These Are Not the Leaders We're Looking For, Part VI

 Bloomberg’s Javier Blas wrote in an article on Thursday March 7, 2024, entitled “When the Fix for Lower Commodity Prices Isn't Low Prices.” He discusses how low nickel and natural gas prices are no longer affected by this principle, due to some fundamental changes in the costs' makeup in those markets. It’s an interesting read for the changes that have occurred in the nickel market. I would argue that the assumptions he’s operating under in natural gas are skewed by producers' specious financial statements, financial statements that appear accurate on the surface but are misleading or deceptive upon closer inspection, and their propensity to say whatever comes to mind in their press releases. 

Shale has brought about a new era in oil & gas. An era of abundance that is the polar opposite of the scarcity era that preceded it. Although producers had developed behaviors of overbuilding capacities and capabilities in the scarcity era, and did not make any changes to their underlying business if prices of oil & gas were too low to command a profit. Doing so by continuing to produce at 100% of their production profile. Shale gas has worsened the situation, distorting the pricing structure significantly. Years of deliberate action will be required to rehabilitate the oil & gas commodity markets. 

First, a quick 101 in commodity economics. The theory says that low prices force producers to reduce investment, curbing supply; they also incentive consumers to use more stuff, perhaps in new applications, lifting demand. Over time, both forces rebalance the market bringing prices to their so called mean reversion, aka, the average. But that stylized supply and supply-and-demand model assumes a fixed environment that doesn’t consider technological changes.

Javier Blas' argument is the one that producers have argued for decades. It is a product of “muddle through” and their belief that cutting capital expenditures will ultimately remedy low prices. People, Ideas & Objects has repeatedly put across its point of view regarding 'muddle through.' The cutting of industry capabilities and capacities does nothing but:

• Aggravate and accentuate the boom / bust cycle within the industry.
• It destroys the field service industry, forcing it to bear the consequences of producer capital cuts. 
• Willingly destroys producers reserves while years pass for the productive capacity to either recede or market demand to increase. 
• Is a dull, blunt instrument that commands no effort or work on the behalf of officers and directors outside of issuing a press release or two. 
• Officers and directors continue to be rewarded with the revenues from a primary industry.

People, Ideas & Objects Preliminary Specification enables producers to shut-in any unprofitable production within the current month. Immediately dealing with the oversupply of the commodity. These specialized financial statements, designed by People, Ideas & Objects, offer a detailed and factual account of each oil & gas property's profitability, unlike traditional ERP systems. Determining the actual profitability of the property based on actual, factual, objective and standard accounting information. The ability of a producer to determine where and how they earn their profits is unknown and unknowable in any current ERP system in the oil & gas marketplace. What they shut-in would be hit and miss as to be a losing property or one that was contributing to the bottom line. From Bloomberg.

Second, on March 4, EQT Corp., the largest US natural gas producer, said it was cutting its output by about 6% this quarter after US gas prices fell close to a 25 year low.

And please note how common place shutting in natural gas production has suddenly become.

Therefore, we are concerned that the desire of producers to finally shut-in production misses the point. They will continue to lose money on the basis their overheads are fixed, not variable as we’ve proposed in the Preliminary Specification. Although we appreciate oil & gas officers and directors' acceptance of our argument of the need to shut-in overproduction. What they're doing is inadequate without the Preliminary Specification to provide the data and information, but more importantly, to guide them to where they make their money and how. How to deal with any loss and to tune their organizations. For an industry that has a culture that has developed on the basis of “making money,” “building balance sheets” and “putting cash in the ground” by spending other people’s money. A transition to a much more sophisticated understanding of their operation must be undertaken. Merely spending money does not equate to profitability. 

In discussing the recent history regarding shale’s build out. Javier Blas emphasizes the industry talking points about the costs of natural gas production dropping from shale’s discovery and development. 

The result was a staggering increase in production, making the US the biggest exporter of liquified natural gas last year. Over time, the process has become cheaper and cheaper, lowering overall costs. Despite years of low prices, US gas output has nearly doubled since 2010.

I believe he’s implying that even with low prices, money was made to expand the throughput through shale gas development. He, like the producers investors, may have been deceived by producers' specious financial statements reflecting profitability during this period. Spending money is not profitable. 

Shale gas has four characteristics that make it unique and support the abundance era. It is substantially more costly to drill and complete, exposes prolific petroleum reserves, it achieves high deliverability and incurs early and steep decline curves. Some of these are considered in the prior quote. However, the need to spend substantial amounts of money within a few years is necessary in order to maintain the high deliverability. This can involve incremental fracing on the initial leg, drilling a second leg and fracing or other work. Higher expenses of shale compared to conventional wells generate these costs.

With the SEC’s Full Cost accounting treatment these costs are allocated equally to each molecule of proven reserves discovered. Shale is prolific for the reasonable size of its pay, however it also extends from Pennsylvania to Ohio through to New York for the Marcellus formation. The aerial extent of these reserves formations are defined by the number of states that access them. Allocating the extensive costs of drilling and completion to this level of reserves makes the capital costs appear miniscule in comparison to conventional drilling. However, the steep decline curve reflects that those reserves will not be accessible without incremental, costly and repeated reworks. These costs will be added to the initial costs on each of the remaining reserves molecules. This skews the producers capital cost per barrel of oil equivalent to the largely irrelevant stage of commercial operations. Over time what we see is that the property eventually becomes too expensive to produce as the reserves decline and the remaining capital costs are too large to produce commercially. Therefore it is abandoned and the reserves and their costs are left stranded, leaving officers and directors shrugging their shoulders. There may even be times when they realize that shale will never be commercially viable and move on to greener pastures!

Producers claiming to be 'innovative' and 'profitable' quote these capital costs. We’ve seen two phenomena regarding the cost characteristics of producer firms that we’ve never thought would happen, and have not seen in any other industry. When commodity prices were declining producer press releases were stating the firm could then produce at ten dollars less cost than previously quoted. This went through several increments from $70 / bbl to almost $30 / bbl and supported their claim of profitability first and foremost, but also their innovativeness. How does a firm whose capital costs were incurred in prior periods suddenly reduce the capital costs by such substantial margins? Are there innovations in historical accounting that I am unfamiliar with? Simply these are what are called in the industry recycle costs. Capital costs refer to the initial expenses to drill and complete wells, while recycle costs represent the hypothetical current costs to drill anew, often used by companies to suggest lower capital expenditures during periods of reduced service industry prices. When a large producer doesn’t increase their well count by much more than 5% per year, that 5% is not going to have a material impact on the historical accounting costs of the past 95%. Producers are stating that if they wanted to they can drill and complete a shale well for less than before.

I personally gripe about how an industry can claim to be innovative when it has done nothing but seek and destroy. It's the service industry that conducts the innovation in oil & gas. Those with their hands on the problem. And to argue after 33 years of doing nothing about their poor accountability and systems. I can suggest that their only innovation was of the type that Bernie Madoff was envious of. 

In most cases where companies are announcing they’re shutting-in production. I’d be concerned they would see their choice is to shut-in their conventional production and keep the shale producing. The exact opposite of what an analysis of profitable properties would be telling them to do. Conventional, it would be assumed, are older with much lower capital costs and the time passed in which to have depleted those capital costs, and therefore would have no remaining capital cost balances to deplete. Therefore being amongst the highest in terms of the profitability for the firm. The difficulty for the producer is conventional oil & gas poses less interesting scientific and engineering issues.

New entrants into the oil & gas industry will be unable to compete at anything other than the highest of costs. Figuring out new and innovative ways to bring their production on line profitably is the challenge. Therefore the fallacy of high prices cures high prices is incorrect as the assumption that low cost production will be brought on to the market is false. All the low cost production in the Preliminary Specifications price maker strategy produces 100% of the time. All the affordable reserves were produced long ago. 

From the consumer point of view, the consumption of energy may decline however that has not been proven the case. The inherent cost of oil & gas production has less and less to do with the cost of oil & gas production and much more to do with the utilities “costs” and government taxes that are conveniently attached. When the consumers value proposition from oil & gas is 10 to 25 thousand man hours of mechanical labor, consumers may begin to believe that it is their most precious resource and have some appreciation for it. When it's cheaper than bottled water, no wonder they think it's of little value. 

Officers and directors have had ample opportunity to address the pressing issues within the oil and gas industry. Yet, despite the innovative solution proposed by People, Ideas & Objects — one tailored to the industry's unique challenges and fully fleshed out conceptually — they have failed to act. They have failed to meet the most basic expectations of them. Investors have withheld further support for nearly a decade, underscoring the lack of progress. The staggering loss of $4 trillion in natural gas revenues from 2007 to the end of 2023 starkly illustrates the consequences of this inaction. Such a profound failure not only underscores the inefficacy of the current leadership but also disqualifies these officers and directors from continuing their roles. The time for change is now. These leaders have overstayed their welcome, proving that the cost of their continued tenure is too great a burden for the industry to bear. For the sake of the industry's future, it is imperative that we usher in a new era of leadership, one that is willing to embrace innovative solutions and drive meaningful progress.

These Are Not the Leaders We're Looking For, Part V

 People, Ideas & Objects have been in somewhat of the same situation we find ourselves in today. Where producer officers and directors appear as though they need to act in order to mitigate the personal risks they’ve incurred in their willful misconduct over the past many decades. This is best represented by the 2007 to current natural gas price differentials creating a documented $4 trillion revenue loss. Why do they realize they’re at risk? They understand their Officers and Directors Liability Insurance may not cover them for these purposes.

Recently we announced we were selling Profitable Production Rights at a 90% discount. Disregarding the futility of the methods People, Ideas & Objects need to use to raise the necessary funds for these developments. No producer has contacted us regarding participation in any form in the development of the Preliminary Specification. We began our campaign on October 11, 2023. We are not deceived in the actions of the producers. After 33 years their behavior is consistent and can be summarized as “they control the funds of a primary industry.” If People, Ideas & Objects speaks of risk, that is responded to by “no one cares about risk.” Just as “no one cares about profits” was previously stated by them earlier in our journey. We would also point out the fact that since no producers have jumped at this opportunity through the discount, our prices are not at issue with them. 

One day People, Ideas & Objects believe producers will begin to understand the damage and destruction they’ve inflicted upon the greater oil & gas economy by their unreasonable approach. When they do it is the Profitable Production Rights that will linger as a daily reminder of what ridiculous extremes were necessary to put their business right. People, Ideas & Objects are sticking with this method of funding no matter how foolish the officers and directors feel it is. 

Their lack of business understanding extends to the method the Preliminary Specification provides oil & gas producers with the most profitable means of oil & gas operations everywhere and always. Our price maker strategy reflects that oil & gas commodities follow the principles established by economic “price-makers.” Earlier they accused us of formalizing collusion and price fixing, that they would have nothing to do with. This was their reason for ignoring the Preliminary Specification. We were subsequently able to assert that if producers were making independent business decisions based on actual, factual accounting information, that determines the profitability of a property is collusion, then one of us had a deep misunderstanding of business.

I raise this point to highlight the consistent theme throughout their “muddle through” induced inactivity and passivity. Claiming or feigning a lack of knowledge or understanding may help them in court if they were not officers and directors. However they are held to a higher standard. If they are this obtuse and lack the business knowledge they’ve displayed throughout the past many decades, they’ll still be seen as culpable. Playing on their investors and the service industries sympathies while they destroy the industry is a deception that would be worthy of, and consistent, with their prior actions. 

Oil & gas commodities are too valuable to be wasted. Unprofitable production is waste. These are finite resources and we have an obligation to future generations to prove we managed the resource appropriately. To show we produced oil & gas profitably and that a healthy prosperous industry was passed onto future generations. Neither is the case today. People, Ideas & Objects believes that industry needs to adopt the principles of preservation, performance and profitability in order to turn this situation around. The “muddle through” culture has failed in this endeavor. 

A few months ago I mentioned the impact that natural gas storage had on the prices of that commodity. The storage facilities were built out in the early 1990s by the producer firms in one of their Keystone Cop approaches to capital investments. Everyone piled in only to find out no one figured out how to make money and therefore since it didn’t make money, storage was sold off to midstream operators. Now they have no control over the operation and it has become a depressant on the price of natural gas. Although storage enhances the deliverability of gas, it appears that the gas held in storage is not owned by the producer and therefore, just as with LNG, in the hands of others who benefit from its upside. 

When seasonal demand or production is high then the high deliverability acts as an effective buffer to the market to maintain somewhat steady prices. However, are those prices beneficial to producers? Unprofitable production is seen by People, Ideas & Objects as the exact same thing as overproduction. If all the overproduction in the industry is absorbed by storage facilities for the majority of the year, and during peak demand storage's deliverability is high enough to accommodate the extreme demands, are these normal market forces? Storage operators buy low and sell high during the seasons as their method of earning a return. 

Natural gas storage absorbs any overproduction when storage is available. And when storage is unavailable, it continues to depress the price and will accelerate any price decline into a collapse. The way to eliminate the effect of storage in the market is the same method as with LNG. Producers must only produce profitable production. By producing only profitable production through the use of Preliminary Specifications price maker strategy producers will be able to achieve all their corporate objectives. Profitability, maximized asset value and effectively eliminated any excess financial benefit to those who effectively trade off their product. 

However, based on the response times officers and directors have approached these opportunities. We should be seeing the wind down of oil & gas due to the successful development of pocket fusion reactors. Those officers and directors who should have been accountable, hold the responsibility, authority and can direct the resources necessary to deal with the consequences of their “management” haven’t risen to the occasion, and we believe never will. What I’ve found was their behavior was unacceptable and quite beneath those who were responsible for the “can do,” “wildcatting” days. These officers and directors believe they’ve co-opted and emulated that image as they strut down mainstreet with their big, beautiful, well-built balance sheets. Showing who truly is the biggest spender by putting the most “cash in the ground.” 

It's time for producers officers and directors to reveal what their vision for the industry is. What it is they plan to do. How it is they'll do what they plan to do. And why they're doing it. They've had plenty of time to come up with something. Why not share it?

These Are Not the Leaders We're Looking For, Part IV

 The question we need to ask ourselves is why do officers and directors believe People, Ideas & Objects glow radioactive? Why is there such a strong adverse reaction to the combination of 'real' and 'profits'? Shouldn't generating 'real' profitability, which would provide more cash, align with their interests? There’s no question it’s the case, why has it not happened? And if they are so offended by People, Ideas & Objects, after these 33 years, why haven’t they changed their systems to generate “real” profitability? 

After asking the many pointed questions I’ve asked in the past few weeks. To summarize, the $4 trillion in lost natural gas revenue since 2007 can be attributed to either the incompetence and indifference of officers and directors or their deliberate, self-serving actions. I suggest officers and directors need to choose one of these alternatives to ensure they don’t become accused of both. 

We have spoken before of several motivations as to why producers have not acted in their own profitable interests. These include the opaque nature of the accounting and systems allows for a freedom and creativity that accountability would otherwise expose. A second reason for the lack of action towards profitability is that the Preliminary Specification represents disintermediation, making the current business models of producer firms redundant, inefficient, and uncompetitive. The third reason that there has been no move to enhance profitability is that under their current business model it can not ever be done. 

Firstly, I have vigorously defended my Intellectual Property throughout this journey, making it accessible exclusively to People, Ideas & Objects, our user community, service providers, and Profitable Production Rights holders. Not to others. Second, today’s producers accounting information produced is inadequate to make the decisions that would be necessary to shut-in production. Accounting information is aggregated and consolidated then merged. To gain any detail or understanding of what its makeup is would be impossible to compile. The two most egregious examples are depletion and overhead.

Depletion

Depletion is a necessary element of determining what level of financial performance a Joint Operating Committees has attained. In a capital intensive industry to exclude the cost of capital from a determination of profitability is inappropriate. Many argue that the well paid-out many decades ago. And that is possibly the case. It doesn’t mean from an SEC or accounting point of view that it ever has or ever will. The need for producers to source investment capital as a means to spend has been over for almost a decade. Competition for capital has to consider a broader, North American perspective and producers need to compete with Apple, WalMart and others as much as they do the producer down the street. 

Accounting is accounting on the basis of the SEC, all accounting for all listed companies will be comparable and to a large extent is. Except when oil & gas Full Cost and the Ceiling Test are involved. These calculations, along with the depletion calculations are not completed at the Joint Operating Committee level, they are aggregated at the corporate level. Reliance on the independent reserve report to provide the detail is where a firm would get the information they need. Note: the reserve reports are factual from a reserves basis however, from an accounting basis their costs are as mythical as Harry Potter in comparison to the SEC requirements. 

The implications of Full Cost and the Ceiling Test are not allocated to Joint Operating Committees. A well may have paid out from the point of view of drilling, completion and equipping. But that’s it. Full Cost allows for any cost that was incurred in the exploration and development of the reserves to be added to the pool associated with those reserves. Therefore, the Joint Operating Committee may have significantly larger capital costs than the individual well’s drilling, completion and equipping. From an SEC accounting basis, any capital costs such as the drilling of uncommercial wells in the pool need to be included in the depletion calculation. 

Currently depletion calculations are conducted on a corporate basis. In today’s Information Technology environment depletion would need to be allocated back to the Joint Operating Committee based on the engineering reports proven reserves and monthly production in order to determine an actual monthly profitability. This work is not undertaken. 

People, Ideas & Objects advocate for a more timely recognition of depletion costs, suggesting a thirty-month period for capital cost recovery to enhance competitiveness and financial health. The SEC’s Ceiling Test defines the limit, not a target. There is ample reason for a producer to adopt a policy of zero property, plant and equipment balances. It will be the most competitive producer that maintains a zero balance of property, plant and equipment. The fact they’ve returned all their investments shows their performance has been historically exceptional. Big, beautiful balance sheets are useless to everyone other than those building consolidated paper empires. The same can be said and is said for the purposes of allocating any changes or adjustments as a result of the Ceiling Test.

There is an associated issue with the management of cash due to these policies. Officers and directors have claimed they were “putting cash in the ground” and they were telling us exactly what it was they were doing. By recognizing capital costs over a thirty month period, this cash would be released back to the producer for reuse for dividends, debt reduction and dividends. Letting cash atrophy in the ground for a decade and more is ludicrous. 

Overhead

The detail necessary for industry to identify the individual Joint Operating Committees overhead costs are significant. As a result industry operates on the basis of overhead allowances charged to the Joint Operating Committee. For every charge to a Joint Operating Committee there are 100% of those charges being recovered in some form from working interest partners. The net effect of these charges and recoveries across the industry is that all overhead allowances equal zero each month. The actual overhead is charged to the corporation and at the end of the year, aggregated and a large percentage, People, Ideas & Objects estimate an average of 85%, are capitalized. 

Ask a producer what’s the “actual” overhead cost to account and administer natural gas vs. oil. No one and I mean no one will be able to tell anyone that until such time as the Preliminary Specification is operational. Eliminating the overhead allowances and replacing them with the actual overhead costs of each process will be done when the Preliminary Specification and our user communities service providers are operational. Each service provider manages one process on behalf of the entire North American producer population. Specializing on their distinct competitive advantages that include: Quality, specialization, division of labor, automation, innovation, application of Artificial intelligence, leadership, Internet of Things, integration, domain expertise, deployment and integration of tacit (their services) and explicit (our software) knowledge, conflict and contradictions, issue identification, creativity, collaboration, research, ideas, design, planning, negotiating and compromising to highlight just a few. Processing the work and billing the individual Joint Operating Committees for their fees for managing their process. If the property is shut-in no data or information is generated for the service provider to conduct their work and as a result no billings are rendered, turning all of the producer's costs variable, based on profitable production. 

This has the added benefit of incurring these costs in a profitable operation each month. Passing these costs on to the consumer of the oil & gas. And therefore the cash incurred to pay the service providers is returned to the Joint Operating Committee within the next month. Maintaining a “cash float” for the overhead costs of the producer firm. Or if the property is shut-in, with the variable nature of overhead under the Preliminary Specification, these costs are not incurred and the property creates a null operation, no profit but also no loss. Today, with the majority of the overhead capitalized, the cash is returned when the depletion costs are recognized annually over the next 15 to 20 years. Demanding that producers find new and willing investors or some form of “new” cash each and every month to pay the overhead. When we think producers knew this from the time of the publication of the Preliminary Specifications publication in August 2012. And no changes have been made to their policies. Maybe alternative 1) above, the possibility of incompetence is the appropriate choice to make.

Moving producer costs to the customer on a timely basis is necessary for profitable and healthy producer firms and the greater oil & gas industrial complex. “Building balance sheets” and “putting cash in the ground” have failed as objectives. As any reasonable person would have anticipated. If the Preliminary Specification disintermediates the officers and directors, or their understanding of business concepts are poor there is ample material here for people to discern the scope of their failure. 

The pressing issue now is the industry's future and how it will navigate the mounting challenges it faces, exacerbated by leadership that has squandered the value entrusted to them by previous generations. A future that sees capital expenditures outstrip any era before it. An unidentified and misunderstood impact of the shale era and its consequences on the industry. A lack of support for producers' capital structures. An industry that has been gutted of any and all value that had been handed from prior generations to the current crop of officers and directors. Which summarily incinerated the capital that was raised in the past three decades. An unmotivated, distrusting and abused service industry that producers have shown they were once played for fools, and they now understand intuitively the real depths of producer depravity. They won’t get fooled again and their capacities and capabilities are inadequate for the continent's future needs. A leadership that has somehow yielded untold personal wealth at the expense of everyone else. And yet are unable to conceive of business concepts such as “real” profitability, “free on board,” “cash float” or “shut-in production.” Among many others. 

Conclusion

The absence of an accurate financial accounting assessment, particularly regarding depletion and actual overhead costs, severely hampers the ability to ascertain the true profitability or loss of any property. Therefore the diversity of outcomes of what is and what isn’t profitable are remarkable. Natural gas and its byproducts are far greater in terms of overhead costs to administer, yet there is no recognition of this in overhead allowances. Blindly shutting in production as the producers are now doing, after 38 years of destruction by not doing so. Is potentially as damaging when done on a turn this valve off and open that one basis. In producer firms today the overhead costs are fixed. Ensuring that the unknown, high overhead properties will be a drain on many other operations if they too are shut-in. 

Decisions are made on the basis of engineering reports and estimates as opposed to any actual financial information. Purely due to the lack of available financial information. Without this information the ability to analyze and understand the business does not exist. Leading to issues such as the $4 trillion natural gas revenue loss since 2007. Accounting today is the means in which to have the bills paid. The intricacies of engineering and geology encapsulate the oil & gas industry's value and complexities, often perceived as too intricate for understanding outside those professions. Thus, beyond balancing the books and undergoing audits, traditional accounting practices are seen as obstacles rather than aids to operational excellence.

The detailed, property-level data offered by People, Ideas & Objects promises to revolutionize the industry's understanding of profitability, pinpointing precisely where money is made and lost. Pursuing 100% of a producer's production profile has been demonstrably inefficient and wasteful. Profitability under the Preliminary Specification will be earned at any level of the producers production profile as all production produced is profitable. Therefore if the commodity prices dictate an 80% production profile. It can be done profitably as the Preliminary Specification, our user community and their service providers turn all of the producers costs variable based on profitable production. I understand these are advanced business concepts. We will therefore need to wait 38 more years before the officers and directors comprehend these points. 

These Are Not the Leaders We're Looking For, Part III

 The technical infrastructure and the disintermediation of the oil & gas industry's complexity highlight fundamental issues. The business competitiveness, which officers and directors have chosen to ignore, will soon become wholly unattainable. The state of the North American industry in terms of its ability to approach the most difficult challenges it has ever faced in its history. The so-called 'efficiently' managed and maintained Rube Goldberg machines within each producer firm have summarily failed under the direction of officers and directors commands. Therefore holding the budget for accounting in general and ERP systems in particular to second hand shoestring diets has achieved what their objective was. Opaque accountability and financial statements, supported by inadequate systems, are treated as features rather than bugs. Are these the source of the $4 trillion in lost revenues People, Ideas & Objects have identified?

Consolidation aims to establish totalitarian control, turning industry participants into 'blind, sleep-walking agents of whoever will feed them.' As Milton Friedman has said it is usually the architects of centralization that are the first to rue the consequences of their actions. How will they be able to deal with the speed and complexity as the business world accelerates further. Are they in control now? Or is this a means in which large portions of the officers and directors can exit the industry and wash their hands of the consequences of their actions? Allowing the skeletons that are springing to life to be buried deeper in a broader “more diverse” organization?

Officers and directors have consistently failed to set a clear agenda, objectives, or direction for the industry. It’s always been “muddle through,” “build balance sheets,” “put cash in the ground,” “clean energy” or when difficulties arise they excuse, blame and create viable scapegoats such as “we need a cold winter,” “it’s the government,” or “the monster under the bed.” Never once employing business principles of good governance or critiquing their performance. Silencing and ignoring those that do. This is the established culture, built over several decades, what officers and directors are relying on to carry them forward for a few decades more? To suggest that we rebuild the industry in the vision of a dynamic, innovative, accountable and profitable oil & gas industry is never accepted and shunned. The industry must be rebuilt, not merely to fulfill People, Ideas & Objects vision, but due to the necessity imposed by accumulated damage and neglect. An industry rebuild that must be undertaken by someone as a result of the damage and destruction that has now been realized. 

On Wednesday, February 28, 2024, I questioned whether the $4 trillion in unrealized value was genuinely surprising to officers and directors. Asking if it was in some way deliberate? Or is this purely on the basis that they did not know? I would suggest it was one of those two and the officers and directors are free to pick whichever one they like. Indication of a deteriorating natural gas price structure from 2007 to 2023. Where 6 to 1 fell to over 51 to 1 at one point did not trigger anything other than People, Ideas & Objects continuing concern, our banishment from the industry and $4 trillion in losses.

If I wanted to, I could come up with other reasons for this disaster heading toward a catastrophe. The crucial point is that, regardless of the reasons, this disaster will persist as long as the current officers, directors, and culture remain unchanged. The difficulty is magnified if it is left to continue with its consolidation. As they will become impervious to outside influences. As they may very well be today. 

I have documented throughout the 18 years of this blog, and this adventure I began in 1991. In response to the 1986 oil price collapse. I have not received any support from industry as it conflicts with the good financial health of the officers and directors. Disintermediation is the theme in all industries. Who is coming up behind me with an idea that will replace the status quo, and will or can avoid the Preliminary Specifications Intellectual Property? What issue in industry will anyone approach that will receive the good faith blessing of the officers and directors? Or will the individual look at the situation, see that it may take 33 years to resolve, and even think there is an issue?

And there is a larger issue than this. The service industry is wholly enamored with the producer firms. Having been betrayed when producers' sources of capital dried up. Suppliers were able to keep the producers active in the field for a period of time. What wasn’t known was the producers had no intention of paying for at least 18 months. With covid making the service industry even more difficult they were faced with selling horsepower and cutting up equipment to survive. All while the producers whistled on by. 

Investors were disenchanted with producers' performance and began to suspend their additional support of producers as early as 2015. Nothing has been done by officers and directors to address these most critical issues of what should have focused the mind of each and every one of them. 

This is an ugly picture and I’m sure it’s as fresh as a $4 trillion revenue loss to many of the officers and directors. It is now decision time for those in power, and I argue that the coming months are critical for making these necessary changes. Otherwise, I don’t see it happening.

These Are Not the Leaders We're Looking For, Part II

It seemed that the goodwill extended to producer officers and directors during the 2008 financial crisis had been fully extended. Yet, surprisingly, they received numerous additional opportunities to rectify their underlying issues. The industry's culture, heavily influenced by a 'muddle through' approach, has rendered follow-through impossible, effectively stifling initiative. Regression to the norm occurs rapidly and expectedly. The reliable and permanent disconnect between press releases and the implementation of action underscores a profound failure to act. 

It should take more courage for an officer or director to stand in front of their shareholders and ask for their nomination to be approved for 2024. Where is their acceptance of responsibility? They were duly authorized, accountable, responsible and had the resources to resolve these issues? What is the role of an officer and director if it is not to foresee the difficulties and avoid risks? Clearly the risks and difficulties were pointed out to them for decades. Solutions have been available for more than a decade. And acceptance that shutting - in production was necessary occurred on February 21, 2024. 

It wasn’t that recent natural gas prices of $1.51 were lower than Canadian regulated natural gas prices of $3.75 in 1985. Adjusted for inflation those would be $9.25 today. Or that the price on a traditional 6 to 1 basis would be $12.76. Instead they accepted 52 to 1, a continuation of the deterioration in the factor that began in 2007. Yet from 2007 to 2024 this issue did not warrant a press release! It was the realization that the quantification of $4 trillion revenue loss they had wasted, which has now put their personal fortunes in jeopardy through the potential loss of their Officers and Directors Insurance. That was their motivation in February 2024, and even that only qualified for a press release. Someone should ask them how they intend to resolve their dilemma?

In terms of answering the question, who should we trust? How could we do worse than what we have today? If new leadership was brought in to take the industry forward, would that be better? While the decision on leadership replacement exceeds my authority, the necessity for change is clear. 

However in terms of an organizational structure and culture in which to rebuild the industry I don’t think there is a better choice than People, Ideas & Objects, our user community and their service provider organizations. We have been focused on the critical issues that the industry was facing. That they manifested into such dire consequences was unnecessary and is the result of the officers and directors inaction. Our purpose and objectives focus on cultivating a new culture based on preservation, performance and profitability—a foundation we believe is essential for trustworthy leadership.

And that is not all. The future through our overall organizational focus on dynamic, innovative, accountable and profitable oil & gas producers. Our user community vision, and by extension our permanent ERP software development capability. Ensures that industry doesn’t fall into any organizationally constrained difficulty again. Our Preliminary Specification is ready and is designed to support industry leadership for their administrative and accounting needs for the next 25 years. 

These Are Not the Leaders We're Looking For, Part I

 People, Ideas & Objects highlight the urgent need for officers and directors to make decisive actions regarding their roles in their oil & gas producer firms. This week, we announced the second phase of our campaign, focusing primarily on the removal of these officers and directors. Their actions have demonstrated a lack of qualification and capability to meet their positional demands, necessitating conduct we deem appropriate. 

Officers and directors must implement mechanisms that establish the industry on a foundation of preservation, performance, and profitability. This means prioritizing 'real' profitable production, strictly interpreted, across all operations. Which involves funding the development and implementation of the People, Ideas & Objects Preliminary Specification through our Profitable Production Rights. Subsequently, they should resign their positions. That was easy to write, we’ll see how effective it is in terms of follow through.

The justification for doing so is the compelling case that officers and directors (in)actions have incurred an intentional tort in the form of willful misconduct. If they were to resolve the issue by putting in place the means to resolve the issues, then the classification of an unintentional tort may apply. The difference between these two definitions is that one is covered by their officers and directors liability insurance and the other may not. 

Continuation of their role in the corporation is questionable when they were unable to comprehend the significance of their actions. Or maybe the significance of their actions is the question. To buy gas from the Gulf of Mexico LNG providers and in turn sell it in the Japanese or Netherlands markets can be done, as I understand, with activity in the futures markets. Hedging put and call options on the producer's production was all the rage a few years ago. Therefore the knowledge and ability were within their domain. It's unclear why the industry failed to capitalize on the proceeds from these LNG shipments. Misunderstanding “free on board” is a bit of a stretch for anyone to accept that the entire industry didn’t understand this most basic business concept. Or is the case of a producer selling their production into the Gulf of Mexico while global natural gas prices soar. And then leaving it to “others” to transport and market the gas into foreign markets would be easier and no less suspicious of them.

Officers and directors have a duty of care; their primary responsibility is their fiduciary duty to the corporation's interests. Mistakes can happen and they are covered by insurance for such instances. However, as I’ve provided a solution to the issues that are preeminent in the market today. Whose issues generated $4 trillion in lost revenue during the same period. Investors of these corporations were dissatisfied with the performance of the producers. Nothing was done by officers and directors. This leaves the industry ill prepared, with few resources, no capital structures and one option in the form of the Preliminary Specification. Continued misconduct and inaction by officers and directors risk escalating the situation from a disaster to a catastrophe. 

How are those that are responsible able to account for a $4 trillion revenue loss under these conditions? How is it that a culture of “muddle through” was ever acceptable to them? Do we allow this to continue?

These are the disqualifying facts of the history of the oil & gas producers in the 21st century. Seeking to maintain their positions has been their primary occupation by issuing successive press releases. None of what had been stated by them at any time has turned out to be valid and they’ve refused to accept the input of others. They have flipped and flopped in and out of oil & gas, declared the shale frontier uncommercial and reported specious profitability through the simple act of spending money. 

What qualifies as profitable in oil & gas in nothing more than the ability to spend money. When little of the capital, in a capital intensive industry, is passed to the consumers. Investors have to support the spending. Deceived by specious financial statements alleging profitability, which are marginally less than the gross profit. Throughout the period of time in which I criticized the industries actions. (December 2005 to February 2024.) Not one single change in any accounting practice, attitude or operation has occurred except for on February 21, 2024. That was the day that press releases were issued stating that natural gas production would be curtailed. 

The current organizational structure and industry culture lack any redeeming qualities, necessitating a comprehensive rebuild. People, Ideas & Objects suggest it needs to be rebuilt under the vision of the Preliminary Specification. It is not on the basis that we would need to tear it down to do so. The state of affairs in oil & gas is more or less destitute in my opinion. Given this need for rebuilding, the question arises: who can be trusted to undertake it? 

Announcing Phase II of Our Campaign

 People, Ideas & Objects' Declaration of Victory last Wednesday was timely and appropriate. However, I am fully aware of the potential challenges that may now begin in earnest. Experience has taught us that it is sometimes prudent to view oil and gas officers and directors primarily as advocates of public relations. Issuing press releases to a receptive media one day does not resolve the actual, chronic issue of systemic overproduction. As we have observed, it took 38 years for them to acknowledge that overproduction was a problem; it might take equally long for them to realize the necessity of implementing a solution. Oracle Cloud Infrastructure, People, Ideas & Objects, our user community and their service providers configured as our Cloud Administration & Accounting for Oil & Gas would be our recommendation to producers.

Major Announcement: Sale of 100,000 Profitable Production Rights

Today, we are excited to announce the sale of 100,000 Profitable Production Rights. This initiative is not a market offering and is exempt from regulatory scrutiny. Instead, it represents the licensing of exclusive access rights to our Cloud Administration & Accounting for the Oil & Gas sector, a licensed product anchored in the Intellectual Property of People, Ideas & Objects.

With the established pricing model, we anticipate these Profitable Production Rights will generate $100 million once we've established the necessary technical, legal and organizational frameworks. To facilitate the creation of this infrastructure, we are offering these rights at a 90% discount, aiming to raise $10 million in initial revenue. This strategic pricing is designed to fund the development of the requisite Profitable Production Rights technical, legal, and organizational infrastructure. Interested parties are encouraged to contact People, Ideas & Objects directly.

Campaign Success and Future Direction

The initial phase of our campaign, spanning from October 11, 2023, to February 16, 2024, achieved notable success across two primary objectives. First, producers have acknowledged the necessity of focusing exclusively on profitable production, a principle we've long advocated for, as highlighted in recent discussions. This shift comes in the wake of recognizing a staggering $4 trillion in wasted resources from 764 TCF of gas. Secondly, we are initiating the second phase of our campaign today, which will extend through the end of May 2024. This phase will intensify focus on the significant financial and operational missteps by industry officers and directors, particularly regarding the willful misconduct in resource destruction and the neglect of proven strategies.

Historical Context and Industry Dynamics

• In 2015, investor confidence waned, with many withdrawing further funding from oil & gas producers due to unsatisfactory performance and historical disappointments.
• People, Ideas & Objects published the Preliminary Specification in August 2012, offering solutions to the industry's prevailing challenges, which remain relevant today.
• On July 4, 2019, we released “Profitable, North American Energy Independence -- Through the Commercialization of Shale,” further advocating for the Preliminary Specification, which was unfortunately disregarded by industry leadership.
• The necessity to shut-in production became undeniable in April 2020 when oil prices plummeted to negative $37.64, refuting claims that such measures would lead to substantial formation damage.
• In 2022, a shift in narrative emerged as officers and directors declared shale unviable for commercial success, pivoting towards clean energy initiatives with purported shareholder support.
• By 2023, shale re-emerged as a strategic focus, albeit with a new consolidation theme, signaling a recalibration of industry priorities.

This sequence of events underscores a pattern of mismanagement and strategic misdirection by industry leaders. Culminating in significant financial losses and a questioning of their suitability for a leadership role. This second phase of our campaign aims to highlight these issues, advocating for a reevaluation of leadership strategies and a return to proven, profitable practices. 

Taking action is essential. The issuance of press releases concerning production cuts significantly influenced the price of natural gas on the day of announcement. However, this effect diminished by Thursday and Friday. The reputation of officers and directors for making statements without subsequent action is well-documented and arguably anticipated. It underscores the urgent need for tangible action, specifically through the implementation of the Preliminary Specification. Alternatively, a consistent, daily series of press releases could serve to sustain the illusion of ongoing activity.

Reviewed & Revised Profitable Production Rights, Part III

 New Growth Theory

Among the seven Organizational Constructs outlined in the Preliminary Specification, New Growth Theory plays a pivotal role. It aims to lower the overhead costs linked to oil and gas exploration and production by facilitating the sharing of administration and accounting services. This initiative is executed through People, Ideas & Objects, alongside our user community and service providers, via Cloud Administration & Accounting for Oil & Gas. The development of this software and service is financed through the proceeds from the Profitable Production Rights.

Professor Paul Romer's theory of non-rival goods extends and enhances the value derived from Adam Smith's principles of specialization and division of labor. People, Ideas & Objects is committed to abolishing the outdated and inefficient practice of each producer independently developing their administrative and accounting capabilities. Instead, we advocate for the adoption of Cloud Administration & Accounting for Oil & Gas, which provides a shared, variable-cost, industry-wide administrative and accounting infrastructure. Persisting in duplicative administrative and accounting efforts across producers is illogical in the 21st century, especially within an industry burdened by significant overhead costs like oil and gas.

Because the economics of ideas are so different from the economics of markets. We’re going to have to develop a richer understanding of non-market institutions, science like institutions, this is going to be a new endeavor for economics.

Budget

Our campaign in late 2023 and early 2024 to highlight the damage and destruction in the natural gas marketplace achieved remarkable success. We have now established as an industry fact that over 17 years, $4 trillion in natural gas revenues went unrealized due to the willful misconduct of certain officers and directors. This figure surpasses our initial value proposition estimates, which supported the potential for $5.7 trillion in incremental profits over a 25-year period for the oil and gas sectors combined. We extend our gratitude to these officers and directors for their unwitting contribution to our campaign.

On February 21, 2024, the Wall Street Journal reported that producers:

1023 ET – Short-covering pushes U.S. natural gas futures sharply higher after 

Chesapeake Energy

says it plans to cut production this year in response to current market conditions. The reaction looks overdone, but “we are keeping a close eye on matching or similar production-reduction comments from the other majors,” says Gary Cunningham of Tradition Energy. “If those come in the next week or so we could see summer push towards $3 and winter make a drive for $4.” The front month March contract is up 11% at $1.753/mmBtu, with double-digit gains also for subsequent months. (anthony.harrup@wsj.com)

Few industry participants would dispute that the direct costs associated with People, Ideas & Objects would be in the vicinity of $12.79 billion USD. The status quo finds it particularly challenging to acknowledge the costs for Intellectual Property royalties, earnings, and the valuation of Flexible Profitable Production Rights as outlined in the Preliminary Specification. The expenses tied to this initiative are minor compared to the now-validated, undervalued potential the Preliminary Specification is poised to unlock. Our Request for Proposal (RFP) section delves into the rationale behind the budget for People, Ideas & Objects, offering a detailed comparison between the prospective value the Preliminary Specification promises and the existing plans enacted by the officers and directors.

Promotion of Profitable Production Rights

People, Ideas & Objects has reintroduced Profitable Production Rights to fund the development of the Preliminary Specification and establish our user community. On February 26, 2024, we will announce a development aimed at initiating this process. The oil and gas industry faces a critical juncture; it has lost essential capacities and capabilities, rendering it unable to maintain its production profile. This situation has been aggravated by the attrition of long lead times necessary for drilling and completing wells, a process traditionally spanning ten years but now severely atrophied.

Particularly troubling is the industry's reliance on shale, which, due to its high cost and steep decline curve, has left us exceedingly vulnerable to an unprecedented industry-wide decline. The short-term inability to address this production shortfall signals a potential, catastrophic failure, compounded by our documented $4 trillion revenue shortfall created by existing officers and directors through complacency and a lack of proactive leadership.

Addressing this crisis requires an all-hands-on-deck approach, transcending the complacency that has circumvented industry motivation for action. The severe problem of declining production capabilities, exacerbated by industries overexposure to shale, demands immediate attention. Those in positions of authority and responsibility, who have historically preferred to "muddle through" using capital-intensive industry cash flows to offset their hefty compensation, must now face the urgency of the situation. The business discussion cannot end with executive compensation while ignoring these looming catastrophes. A concerted effort involving revised industry leaders, policymakers, and innovators is essential to forge a sustainable path forward for the oil and gas industry.

Conclusion

Status quo producers have lost sight of their purpose. They have failed, will not succeed, and have proven culturally incapable of earning "real" profitability. They have no desire to change or succeed. As time passes, the difficulties in the industry will become more apparent. The choice of alternative organizational opportunities for the greater oil & gas economy is limited to one choice offered by Oracle, People, Ideas & Objects, our user community and their service provider organizations in the form of our Cloud Administration & Accounting for Oil & Gas application. The time to consider these issues has passed. As part of the Intellectual Property available to develop any alternatives, it will be necessary to consider what solutions have already been developed and avoid what exists in our Preliminary Specification. Then undertake the difficult ten year process of researching a solution to achieve the industry needs.

In light of the trillions of dollars of damage and destruction caused by producer officers and directors throughout the greater oil & gas economy. People, Ideas & Objects provide extensive value propositions, developed new business models that bring new value as a result of disintermediation. The cultural methods we implement in the Preliminary Specification to achieve these advantages are described in our seven Organizational Constructs. We are building the future oil & gas industry on these cultural foundations.

As a result of our budget, the producers' officers and directors have maintained their distance from this project. Because of the scope and scale of these issues and this project, these costs must be recognized. Our next phase of development will not be built on one individual's success. As a result, it will be based on a comprehensive sense of urgency necessary to address these issues in the industry. In addition, the revenue potential and characteristics of Profitable Production Rights should reflect a negotiated share of the BOE's value proposition. And determined by the individual rights owner. We will be offering standard documents to aid their process.

The purchase price of these rights is $1,000 U.S. per North American BOE. In addition, the potential revenues and characteristics of that right reflect a negotiable share of the Profitable Production Rights with those who own the oil & gas production. The proceeds are used to build the Preliminary Specification. Fulfilling the need for People, Ideas & Objects revenues from oil & gas production, albeit indirectly in this case. By operating Cloud Administration & Accounting for Oil & Gas software and services, the Profitable Production Right will reflect the intrinsic value of oil & gas production's ability to organize profitably. It is a perpetual right and exists beyond today's oil & gas producers. Although our costs are large they pale in comparison to the significance of the damage done by these officers and directors. This damage is accelerating, has not been identified or approached and continues. Therefore anyone and everyone can share in the effort, the success and the reward of resolving this industry catastrophe to prevent what could become a societal catastrophe.

The status quo in the oil and gas industry is no longer sustainable. Producers have lost sight of their purpose, trapped in a cycle of unprofitability and culturally resistant to change. As challenges mount, the need for alternative organizational strategies becomes undeniable. People, Ideas & Objects, in partnership with Oracle and our vibrant user community, introduces a revolutionary solution: Cloud Administration & Accounting for Oil & Gas. This product represents the only viable alternative to reinvigorate the industry with real profitability and sustainable practices.

Our approach, delineated in the Preliminary Specification through seven Organizational Constructs, offers a blueprint for disintermediation and cultural transformation. These constructs provide a foundation for developing new business models that promise significant value by addressing the billions in damages caused by current leadership practices.

Recognizing the project's scope and the pressing need for industry-wide collaboration, we propose Profitable Production Rights. Priced at $1,000 U.S. per North American BOE, these rights not only fund the development of our solutions but also allow stakeholders to directly participate in and benefit from the industry's transformation. This model represents a perpetual investment in the future of oil and gas, transcending today's challenges.

As we stand at the precipice of what could become a societal catastrophe, it is imperative that we all contribute to a solution. The Profitable Production Rights offer a pathway to rebuild the industry on principles of profitability, sustainability, and collective effort. Our invitation extends to everyone to join this vital endeavor, shaping an industry capable of meeting the demands of the future while rectifying the mistakes of the past.

The Battle

For over four decades, North America's oil and gas industry has seen billions of barrels of oil and trillions of cubic feet of gas extracted and reported on balance sheets, with unclear benefits to society at large. While the purpose behind these actions may not be fully understood, the necessity for transparency and a reevaluation of strategies is undeniable. Alarmingly, the prosperity generated has largely been confined to the industry's officers and directors, posing a significant risk to societal well-being. People, Ideas & Objects recently documented over $4 trillion in revenue losses were realized in the July 2007 to current period. And did so unnecessarily. With disgruntled shareholders actions since 2015 designed to focus on these issues. And a solution in the form of the Preliminary Specification since August 2012. Willful misconduct are the personal issues in which individual officers and directors need to address.

As these leaders transitioned towards clean energy, taking the industry's revenues with them, questions arose about the legality of this shift. It highlights an urgent need for a system that genuinely aligns with oil & gas profitable oil & gas practices. Enter Profitable Production Rights: a concept designed to steer the industry towards a culture of preservation, performance, and profitability, prioritizing the most profitable means of oil & gas operations.

The Preliminary Specifications seven Organizational Constructs lay the groundwork for this transformation, offering a comprehensive and intuitive cultural framework. This environment invites all concerned stakeholders to engage, innovate, and thrive, marking a pivotal step towards creating a dynamic, innovative, accountable, profitable and prosperous oil and gas sector.

Smell's Like Victory to Me

The oil & gas industry has long been marred by systemic issues, leading to unprecedented losses—764 trillion cubic feet (TCF) of natural gas undervalued for a staggering $4 trillion loss between 2007 and 2024 stemming from their distorted price structure. This chronic overproduction, tracing back to the significant oil price decline of July 1986, has not only impacted North American producers but the economy at large. Nearly four decades later, the consequences of these (in)actions are undeniable, yet it took the risk of personal liability for officers and directors to spur a reevaluation of their strategies. 

How long will it take them for the next issue to be resolved? What is their credibility? Who do you trust?

From today’s Wall Street Journal here and here.

Reviewed and Revised Profitable Production Rights, Part II

 Issues Involved in Profitable Production Rights Licenses

An Inconsistent Software Architecture to What’s Approved

People, Ideas & Objects now hold commercial rights to Paul Cox’s Intellectual Property, marking a significant issue for the traditional officers and directors in the oil & gas sector. Historically, these stakeholders have neither accepted nor recognized IP, fearing that doing so would conflict with their established protocols and operational methods. Intellectual Property safeguards the software within Cloud Administration & Accounting for Oil & Gas, securing its value proposition and, consequently, its asset value. This protection enables us to generate development and maintenance revenue by creating Profitable Production Rights License products, thus preserving their inherent value.

People, Ideas & Objects and the status quo aim to secure commercially what rightfully belongs to People, Ideas & Objects' value as represented in the Intellectual Property developed in the Preliminary Specification and beyond. We leverage this value to drive productive change in the industry and challenge the status quo. The traditional powers seek to halt this progress to preserve their dominance for another generation, hourly compensating those who contribute to their cause, thereby keeping a critical aspect of the industry's future under their control. We have chosen a different path to ensure the health and prosperity of the oil & gas industry.

In this vein, People, Ideas & Objects poses critical questions: Will a dynamic and innovative oil & gas industry emerge without the contributions of those individuals dedicated to solving complex scientific and business challenges? Moreover, will these problem-solvers commit their time, resources, and effort without the safeguards provided by Intellectual Property Laws? These questions underscore the indispensable nature of IP protection in motivating innovators to push the boundaries of what is possible in the oil & gas sector.

This software infrastructure is a primary concern for the Profitable Production Rights Licensee, aiming to secure leverage for their value proposition. It is entirely derived from People, Ideas & Objects and its licensed Intellectual Property. Intellectual Property is a key construct among the seven Organizational Constructs outlined in the Preliminary Specifications. We invite readers to review this section to grasp IP's significance in our community and the broader oil & gas industry.

The prevailing mindset among producers' officers and directors, and the broader commercial marketplace, is that commercial software applications like the Preliminary Specification should be accessible via published Application Programming Interfaces (APIs). The preference for open-source software, due to its expansive community and low cost, allows for creative and innovative enhancements to software through these APIs. This approach seems to offer an improved method of software delivery. However, it's crucial to understand the underlying motivations for this architecture choice and to compare it with People, Ideas & Objects’ strategy of using private APIs for proprietary software, which is accessible only within our licensed domain.

Publicly publishing an API as desired by the status quo would breach the terms of our user community provisions. Our licensing agreement grants users the rights to uphold, secure, and create derivative works. Consequently, publishing an API would enable producer firms to access software code without compensation, undermining the value proposition of the underlying Intellectual Property. This issue came to the forefront on May 6, 2021, when the United States Supreme Court ruled in favor of Google against Oracle, regarding the unauthorized use of the Java Programming Language. The Court determined that using a published API constituted “fair use” and did not violate Oracle’s copyright.

Despite this, producers are still willing to pay for software development conducted by "blind sleepwalking agents," as long as it serves their interests. This situation highlights the contrasting motivations and arguments surrounding this legal nuance. People, Ideas & Objects and the status quo aim to secure commercially what rightfully belongs to People, Ideas & Objects' value as represented in the Intellectual Property developed in the Preliminary Specification and beyond. We leverage this value to drive productive change in the industry and challenge the status quo. The traditional powers seek to halt this progress to preserve their dominance for another generation, compensating those who contribute to their cause, thereby keeping a critical aspect of the industry's future under their control. We have chosen a different path to ensure the health and prosperity of the oil & gas industry.

People, Ideas & Objects ask what benefit will oil & gas producers gain from the ownership of ERP softwares Intellectual Property? Their distinct competitive advantages fall under their land & asset base and their earth science & engineering capacities & capabilities. It is the application and coordination of these towards their asset base that will generate the value and profitability for the producer firm. ERP Intellectual Property will continue to be distractions if producer officers and directors continue to seek them. At the same time IP is critical to the structure and means of an effective ERP marketplace.

Potential Profitable Production Rights Licensees should note that my holdings are evenly distributed between Intellectual Property royalties, People, Ideas & Objects earnings, and fees from producers through the Flexible Profitable Production Rights Licenses I possess. I’m all in to ensure I benefit from a profitable and prosperous North American oil & gas industry as a result. 

Vaporware

Absolutely, and we embrace this label with pride. Our approach has avoided locking ourselves into rigid solutions that might later require expensive software redevelopments. This strategy has allowed us to remain agile and financially autonomous, focusing squarely on the pressing matters at hand. As the oil & gas ERP provider that has faced financial neglect, criticism, and outright vilification, People, Ideas & Objects stands resilient. Despite the heavy criticism from entrenched interests within the industry, we continue to present the sole viable solution to the existential and organizational challenges facing the sector.

Embracing the concept of vaporware to its fullest, we've focused primarily on nurturing our user community since 2014, a meticulous and time-intensive endeavor. The Preliminary Specification, published in 2012, serves as a blueprint for our community, enabling them to grasp the future dynamics of oil & gas operations and contribute their expertise to this vision. This initiative empowers them to actively participate in shaping the industry's evolution. With the exclusive license provided to our user community, they have the unique opportunity to:

• Craft derivative works based on our Intellectual Property exclusively.
• Provide essential feedback to our software developers at People, Ideas & Objects.
• Exercise discretionary control over their budgets.

We safeguard the outcomes of our user community's efforts, protecting them from the scrutiny and jealousy of the industry's traditional power brokers. This protective measure ensures that our contributors can continue to thrive in their roles without risking their positions. They engage in shaping both the future and the revisitation of past practices, doing so both overtly yet inconspicuously.

Upon the completion of our user communities in-depth analysis and enhancement of the Preliminary Specification, we will be positioned to finalize a system architecture and operational framework. This groundwork will enable us to implement cutting-edge, dynamic, and accountable oil & gas operations, setting new standards for dynamic, innovative, accountable and profitable oil & gas producers in the industry.

Scope and Scale

The Preliminary Specification introduces an unprecedented scope within the ERP environment, driven not by mere ambition but by the profound challenges and the unwavering stance of industry leaders over decades. The oil & gas sector, essential to our advanced standard of living, faces potential risks. Yet, the ability of producers' officers and directors to address these challenges dynamically, innovatively, accountably, and profitably seems limited by a pervasive culture of complacency.

The challenges posed by the Preliminary Specification are unique, yet the essence of what we offer does not deviate from what producers must inevitably create themselves. Every producer faces the burden of development costs tied to their Intellectual Property, which must not infringe upon the IP of People, Ideas & Objects. This situation raises a significant issue: the lack of a clear vision and understanding to tackle long standing problems like Production Discipline, unresolved for more than four decades.

Oracle's current initiative to overhaul the U.S. healthcare system by shifting the focus from facilities to patient-centric care presents a parallel in ambition. Their approach, aiming to unify patients' medical histories across different healthcare providers, surpasses the scale of our efforts in complexity and scope. This comparison highlights how isolated systems fail to meet contemporary needs for integrated care.

The question arises: Are the initiatives of People, Ideas & Objects and Oracle merely experimental phases for ERP systems, or are they essential responses to the growing demands for enhanced capacity, capability, and organizational performance within their respective sectors? The necessity of such transformations for societal advancement is undeniable. The success or failure of these ambitious projects will ultimately provide the answers. Given the absence of viable alternatives to the Preliminary Specification, the pressing time constraints, and the urgency of our mission, the success of People, Ideas & Objects is imperative. Resolving these industry-wide challenges requires a collective effort, underscoring the importance of every stakeholders contribution to achieving this goal.

Assuming Oil & Gas Disintermediation is Necessary

Disintermediation is essential across all industries. The future viability of structured hierarchies is in question, as their current functionality fails to meet the efficiency and commercial performance society demands. The internet has catalyzed various organizational models that introduce innovative approaches to value generation, surpassing the capabilities of traditional structures.

The need for disintermediation within the oil & gas industry is a point of contention. People, Ideas & Objects posit that the existing framework has fundamentally failed, a perspective not universally recognized but gaining traction due to the growing concern over the industry's tendency to overlook or inadequately address business challenges.

A hallmark of disintermediation is the clash between defenders of the status quo and advocates for change. In North America, the oil & gas industry's resistance has been so staunch that it detrimentally impacts all facets of the sector and its ancillary industries.

Viewing the situation optimistically, People, Ideas & Objects see disintermediation not merely as a necessity but as an opportunity. The extensive damage inflicted requires substantial corrective measures to rejuvenate the service industry's capacities and capabilities and to revitalize exploration and production competencies within the producing entities. Restoring trust, faith, and integrity among producers is crucial to re-engaging the investment community with the industry. Ensuring that the sector adopts the most profitable means of oil & gas operations is paramount, along with guaranteeing that consumers have access to energy that is affordable, abundant, and reliable. Therefore, the question arises: Why should the industry revert to outdated methods when modern, proven tools and strategies from other sectors can lead to success?

Value Proposition

Our extensive value proposition hinges on a critical premise, leveraged by both categories of Profitable Production Rights Licenses. The historical dependence of producer companies on external capital and the consequent erosion of value over the past four decades have rendered these entities neither profitable nor commercially viable. A well-established principle emerges: over-reported assets lead to inflated profitability figures, triggering excessive investment and, consequently, overproduction. In the realm of oil & gas commodities, adhering to price maker principles is crucial. Decades of overproduction have severely undermined the prosperity of all stakeholders in the oil & gas sector.

This situation reveals an insidious problem eroding industry performance over time. Profitability and financial performance, taken for granted and unquestioned, become ostensibly easy targets. However, over time, organizational performance degrades to a point of complete reliance on external capital for basic operations. The oil & gas industry's culture of unwavering persistence against change has become its Achilles' heel, rendering the sector economically not viable as its present value dips into the negative.

This predicament appears terminal. A market economy cannot thrive with a counterproductive culture; such a culture must be dismantled to prioritize performance as the benchmark for success. Unfortunately, the energy required to dismantle this bureaucratic culture is immense. Luckily, People, Ideas & Objects is poised to reconstruct the industry based on the performance-oriented culture outlined in the Preliminary Specification, ensuring the most profitable oil & gas operations universally.

The industry's pervasive "muddle through" approach, stemming from the assumption that commodity markets will absorb any level of production, sees producers operate at full capacity. However, the Preliminary Specifications decentralized production model and price maker strategy face criticism as potential collusion. Unlike this perception, price makers curtail unprofitable production until it becomes viable, considering oil & gas commodities as price makers to regulate supply by introducing only profitable production to the market.

Directors and officers often mistakenly believe the market will magically balance any volume they produce. This misconception has led to dramatic price declines, including several collapses since 1986 and the unprecedented negative oil price of $37.64 in April 2020. Markets operate on the principle that price conveys information, suggesting production is only justifiable if it yields profit; otherwise, it results in value destruction. This fundamental misunderstanding by oil & gas officers and directors—that they are mere spectators in the market—leads them to persist with production at 100% capacity regardless of market conditions, embodying a culture of loss acceptance.

Profitable Production Rights Licenses capitalize on the disparity between these industry paradigms to offer People, Ideas & Objects compelling value proposition. Predicted to be worth $25.7 - $45.7 trillion over the next 25 years, these licenses could unlock $5.7 trillion in incremental profitability. Contrary to claims that $20 to $40 trillion is needed in capital investment to rejuvenate the industry's capacity and infrastructure. In the Preliminary Specification, this amount is not necessary, since capital costs are recognized competitively with all other industries in North America. Internally generated cash is reinvested to be recovered repeatedly. As a result, it will be invested again and again competitively with what other industries in North America achieve. The costs of a capital-intensive industry such as oil & gas are primarily capital-related and therefore will be the predominant cost passed on to consumers. In contrast to officers and directors strutting down main street comparing their well-built balance sheets and "putting more cash in the ground," the Preliminary Specification puts cash to work, quickly and repeatedly.

Disintermediation, by any standard, holds promise. Despite 19 years of advocating through this blog, the choice of industry leaders to neglect available value in favor of maintaining destructive practices is unsurprising. The value unlocked through disintermediation in various sectors is well-documented, echoing Adam Smith's findings on the impact of specialization and division of labor, which have significantly increased industry throughput. Today, the benefits of specialization and labor division are universally acknowledged as fundamental to our economy's value generation. Yet, ERP software has often cemented organizations in static models, satisfying only those content with the status quo. People, Ideas & Objects advocate for the creation of our permanent software development capabilities to eradicate what we perceive as a contemporary software flaw.