors were leaving the industry. With information contained within this graph, we feel it confirms what we suspected and supports what we believe is necessary to move forward. This graph is from @Soberlook on X.

Who could blame the investors? For over four decades officers and directors have used the industry to fuel what may yet become the greatest destruction known to mankind. Energy in the form of oil & gas is critical to our quality of life, economy and survival. To have it so ruthlessly destroyed as documented in this WorldOil article is only the beginning of the difficulties we’ll face as an industry. 

• The Permian basin is expected to join all other basins in experiencing production declines. 
• 2023 saw 135 rigs dropped from the fleet to now stands at 642 rigs.
• Drilling and Uncompleted Wells, or DUC’s have declined. As the article states “the lower the count becomes, the longer it will take for shale supply to return.”
• In any corner of the industry, producers do not command respect, integrity, faith, trust, or goodwill.
• Others lack motivation to do business with producers' officers and directors.

How is this happening? We know it is the officers and directors, their “muddle through,” well built balance sheets and other nonsense that has brought us to this point. Why has this happened? There has not been a penny of profit made by a single producer in the industry since the late 1970s. Nothing but the expenditure of investor money gained from specious accounting reports that claim oil & gas reserves are valuable. If they’re so valuable why are they not produced profitably? What has been proven is that with willing investors, the useless spending machine of officers and directors destroys value. They used to proudly preach to me, "Who cares about profits? It's about cash flow.” They hardly understood why profits were necessary. They never recognized that they were not profitable. They never understood what was needed to earn real profitability in a competitive market. What they have proven is they have no understanding, concern or need to operate a profitable business. Since 2015 investors have given them ample time to figure out how to earn real profits. And what did they do? Declared shale was unable to be commercial and moved on to clean energy. It's time to say goodbye. Good riddance and don’t let the door hit you on the way out. 

There is a material difference between what officers and directors believe and their reality on the ground. We are therefore making a significant change in our posture and moving to an operational software company.

What we’re reading into this is a material change in the trajectory of investors' tolerance for oil & gas. The past eight years saw no investment money flowing in. Now with no action from producers and the disaster documented in the WorldOil article, investors are selling their positions and moving on. We see this as confirming the People, Ideas & Objects Preliminary Specification. Investors have lost patience with officers and directors and are leaving. Funds flow is relatively small at this time. We see the trend as our friend and expect it to continue after oil & gas took decades to get to this degraded position. People, Ideas & Objects believes the industry is at least seven years from stopping the log rolling down the hill. And we’ve only begun to witness it’s in fact rolling.

The reason we’ve waited for these indicators to materialize is that it provides us with a clear understanding of the future. Our concern was that if we began development without a clear signal from the investors as to what their future actions would be, we could have a terminally failed project on our hands. One that has no hope of rebuilding the North American oil & gas industry as we’ve proposed. We have represented our position to the investor community. If investors suddenly supported producers again, funding their capital expenditures with new funds. This would have been terminal for our organization and we would have failed spectacularly from a distinct lack of credibility. People, Ideas & Objects would have seen an action such as this as a betrayal by investors towards the future of the oil & gas industry and all those that expect and depend on a turnaround. If this wanderlust and spendthrift industry leadership regained their investors, People, Ideas & Objects would be sent back to the stone age in terms of our product horizons. 

Therefore in order to keep the overall opportunity open we had to wait until we saw what investors would do. So we kept our powder dry and our candles lit until we knew where we were headed. We now have that. We would not waste our user community's time or money. We have a viable business model, a plan and a vision to deal with the issues at hand. We indirectly have the support of oil & gas investors who have not supported producer officers and directors since 2015. Investors who have tried to deal with dysfunctional leadership and are abandoning them. I see investors' actions as terminal to producer firms' leadership. There is no stronger message that theirs is a flawed and failed corporation than having their investors give up on them. 

I am therefore pleased to announce that People, Ideas & Objects are instituting a Sales Commission Program for our Preliminary Specification for North American-based producer firms. This program is open to those individuals in the oil & gas industry. Who believe they can close the sale of ERP software development, as defined in the Preliminary Specification, to North American producers.

Now is the time to offer this opportunity. Our perspective on the industry is expressed in our writings. Our vision, plans and Preliminary Specification resonate within the industry. What officers and directors ridiculed us for as “opportunity costs'' over the past decades materialized in the form of our substantial value proposition, irretrievably lost due to inaction. Our concern for the future of the industry if the issues were not addressed would be severely detrimental. This would harm the oil & gas economy. This is a turning point that calls for changes to be made. Changes such as those defined in our Cloud Administration & Accounting for Oil & Gas software and services. Inaction by producer officers and directors leads to others taking the necessary steps to resolve these industry difficulties. The first thing we need to do is organize ourselves in a manner that resolves these. In the 21st century, a software system that defines, supports and constrains an organization needs to be built first. We find ourselves at the point where sales must begin and our budget is funded.

Pricing for our solution is based on our value proposition. We assert that due to the implementation of the Preliminary Specification the greater oil & gas economy would realize $25.7 to $45.7 trillion in incremental revenue and profitability over the next 25 years due to its use. Our Intellectual Property provides this value, which is substantial, proven, and exclusive. Decades of evidence show that industry action cannot resolve these issues. Producer firms have chosen to do nothing, and others will now take it from here. 

The commission earned by the individual(s) who close the sale is 15% of the sales price to the producer. Producer costs will be based on the per barrel assessment plus 15% commission. We have raised the per barrel cost assessment to $600/boe. People, Ideas & Objects pricing is based on the value proposition we bring to the market. Without the Preliminary Specification the industry is only involved in the pursuit of waste and does not have any plans or vision for the future. Sales commissions are paid upon closing. 

The sales process will be long and complicated. This process will incur costs that are the responsibility of the individuals who participate in this commission program. People, Ideas & Objects are available and will support the process to the extent of our ability. Unlike the Whistleblower Program we instituted there is no exclusivity granted to any one individual. However, it is available for a fee of $5,000 U.S. which buys a two-year exclusive license to sell. License renewals are granted however they will lose the exclusivity of the initial license

With regard to startups and small oil & gas producers, two classifications of producers that People, Ideas & Objects et al Cloud Administration & Accounting for Oil & Gas software and services are dedicated to. We do not expect sales interest in these producers initially. It is likely that they will join on their own or fall into the group towards the end. The Preliminary Specification provides enhanced and distinct benefits over other producer firms' classifications. Their participation will not be material to this Sales Commission Program unless an individual expresses otherwise. Possibly as an allocation for start-up or small producer firms with an aggregate production profile of X.

Although we've done what we could in light of the circumstances we were faced with. We were driven by a strong sense of urgency. I've seen exponential growth in that sense of urgency and am announcing our "First to Close Bonus" on these Sales Commissions. A "First to Close Bonus" of 2 X commission will be paid to whomever secures the first sale. The "First to Close Bonus" will be paid from People, Ideas & Objects sales proceeds.

I’m certain that I’ve caused confusion as to how this will be implemented and managed. The underlying premise holds that there are substantial conflicts and contradictions in the fact that we are seeking to secure funds from existing producers to rebuild the industry. What I see is an obligation on behalf of those who have willingly destroyed the industry to do the right thing and support this initiative. The fact is the detail of how these communities are financially supported is unknown to me. By putting this out in public I’m looking for feedback and pushback on these points. There is much we need to do and we need to do it quickly. No one has all the answers. Please review our RFP as a tool to support this process.

People, Ideas & Object - Whistleblower Program

 People, Ideas & Objects is instituting a Whistleblower Program to terminate any unauthorized use of our Intellectual Property in the oil & gas industry. We believe there has been a serious attempt to circumvent our Intellectual Property in a material way over the past six years. Our efforts to document these are limited by access to the evidence we need. Our Whistleblower Program is designed to provide us with the evidence to proceed with our Retroactive and Compensatory License for these indiscretions. There will be three aspects to these licenses. 

1. At no time will Whistleblowers be known to anyone. I am aware of the methods used by producers to ostracize and vilify individuals who offend them. That is why we are implementing a level of absolute anonymity. 
2. Licenses provide no further provisions for producers to use any Intellectual Property that is discovered. They must cease and desist.
3. Any compensation earned in the Retroactive and Compensatory License will be shared 50 / 50 between the Whistleblower and People, Ideas & Objects.

What we are seeking is documentation of the evidence needed to prove our case. Video, audio, screen shots, software documentation, process management, emails, job descriptions or interviews with individuals. To name just a few methods. Please redact any identifying information submitted to People, Ideas & Objects.

Here is the process we’ve established to participate in our Whistleblower Program. 

• Time to document and develop can be lengthy and difficult. Therefore we ask that you register your intent to document in an email to paul.cox@piobiz.com at the very beginning. 
• Please do not use your name or your current email address. Use gmail (establishes a collaborative environment with People, Ideas & Objects.) to set up a new email address with an unidentifiable name such as xyz@gmail.com. This way People, Ideas & Objects will not know who the Whistleblower is.
• In the initial email describe the Intellectual Property that you seek to document and for which company. It will be in this way we can grant the exclusive right to be the Whistleblower for that process at that company. Confirmation of this grant will be emailed back to you.
• Producers will make it clear that participation in this Whistleblower Program will be grounds for termination. Much is at stake and the need for anonymity. 
• Video is taken from a hidden camera that doesn’t reveal anyone but the subject of concern and is from an unidentifiable perspective. 
• Video and audio are edited to not reveal anything about the other participants. Please ensure there are other participants in audio and video recordings to maintain anonymity.
• If I don’t know who you are, then no one will know who you are.
• In the initial email please comment in your own words. “You are not acting as an officer, director, agent or employee of the producer firm for the purposes of seeking to circumvent the discovery process of any violation of People, Ideas & Objects Intellectual Property. That you are an individual with the requisite access to the described process and are acting on a good faith basis to document what company X’s inappropriate behavior is.” Etc. Please attest to your employment at the firm you’re documenting. 
• I will confirm your registration which grants you the exclusive right to proceed. That no one else has or will be authorized to do so. Providing you the time and opportunity to conduct the documentation thoroughly and effectively.
• People, Ideas & Objects and yourself are therefore free to conduct a collaborative effort in terms of reviewing the process and producer firm.

To commit People, Ideas & Objects to the Whistleblower Program. Commit this blog page (not your emails) to the Wayback Machine, under your account. (Anonymity precludes a formal legal agreement between yourself and People, Ideas & Objects. The Wayback Machine and email reflect the offer and acceptance, etc.) Information regarding the Whistleblower Program can be aggregated on this blog by selecting the Whistleblower tag on the bottom left. 

For further information please contact me at paul.cox@piobiz.com  

A Not So Friendly Warning!

 Attention: Producer Officers and Directors. 

On several occasions People, Ideas & Objects have advised producers that the use of our Intellectual Property in any way is unauthorized and forbidden. That although copyright is the law we find its use in the political realm more valuable and have chosen to apply it in that context. Political in the sense that upstanding law-abiding corporate citizens would not violate or take others' property. And no software company diminishes the use and value of another software firm's Intellectual Property. Since the 1990s this environment has become firmly established in the North American marketplace. We've participated in the development and protection of our Intellectual Property on this basis. We’ll now move forward based on Intellectual Property's legal aspects.

People, Ideas & Objects advised on four occasions that our Intellectual Property was forbidden. We are currently witnessing a fifth example that began in 2017 and has been ongoing since then. This is after we’ve noted the producers' prior involvement in Intellectual Property development that violates our work and informed them of our claims. We advise any and all participating producers to cease and desist immediately and seek a retroactive, compensatory license for this additional breach. 

In each instance the violation begins as a collaborative effort among producers seeking to enhance the industry's innovation, performance or other criteria. These collaborative efforts gain momentum and soon reach a conclusion. The conclusion is that the Joint Operating Committee will be the source of performance and innovation, whatever it is the collaboration seeks. The first instance of this was in April 2004 and continued with a second event in 2007, a third in October 2013 and the fourth in 2014. As stated, the current breach started in 2017 with the overt objective of producers working together to meet production and profitability goals. I’m paraphrasing here. Our next two blog posts will document the actions we’re taking to remedy these issues. Producers must immediately cease and desist in using our Intellectual Property.

As these dates show, People, Ideas & Objects discussed the benefits of Oracle Cloud ERP packaged into Cloud Administration & Accounting for Oil & Gas. This was throughout our research, development and iterative improvements of the Preliminary Specification, our user community, and service provider organizations. Elsewhere officers and directors were actively looking to disparage our efforts in the market while figuring out a method of claiming our Intellectual Property. The third aspect of their actions that officers and directors may not have considered. These failed attempts have only proven that they lack this intellectual property. What People, Ideas & Objects express in our blog and wiki are valid and workable ideas. Officers and directors are only concerned with maintaining control, their own skin and method of personal aggrandizement method. 

And this point cannot be argued today. The contrast and conflict in our claims are further supported by additional evidence. People, Ideas & Objects began with our research proposal in August 2003 and our Preliminary Research Report in May 2004. Since that time we have been researching the development of what the industry would look like if this were the case. We have also researched how it should be structured and why. We know that our August 2003 research proposal precipitated the first instance of the other firm's April 2004 research proposal. This was a month before our Preliminary Research Report was published in May 2004. And we see a similar timing pattern with the publication of the Preliminary Specification in 2012 with two separate events occurring in 2013 and 2014. The irony is that I was looking for $750,000 in August 2003 to conduct research on behalf of the industry. Producers would have owned the copyright! The response was repeatedly that “we don’t hire small research firms.” And in May 2004 when we published the Preliminary Research Report, the only question, once again repeatedly was “who paid for this research?"

An incremental conflict and contrast shows the validity of our Intellectual Property claims. Since August 2003, twenty years ago. The industry has fallen into shambles. Fundamentally destroyed and all the value built in prior generations, all the value of investors who were duped into investing through accounting that misrepresented the state of affairs. All oil & gas production during this period has generated no residual value. It's all waste. These were the issues raised and discussed repeatedly throughout our writings. It was the issue we sought to resolve and mitigate with sound business practices and common sense since August 2003. Which the Preliminary Specification et al. provides. We were accused of collusion, being crazy and that the system didn't work. That our claims of value generation were nothing more than opportunity costs. In my defense twenty years later, I’m sure every investor of that vintage would love to have their damages exchanged back into opportunity costs. 

They say patience is a virtue. I have been patient with the producers. As we all have. What redeeming quality is expressed today in the performance, viability and future of North American oil & gas? Unsupported capital structures of producers and service industries. Technical resource constraints only become more pronounced each year. Science becomes more complex and the capacity and capabilities to conduct operations slip away from those with authority and responsibility. Based on second quarter earnings reports, not a word about this rapidly declining capacity and capability. Who do officers and directors think will build the next drilling rig after what they did to the service industries in the past decade? Their “muddle through” is a comprehensive and complete failure.

Why have I not been able to perform when the obstruction to my performance is this incompetent, self-interested and derelict? 

Questions to ask our good friends, the officers and directors of the producer firms.

During the twenty years before today?

• How much investor cash has been raised?
• How much value did natural gas production lose while trading above 6 to 1?
• How much value did oil production lose while trading below cost, or negative prices?
• How much executive compensation was granted?
• How much creative and innovative executive compensation was granted?
• How much overhead was incurred by officers and directors, then capitalized?
• How much overhead in general is capitalized? Why?
• Who is willing to say they trust oil & gas officers and directors?
• Who is willing to say they have faith in oil & gas officers and directors?
• Who is willing to say oil & gas officers and directors have integrity?
• How much goodwill exists between officers and directors vs others in the industry?
• Who believes the officers and directors will do the right thing?
• What is the vision for the future and how will we get there? Is silence and shrugs enough?
• Will the current culture of oil & gas change when this leadership exists?
• Who has the appropriate solution for the issues of today?

Just to state again. Mondays and Tuesdays posts will describe the actions People, Ideas & Objects will now take. Make sure you have a look, I’m sure everyone will appreciate them. 

A Friendly Reminder

To: SAP

People, Ideas & Objects have become aware of the elevated use of SAP for Oil, Gas and Energy in North American oil & gas producers. We appreciate the opportunity to compete and deal with an industry that desperately needs creative business models and methods of management. This is to address several existential issues in oil & gas. We write today to state that we are fully aware of the SAP software and backend infrastructure represented in your “SAP S/4HANA Cloud for oil and gas upstream hydrocarbon accounting and management.” We have, and will continue to monitor, that we are not in violation of SAP’s Intellectual Property in terms of their Oil & Gas related features, processes, business models and methods. We expect to maintain an arms length distance from the SAP application and services at all times.

At the same time we will continue to focus on Intellectual Property licensed to be commercialized through People, Ideas & Objects. These are original expressions of how we manage an oil & gas enterprise. We are focused on developing an entrepreneurial culture in the industry around a dynamic, innovative, accountable and profitable oil & gas producer, industry and service industry. The legacy of this Intellectual Property in its current form began in August 2003 and can be reviewed through our wiki or blog. Subsequently we spent a decade on pure research to determine if we did make such a fundamental change in the industry would work, and how would it work? This research concluded in August 2012 with the publication of the Preliminary Specification. From there, the build-out has occurred with comprehensive contributions to the Preliminary Specification and our user community.  

Software developers cannot disregard other software developers' Intellectual Property. It is for this reason that I am informing you of our work in the North American oil & gas marketplace. One of the coincidental consequences of the work we are doing is that we are disintermediating oil & gas producers in what can be described today as the traditional sense. Producers are not sympathetic to our needs and therefore our reliance on Intellectual Property is exaggerated beyond that of a normal software developer. Intellectual Property is one of our three competitive advantages and a means of organizing our offerings. 

We therefore expect that our Intellectual Property, however controversial, will be respected by all other software vendors as we are all reliant and dependent upon it as the source of our revenues. I thank you for your time and consideration. Open communications should be our policy going forward. If you have questions about our Intellectual Property please contact me. 

Paul Cox

Thank you. 

These Are Not the Earnings We're Looking For, Part LXVIII

 Issues surrounding the recording of capital costs are complex and the implications across the industry cause many tragic difficulties. The consequences are being realized today in what I consider serious fallout in every area of the industry. Officers and directors believe these are accounting issues and will affect the accounting debits and credits and not much else. Misunderstanding the business aspect of the discussion and the underlying subtleties. Accounting is about performance. It’s not about bookkeeping or "building balance sheets" or recording the volume of cash being put into the ground. These are serious issues and the toll on the industry is plain to see. I feel we’re headed towards a grave downward step in our performance trajectory, are ignorant of what the future holds and our leadership is wandering about in and out of the industry, selling themselves as heroes to one another and have comprehensively failed everyone else. Did I miss anything?

At the same time I have not been able to convey the subtlety of the issues in coherent form to those that refuse to listen or consider an alternative point of view. They contrast my arguments with their peers at the golf club and the response they received when visiting their Ferrari dealership. "They built the oil & gas industry." They are the chosen few who find these others have leached from their achievements and efforts. Others do not appreciate the science and skill put into what they do." Theirs is a myopic view of the world where they occupy the center and will do nothing to explain their point of view to those who they feel have no ability to comprehend. I think I’ve covered it. 

One of us may be right or there may be a hybrid of the two perspectives. Oil & gas is a business first and foremost. It has not been a business since the 1970s. The culture that formed around that time does not understand the difference between what is done, what should be done or why. A capital intensive industry will always generate adequate volumes of cash that overwhelm anyone’s objective thinking. When you deceive yourself by never recognizing the capital nature of the costs incurred, everything appears to be profitable, organizations have no reasonable measure to assess their performance against, they find themselves intoxicated by their ability to achieve alleged success at every corner in anything they try. They soon lose perspective and become unreachable and unteachable. As time passes, the culture becomes intractable.

I saw what was happening to the business and the need for change in 1991. As I said, mine has been a single voice in the wilderness for the better part of that time. That’s not the case anymore, and the level of damage and destruction is clearly seen by most people in the industry outside of those officers and directors. The details of what I’ve been concerned about are evident in the solution we propose in the Preliminary Specification. This solution is discussed repeatedly on this blog and the wiki. 

Let me be clear. This is not Joe Biden's or Justin Trudeau’s responsibility. If you want to accuse them, they’ll be responsible for all the good the industry has accomplished. They have done neither. It is not the service industry. They have given everything and have nothing left to give. They have no motivation, no desire and no need to be in the oil & gas service industry. Pipeline companies are in the same boat. They are regulated companies and are therefore protected financially. It is not the fault of investors who can earn superior returns in other industries and invest their money there. Those who today see that nothing will happen after eight years of waiting for those responsible for the damage and destruction fail to act. Employees of producers who have tried everything but are powerless without leadership. It is, and always will be the leadership of the producer firms as represented by the officers and directors. There is no one else with the authority and responsibility to ensure that all contributors profit, prosper, and serve their purpose. And do not let them say they made a mistake, they didn’t know or they’re sorry. For two decades they sought others to blame, excuse and created viable scapegoats for the damages from their “muddle through" strategy. Did nothing to correct their actions. And there was an alternative for them that began in August 2003 and continues today. They did nothing but choose to eliminate People, Ideas & Objects from the marketplace and try to steal our Intellectual Property outright 5 times. 

I’ve been reading Professor Richard N. Langlois's recent book “The Corporation and the Twentieth Century: The History of American Business Enterprise.” He has some fascinating information within the book and I highly recommend it to everyone. Professor Langlois suggests the Twentieth Century Corporation benefited from primary industries such as coal, oil & gas. Oil & gas' mechanical leverage today is between 10 and 25 thousand man hours per barrel. This was realized through innovations and developments in machines and tools deployed by 20th century businesses. And on the other hand, WWI, the Great Depression, WWII, and the Vietnam War each presented organizational issues that markets were too unsophisticated and unable to approach. Government and big business therefore found a role for the bureaucracy and the question needs to be asked, what exactly is the benefit of today's bureaucracy from the structured hierarchy? Its benefits do not seem relevant since Internet-supported markets are sophisticated enough to accomplish what bureaucracies cannot. Moreover, coal, oil, and gas are unable to realize the significant gains on an annual basis that offset outright the cost of bureaucracy. This is in terms of what I think has always been bureaucracies' forte. Negative productivity. I feel it's clear we don’t want or need them anymore.

These Are Not the Earnings We're Looking For, Part LXVII

 Our sample of producers' second quarter reports have been published and I have to say that I’m quite surprised with the producers' outcome. There appear to be some changes in the industry. These changes reflect officers' and directors' behavior, and second, the disenchantment it has produced. What I’m stating is that all the tricks used to make producers look more attractive in the past have been resurrected and are fully employed again. The disheartening aspect of this is investors who have been patient with producers since the beginning of their refusal to give them more money. It has been eight years. Are now giving up on waiting for producers to turn the ship around. That's the oil & gas ship, not clean energy or any other industry the officers and directors may find interesting on a Monday morning. This act alone probably sealed their fate with their investors. Producers' inability to compete on the North American capital markets affects investors' commitment to the industry. Other industries are positioning themselves for substantial upside in the long term and hanging around in the deadzone with zombie management doesn’t seem to have a future. Therefore investors are walking. 

Production discipline is a key issue. Natural gas prices ranged from 25 to 1 and 40 to 1 in 2023. Not a word is heard about the absolute catastrophe this is. Natural gas prices broke down from their historical 6 to 1 pricing in 2009. What we’ve seen is another step down in 2023 of natural gas prices from the revised pricing established in 2009. This direction seems mindless. Arguing that it's casing head gas or associated gas that is the issue, they don’t pretend to look at that issue from the point of view of resolving it. At the same time they continue to see the service industry unwilling to commit the resources needed to supply oil & gas producers with their needs for the long term. Who could blame them for that based on the treatment they’ve received over the past decades? Nothing will happen until producers commit to rebuild the service industry. And that means supporting them with generous philanthropic efforts. Producers broke it, producers need to fix it. This occurs at the same time they dump natural gas as a byproduct onto the market with catastrophic losses hoping to make it up in volume, or "oil prices are healthy enough to cover the loss," or "build balance sheets,” or “put cash in the ground.” Officers and directors may find my arguments repetitive, because they are. Imagine how their investors feel about them.

In terms of oil prices, the understanding is that oil & gas is a capital intensive industry which generates strong cash flows. As a result these strong cash flows enable officers and directors to keep the lights on and the circus moving. This argument is lost on producers. Most importantly, it provides strong executive compensation. The problem is that it's not profitable. Specious accounting, which we'll discuss later, is back in vogue, and I don't mean to suggest it ever left. Oil prices are too low to be profitable. They are certainly not enough to compensate for natural gas losses. What producers fail to consider is that Saudi Arabia has two million barrels of oil per day withheld from the market at this time. Will this reduction continue? Will a recession begin soon? What will be 2024s oil price?

Only People, Ideas & Objects, our user community and their service provider organizations configured with Oracle Cloud ERP in our Cloud Administration & Accounting for Oil & Gas have a proposed solution to chronic oil & gas overproduction. Production discipline is attained in the Preliminary Specifications decentralized production model. A proposed solution we have discussed since January 5, 2007. Natural gas volumes speak of this unconstrained production nightmare. Our method uses profitability to allocate production. We can therefore ensure oil and gas production in North America is profitable. This is a strong foundational element of our value proposition. What is clear is what has been stated simply as: “Think of it this way: If you've got a leaky bucket, you're better off fixing the leak before pouring water in the top." From January 5, 2007 until today, what would be the differential between the specious cost of oil & gas production reported and the revenue received? Vs. the comparison to the actual cost of oil & gas exploration and production, what revenues should have been received to be profitable in the real sense?

In the land of what could have been. Theoretically when interest rates are low it is capital intensive, labor saving productivity that firms should invest in. Overreported capitalization due to “building balance sheets” and “putting cash in the ground” enabled producers to leverage their positions excessively during two decades of low interest rates. Adding to the difficulties of chronic overproduction or unprofitable production. Creating a future crisis due to extreme debt levels during a period of normalizing interest rates. Officers and directors have now achieved neither benefits of these worlds.

We hear in the press about producers' phenomenal efforts to reduce debt. At the end of 2016 our sample of producers' debt percentage was 55.9%. As of the second quarter of 2023 it’s 61.7%. (Our numbers include short and long term liabilities.) Here for example is their previously tried and tested method of "hysterical" accounting. From Reuters.

To get a picture of how much improved the cost efficiencies are in 2023, conventional greenfield unit development costs (development cost divided by the reserves developed have been curbed by 60%, from US$16.1/boe in 2014 to US$6.5/boe today. It is claimed that oil wells generate nearly three times more production for the same unit of capital than in 2014. 

And later in the article.

“Contrary to popular opinion, the world is investing appropriate amounts of money in fossil fuel production to satisfy demand. Cost savings mean operators can produce the same amount of oil at a lower cost…” 

The issue is twofold. Producers should not celebrate the ability to force discounts on the service industry due to officers and directors treating them abhorrently. Doing so over a number of decades deserves special recognition however. The second issue is that the statement is false. These are historical costs, not recycle costs as producers call them. Capital costs are not variable based on what can be done in the field today. That is what producers think they can show profitability at, the $6.5, but can’t compete based on their actual, factual and historical cost of $16.1. And long term readers know I have significant difficulty accepting the $16.1 / boe cost being assigned to each of the 30 to 40 years of reserves as anywhere close to what capital markets provide from other industries. What we know is that shale exposes prolific reserves and the capital costs incurred to explore and produce them are allocated to each molecule of those reserves. Shale has steep decline curves demanding costly rework and recompletions assigned to the entire reserve base. Capital costs are never reasonably realized or passed on to the consumer. They are for the sole purpose of “building balance sheets” or “putting cash in the ground.” What they cannot understand is that running a truly profitable operation would provide them with all the financial resources they could ever need. It's easier for officers and directors to wait until investors finally see the brilliance of producers' unknown and unseen plans than to do something about these issues. Yet all investors see are mice scrambling for their daily cheese.

People, Ideas & Objects proposes the following. First, the current production cost is what the replacement cost will be. Ultimately, that's the cost of replacing the product. Oil & gas are unique products in that they are irreplaceable and irretrievable. This demands a different approach if we are to manage the industry appropriately. With the decentralized production model these costs will be recognized in the product price, passed to the consumer and therefore recovered as cash to be distributed for future capital expenditures, dividends and bank debt. Profitable operations seek to realize costs appropriately and on time to fund future operations. 

At times people argue that I contradict myself, recycle costs are production replacement costs. I disagree. My arguments are that a dynamic, innovative, accountable and profitable oil & gas industry, as a primary industry, has a responsibility for the service and other industries. This is to ensure that they are healthy, well-paid, and prosperous. Cutting the price of the services because they can get another drilling rig for half price because all producers have slashed activity levels, only drops the rig operators' revenues into the low teens. Cannibalizing those that work directly for you may not be an effective long-term strategy. Secondly, recognizing the actual cost of production by competing in the capital markets for capital, demands that capital costs be recognized on a performance basis that is in quarters, not decades or centuries. Certainly competitive with other industries.

We’ve seen over the past few years our sample of producers report hedging losses of $109.7 billion. Yet as of 2023 reported hedging gains of $2.863 billion. My argument regarding hedges is that it sets the high water mark for organizational performance. It also sets the low water mark for organizational performance. So why would any of the staff do anything other than what the officers and directors do in the form of “muddle through?" Conversely you could have honed your organization to operate at the peak of perfection as a producer. However, what good are you in a sea of sludge? Officers and directors foster and enable a culture of failure and shrugging shoulders at each and every other producer firm.

In what I call their bankruptcy business model. Officers and directors at Chesapeake survived this otherwise terminal process and were rewarded with $25 million in bonuses following their bankruptcy declaration. There is only one conclusion to be drawn here: the loser is the investor. Who was the fool in the oil & gas firm management transaction? In addition to "muddle through," specious accounting, dilution by repeated annual stock issuances, and now dilution by consolidation. These are cultural, time-honored traditions. 

Officers and directors should also be commended for their actions towards innovators, entrepreneurs, and thinkers. Companies such as Packers Plus and coil tubing providers have suffered through their own persecution and prosecution by producers. Though we have not brought a commercial product to the market at this time, we have brought more ideas to the administrative and accounting areas. In terms of solving profitability related issues and value generating ideas we’ve been working on some promising leads. We’ve seen 5 attempts by officers and directors to use our Intellectual Property in an unauthorized manner. All while receiving nothing but the wrath of the officers and directors and their desire to maintain control of the sinking ship. My argument here is that these should not be seen in isolation. Others see these actions and think, I’ll shrug my shoulders and “muddle through” as well. Eliminating initiative and therefore nothing gets done.

This is the environment, the culture and the status quo of what North American oil & gas producers want to be known for. There was a video I came across that suggested Canadian producers should stop listening to their investors because what they’ve said was wrong for them. Although I cannot find the video, it was on Yahoo! I'll continue to look for it or others as it seems to have that old familiar twist we’ve seen many times before from producers. If there is a recession in our future, if the Saudis reverse their production cuts, these are all the risks we need to face on a day-to-day basis. When we assess the North American oil & gas industry it's at times difficult to get a handle on my perspective, I’ll admit. The industry operates on hope and possibility. Never accounts for the way things are or who’s responsible. To reconcile yourself to my perspective however, only asks the question, where do we proceed from here, and how?