Conflict and Contradiction

 The past number of months I have on occasion mentioned that conflict and contradiction were analytical tools that were added to our user communities list of competitive advantages. To some these may seem counterintuitive to a team environment focused on productivity, profitability and prosperity in the greater oil and gas economy. I am not of the opinion that they’re that new to our primary target audience, those that we consider our customers, they being our user community members, not the oil and gas producers. People, Ideas & Objects exist to provide our user community with the software development capabilities they’ll need to satisfy the software needs of their customers, the oil and gas producers, in combination with the services they’ll provide through their service provider organizations. 

Conflict and contradiction are most certainly unwanted attributes that people do not want in their lives. They’re avoided and ignored in order to make their lives easier. “Don’t rock the boat,” “he’s (insert your ad-hominem attack here).” If there is nothing to be argued from the other side then ad-hominem attacks, attacking the character of the one generating the conflict, is the method used to gain support. Very effective, i.e. “Trump is an ‘ad hominem attack’.” We need to look at those who are attacking others with comments about others personalities and character to understand that this shows they have no counter argument, policy or solution to provide and they’re only concerned with maintaining their self interest in the status quo. Bureaucrats use these tactics prolifically as we’ve seen in their excuses, blaming, lying and viable scapegoats as to why they’re such failures. What they should be doing is standing up and stating unequivocally the benefits they provide under their current business model. Benefits such as how they’ve kept the pulp and paper industry prosperous and profitable. My ad-hominem attacks of the bureaucrats are somewhat due to the fact that they are as bad as I state, and indeed are the issue of oil and gas’ destruction. Other than these facts, what would I write about?

Hugging things out in the Boardroom during the Directors meeting and C Suite has to be what’s been going on. Professor Jordan Peterson, of 12 Rules fame, states that “conflict delayed is conflict multiplied.” It’s clear that throughout the bureaucracy, but most importantly in the C Suite and Boards nothing but coffee, donuts and hugs have been taking place for a long time. The volume of producer issues reflects not so much a multiplication but an exponential extension of the original problem that could have been solved. If someone would have raised their hand and asked the pertinent questions at the right time, however unpopular it would have made them, everyone could have subsequently avoided so much destruction in the greater oil and gas economy. 

Conflict is not a reflection of the individual that no one seems to be able to get along with. It is the one that has to ask the difficult questions at the right time before the issue manifests itself into the greater problems that can eventually take down an industry. It demands an understanding of the situation and a deeper knowledge of the issue than one would normally have acquired. It could and should come with a proposed solution or the consideration that it should be studied to determine what solution could be provided. Conflict is not a tool to disrupt the personal interactions of the team, only a means in which to disrupt the flow of another key human attribute and competitive advantage, that being our unique ability to make errors and mistakes. Something we’re quite good at and most familiar with. With the scope, scale and volume of work that each of us are managing within our domain. In an exponentially more complex environment that we’re building in the Preliminary Specification and we described in our previous blog post. Where people are using their thinking attributes more than their doing activities in the very near future. The implications and interactions of the work that will be done by an individual will be more involved and hence more important and impactful. 

So where is the issue that needs to be addressed? How can these issues be identified and pointed out in a timely manner? Students of philosophy would know the answer comes about by identifying the contradiction of whatever it was they were looking at. That will be the source of the issue and the point that needs to be resolved, in most cases. The issue may go deeper than what it appears to be. The method necessary to analyze the contradiction is nothing more than the Socratic method that is the basis of all artistic and scientific progress since around 400 B.C. The Platonic Aristotelian philosophies are derivative of the Socratic method which means that you ask a lot of questions. The questions are pointed and have an agenda behind them in which those being questioned are informed and advised with an understanding of the issue, the perspective the questioner has and a probable solution that is consistent with the questioner's understanding. And in turn the questioner's understanding is broadened by the answers they recieve. Where contradictions and false assumptions are rooted out. 

This is how People, Ideas & Objects, our user community and their service provider organizations will be able to seek and find the truth regarding the most efficient and effective method of proceeding with the development of the Preliminary Specification. “How, What and Why” it is that needs to be done and by whom at what point in time and where. Will need to be asked repeatedly by those in our user community in order to formulate solutions based on that understanding and knowledge. This, in a nutshell will be the method of how the Preliminary Specification is taken from its current form and prepare the details needed for our developers to develop the software in order that the user community is able to meet the producers needs. 

Due to the fact that People, Ideas & Objects have been organizing our user community since the first quarter of 2014 we have been able to achieve something significant that I’m not aware that any other ERP software initiative has been able to do. Our user community will be able to do this work in the current configuration that we’ve determined. This consists of approximately 3,000 user community members. One for approximately each process in the application. To organize a community of this size isn’t the difficulty per se. It’s a challenge but certainly not the difficult challenge in putting together a user community. With eight years and the Internet it can be done. The difficulty is in expressing a usable vision, a viable business model that expresses a solution to those issues that are present in the marketplace. One that solves today's problems and sets the foundation for the future. A future where the means to make the necessary changes on an incremental and individual basis are available as needed on a timely basis where they are needed. Everyone in oil and gas has been able to view People, Ideas & Objects vision as spelt out in the Preliminary Specification since December 2013. These people have also been able to see how our user community vision has the ability and capability to provide them with the means to build the appropriate applications and services. Where by joining our user community they can affect change in the industry as change is required. Bring about the permanent, prosperous and profitable oil and gas producer and industry everywhere and always. And in turn, for each and every user community member. 

None of this information regarding conflict and contradiction is new to the majority of the people we are attracting. I learned an important lesson that I don’t think many people know. When I published our first document in 1996, we then followed up with sales calls to discuss the work that we were doing. In almost all the meetings I was shocked at what I saw. The “white paper” I published was quite literally trashed. They were annotated, highlighted, dog eared, bent, rolled, used and abused to the point where they were almost unrecognizable. When people who were in the lower levels of the organization were in attendance they were cherishing the document. Looking at me as if to say we want this. This taught me something very important about my target audience. They were a) hungry, but that wasn’t the most important thing. Instead of consuming the bite sized marketing quotations, slogans and “nutshell it for me” type of summaries. They consumed the critical conflict and contradictions pointed out in the paper. They wanted analysis, they wanted to be challenged and they wanted to see the solutions that were being presented. I have used this understanding and the comprehensive response that people have to my writing on this topic as my personal competitive advantage throughout this adventure. To summarize this, I would say that people read voraciously. I am only willing to express this now as it would be too late for any of my competitors to learn from it and be competitive today. And I don’t think it is just my words but the words of anyone who conducts this type of analysis and determines this type of solution to real life problems. This is why I am listing conflict and contradiction in our user communities analytical tool kit for them to build out the Preliminary Specification at this critical time. This is how they’ll be making the product and their service provider organizations services polished and precise. By understanding that people read and they appreciate the hard work of others. 

I’m not just identifying a competitive advantage of mine. This blog is not about me, never has and never will be about me. I only raise these points to make the following argument. I see the same competitive advantage in our user community today. It is inherent and present in their culture and reflective of the quality, highly educated and vastly experienced group of people they are. The bureaucrats ignore these cultural attributes and have their own means and methods of taking the organization in the direction that they’ve taken these firms. They perceive that their people have been along for the ride. And these people are as a result frustrated and disappointed as what has generally been expressed here on this blog. They also know they’re powerless to do anything about it. If they do say anything it will accomplish nothing. If they point out People, Ideas & Objects Preliminary Specification they’ll be dealt with negatively. If they’re found to be members of our user community, that would be the end of their careers. That is why we keep their information confidential. Only I know who they are. Only I know the full scope of the despicable tactics of these bureaucrats and how they will seek to destroy them. I wouldn't be surprised if there were a few who are only there to try to find the names of others to make examples of. Such are the ways of our good friends, the oil and gas bureaucrats. 

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industries revenues away from the development of these initiatives. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous. If the producers will not invest in their organizations profitability by implementing the Preliminary Specification, our user community and their service provider operation, why would anyone invest in them? 

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Centralized vs. Decentralized

 One of the greatest contrasts between People, Ideas & Objects, our user community and their service provider operations versus the bureaucracies consolidation “vision” is the method used to earn a profit. Bureaucrats have established specious accounting as their preferred and only method of “earnings.” People, Ideas & Objects our user community and their service provider organizations have spelt out our vision in detail within the Preliminary Specification. The Internet establishes the means in which decentralized organizations are once again able to provide the value that society needs to move us through this next century profitably and prosperously. By using individuals in markets and their inherent dynamism to provide for the needs and direction of the greater oil and gas economy. The return of the invisible hand as Adam Smith described it in the late 1790s. Or the vanishing hand, as described by Professor Richard N. Langlois in his research which we’ve included in the Preliminary Specification. As a direct replacement to the visible hand of the bureaucracy of the past century, which was the only effective method at that time. Consolidation does nothing but double down on an expired, but personally lucrative, business model which is understandable for those who have benefited so handsomely. 

The Internet is introducing many new conceptual models and societal changes. Consider the impact of automation, the Internet of Things and to a lesser extent robotics over the remainder of this century. Replacing the “doing” aspect of man and enabling us to be more involved in the “thinking.” If we were to just limit our thinking to the prospect of increasing profitability through enhanced productivity, innovation and cost control. These would require that people throughout the industry adopt the same competitive advantages that the people within People, Ideas & Objects, our user community and their service provider organizations have adopted. These include; quality, specialization, division of labor, automation, innovation, leadership, integration, tacit and explicit knowledge division between humans and software, design, planning, thinking, negotiating, compromising, observation, reasoning, judgment, ideas, research, collaboration, creativity, issue identification, issue resolution, the use of conflict and contradiction as analytical tools and decision making. Just to start. None of these are able to be conducted by computers and none of these will be able to be conducted by computers in anyone's lifetime today. Clearly we have much work to do. The bureaucrats are suggesting that the shuffling of paper on a much larger scale is what will be necessary in order to earn the prosperity that their former small scale application had failed at. And just as computers will never begin the thinking process for us, bureaucracies never will either.

What is desperately needed in the future is for individuals to have the necessary influence in the determination of profitability and value generation for the Joint Operating Committee. Using their distinct, personal competitive advantages in an organised and controlled manner to ensure that forward progress is always possible and achieved by the organizations that employ them. This does not allow for or permit everyone to be making decisions to determine what they believe should be done when and how at any time. Innovation does not happen in that manner. Innovation only arises out of the organizational structure that is configured to produce it. This was a comprehensive aspect of the research that was conducted and included in the Preliminary Specification. Having people potentially causing damage to things is a significant risk in oil and gas. In addition, doing the same thing over and over, expecting different results is very costly, foolish and insane. Situations such as this must be avoided and can be through the appropriate organizational structures such as the Preliminary Specification. Where anyone can offer their contributions and they are welcomed as a necessary ingredient to this new world. That doesn’t mean they’re all necessarily tested and / or deployed. That also doesn’t mean they’re not viable in the future or forgotten. They may be the seeds of some new idea that will be developed from them. Ideas that can be developed further, collaboratively and enhanced. These imply the methods of the organization are structured to deal with these and manage them appropriately. The bureaucracy finds these contributions best left in the hands of the CEO and COO. All others will need to continue to sit down and stfu. We’re not where the Preliminary Specifications vision is enabled yet. We are constrained by an obstinate, stubborn and self interested bureaucracy who are threatened by this vision. Does anyone find the bureaucrats' vision of consolidation prosperous, healthy or profitable?

In terms of the current structure of the producer firms, and most particularly those that have been consolidated. We can see they are overvalued in property, plant and equipment. Book value amounts that were not representative of the market value for those assets. (Accounting must record the assets as the lower of cost or market value.) And as such are under severe pressure due to the diminished working capital in the industry and the lack of demand from anyone else to purchase them. Markets were not able to provide for the alleged price they were listed at on the balance sheet. Seeing this issue, I believe the bureaucrats were motivated to initiate the consolidation phase in order to reestablish the values in property, plant and equipment to at least their book value through the issuance of common shares at these “established” prices. In essence creating a false market value for their oil and gas properties. The dilution of shareholders interest is a tried and true currency of the well endowed bureaucrat. Other than covering up this gangrenous infection, what does consolidation do in terms of resolving the destruction that has occurred in the industry. Or establish a prosperous and profitable footing for the industry to be passed onto future generations. The gangrenous infection isn’t visible anymore. The cash is still magically evaporating and working capital continues to be a crisis at whatever the commodity prices are at. Interesting! Investors are even less enthused and bankers who are usually the first to go somehow got the message late and only began their exit last year. None of these people are showing any renewed interest but the most important aspect of the issues being discussed here is that the bureaucracy thinks they have an unmitigated “boom” on their hands. 

The greatest contrast between centralized vs. decentralized organizational structures is best reflected in the two major political theories. Capitalism vs. communism. Communism is claimed to never have had the opportunity to really prove itself as a valid theory. Billions of casualties would be the one reason I would point to its failure. And maybe we’re seeing this play out in our current political environment. The disintermediation of the communists is happening as a result of the Internet too. Resistance by communists to their disintermediation is what’s being played out in the current global struggle. There is far too much government involvement in our lives today. The only justification for it is the power that is obtained by the politicians. Why would we need to be monitored and controlled by big, ugly government bureaucracies in a world where decentralization is enabled, capable and proven to be the far better method of generating societal benefit? Yet the propaganda says I’m wrong. I find it interesting that so many large corporations are so involved in politics today. Birds of a feather.

Ideas have a shorter half life today than they did yesterday, and a much longer one than they’ll have tomorrow. And for every one idea that generates value today, we’ll need ten ideas to build the same incremental value tomorrow. Where will these ten, shorter life ideas come from? In a collaborative effort, where the efforts of everyone are considered this is possible. In a bureaucracy, where today they are not challenged by their inability to change, resistance is futile, implying that any idea purposely dies on the vine, what future is there. Will a deferral to Artificial Intelligence make up for the deficiencies of the bureaucracy? Or will our unique characteristics and competitive advantages remain unique to us? 

Bureaucracies in other words can’t, won’t and will not ever think. Even with synthetic means. Markets full of people who are enabled and capable, who are organized in structures through the Internet, that maintain and enhance their productivity and ensure the prosperity and profitability of the organization, are the opportunities that exist today. We see around us the absolute failure of the bureaucracies in everything they touch. And their last ditch fight for survival. It’s time to stop and think of better ways and implement them. For oil and gas the only other organizational construct that has been fully researched, which is a workable model from a logical business perspective is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industries revenues away from the development of these initiatives. And therefore are unnecessarily directly supporting the status quo behaviors that are now proven to be disastrous, conflicted and personally self interested. They say the enemy is most dangerous towards the end, that is when they fight the hardest, the question therefore has to be are we at the beginning of the end of these bureaucracies, or is there more fight to come?

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

The Bureaucratic Opportunity of a Lifetime

 Increased activity within oil and gas creates the appearance of opportunity in the producer firms. Where and how, but most importantly for whom will be discussed in this post. Buoyed by higher oil and natural gas prices producers feel they have the cat by the tail once again. However this time is different, and in so many ways. Betrayal by our political leaders, the media, scientists and big corporate interests has more or less been fundamentally accepted by the majority of people. Being dealt with dishonestly these past few years has not been uncommon it seems in retrospect. Who do you trust, and why would you still be trusting them? Is the question that’s being asked again and again. It is in this way the oil and gas industry has shown great leadership over the past decade. The self-serving bureaucrats have, once again in retrospect, failed in everything they’ve attempted to do. And lied about the reasons and purposes in doing what they said they were doing. 

Unfortunately today we no longer have the hollowed out carcasses of the oil and gas, secondary and tertiary industries. Even the skeletal remains of what we once knew have begun to turn to dust. There is an inherent acceptance and capitulation of these facts in the bureaucrats' calling and forceful charge towards “clean energy.” All for the moral and ethical benefit of our grandchildren's health and to ensure the planet remains in one piece for them. Who could argue with that? What clearer indication do we need that they haven’t any idea what to do, where to go and how to get there? Those hooked on the consolidation dream are only remnants of the old school talking points. Such as this article from World Oil discussing Contango Oil and Gas Chairman John Goff’s consolidation with KKR backed Independence Energy. Goff’s only point worth discussion is the size of the projected production volume with the comment “massively larger than where we are today.” Production volumes will double again in the near future and what follows on implies growing more after that. Not a hint of financial performance or the conduct of the business from a financial perspective. Just growth, as if it was competing with a startup tech firm in Silicon Valley. The following comment however somewhat asserts that there is an “overhead burden” issue in the industry? 

“When I look at the backdrop of the industry, it’s still ripe for continued consolidation,” Goff said in an interview. “We’re tracking numerous opportunities of assets and companies that are stranded that are either in the hands of non-natural owners or they have too much leverage or they have too much of an overhead burden and just can’t really survive in this era of the energy sector.”

It’s been implied throughout these consolidated producers that the reason for all of the damage is there are too many producers. And that the smaller producers are at fault for collapsing the prices by overproducing to meet their bank commitments. Ok, let's assume for a minute these derelict, culprit producers are smaller, which implies a generalization that they would also be younger. And therefore they’re the ones that are responsible for the overproduction that began, as we’ve documented in this blog on many occasions, back in July 1986? That makes sense, founded in 2010 responsible for the damage that began in 1986! That’s a sellable point on the capital markets. Here’s an alternative plan. Implement the Preliminary Specification across the industry so these smaller producers, or do bureaucrats refer to them as the unwashed, giving them the means and methods to ensure their production is produced profitably everywhere and always. I’m certain the bureaucrats considered that. If the smaller producers were accessing the Preliminary Specification they would be wildly profitable and very attractive to the investment community. They’d be transparent and accountable in terms of how they accounted for their businesses and oddly enough, performing as they planned and stated. “On second thought let's not do that.” The Hive Mind.

It’s also interesting to note that I suggested that the asset valuations focused on building balance sheets were misguided many years ago. Producers should have adopted the meme of the WallStreetBets Reddit community of “To the Moon” as the natural follow on to their “building balance sheets.” Nonetheless in the depths of despair when commodity prices tanked and financial markets were closed bureaucrats tried to raise cash through the sale of their producing assets. Only to find the market had been beaten down to the point where asset valuations were pennies on the dollar. No one would or could sell, and the issue quickly became how could they establish the prior value they had built “to the moon” on their balance sheets. First was the need to stop the increases in production. Consolidation was where the Keystone Cops were sent to next. They dusted off their share printers to acquire the highly inflated asset values of other producers at the value that they were once stated at. The follow on to that plan was to use whatever remaining share buyback authorization they could afford to quickly pump up the value of their share prices and make it appear that a recovery had taken place. The ultimate objective of these two transactions would be that this “managed industry” would be able to find those investors who were naive and stupid enough to buy the charade, again. It appears the only one so far is the Kolbert Kravis Roberts or KKR group, a firm that started the leveraged buyout phenomenon and were once good at it in the 1980s. If Dr. Fauci declared another pandemic. Would anyone listen? Producers should ask themselves similar questions such as these.

These questions may come in handy as the foundation of a good legal defence. Lawyers as we noted over the past few months have found the oil and gas industry to be a lucrative field in which to mine for their craft. Recently Southwestern Energy and EQT have had investigations launched by shareholder litigation firms over the valuation of their takeover targets. Suggesting that Southwestern and EQT may have overpaid for the assets! Who would have thought? The consolidation drive is to secure the bureaucrats' life line that has been able to keep them in place throughout these up and down cycles. The cash flow that is generated is a result of oil and gas being a capital intensive industry. Cash flow in oil and gas is nothing more than the return of previously invested capital. It should be clear to everyone that there is no incremental value earned by the bureaucrats. Therefore producers cash flow is and has always been just the return of capital, less a sizable bureaucratic tax. These were adequate, with annual top ups from willing investors, to keep the facade operating in whatever environment the business may be in. And only call the attention of the bureaucrats back during times of crisis such as negative $40 oil prices. Bureaucratic resiliency has been fueled by these cash flows. The lack of transparency throughout the industry in terms of the gross amount of overhead that is incurred and the characteristics of those costs remains unknown and unknowable, everywhere and always. If I were to ask one question of a bureaucrat during an annual meeting it would be what was the level of materiality that was determined by the public auditor during your annual audit. Now we’ll only have to take the word of these people until next year. They need to know the level of materiality in order to ensure their expense accounts pass well below that criteria. That is if expense account is what it’s still called. 

Corporate history has shown that for a variety of reasons when the company becomes untenable the rats jump ship first. Sorry, that should read “bureaucrats jump ship first.” I’m on record throughout these writings that the overproduction of oil and gas was deteriorating the financial base of the industry. The company's earnings never existed. It was all just investor and banker money being spent. Investors withdrawal would lead to a financial catastrophe that would see the producers collectively lose control of the financial, operational and political frameworks of the industry. These losses would lead to a precipitous decline in the overall capacities and capabilities of the North American producers. Historically the next step was probably the most destructive of all and that is the bureaucrats would leave their posts. This will be the point where we’ll soon find ourselves and People, Ideas & Objects Preliminary Specification will be desperately needed. Until then we’ll see the trend of CEO’s leaving, such as Chesapeakes at the end of May, three others being terminated without cause and last week's exit of Ovintivs CEO. Ask yourself, what is it that a CEO can do to fix this situation? All I think they can do is ride the inevitable collapse downward. When the ship is sinking you need to get away from it as fast and as far as you can. Or you will be sucked down by the water that is drawn in from it’s passage to the bottom and you will drown. Therefore this “managed industry” they’ve now “achieved” can be the opportue point to state unequivocally they left the ship in good hands during the good times. And there’s more, if they funded the Preliminary Specification on the way out the door, they could also state, they left it with a prosperous and profitable future.

There is a serious upside for these CEOs from their exit from these producers. If you were a bureaucrat, would you want to continue to be harassed by People, Ideas & Objects who are holding them to account and challenging their performance? Identifying their history and legacy? An alternative might be they could move into the unaccountable world of clean energy where performance has never been the objective or concern and never will be. Where after ten years of alleged clean energy related capital expenditures those bureaucrats that chose to stay will be able to state unequivocally “that they’ve failed, it's a difficult challenge yet they haven’t given up yet!” Or take this opportunity to get out as fast as you can, now.

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Rats Are Abandoning Ship

 We’ve noted at times before that the ultimate manifestation of the decline and destruction we’re experiencing in oil and gas is the bureaucrats' abandonment of their post. This will cause unknown consequences as all the King's horses and all the King's men… In prior situations where this has occurred it has led to substantially more government involvement in the industry as a result of these failures. This is possibly the trend we’re headed to with the recent resignations of Chesapeake and Ovintivs CEOs. And Friday’s termination of three more Chesapeake executives without cause. Maybe we’ll see this momentum build and we’ll be stuck with other consequences. Consequences such as a dependence on foreign sources of oil & gas and the prices those producers deem appropriate. It’s not that North American producers are selling a compelling argument. To summarize they’re stating “oil and gas is finished, we’re focusing on clean energy” and at best they’re offering a status quo environment in terms of economic activity. In a world of massive disruption in business and industries across the continent, where new and better ideas and products are coming to market, oil and gas gives them a comfortable retirement home where it will be a nice place to die. 

The precursor to this was the precipitous decline in capacities and capabilities. People, Ideas & Objects provides a solution in the form of our Resource Marketplace, Research & Capabilities and Knowledge & Learning modules of the Preliminary Specification. What we published in December of 2013 foresaw the inevitable outcome of the chronic overproduction by North American producers. Not only do we have the financially destitute nature of the producers themselves. Today we can count on the major losses of the Schlumberger's and Halliburton's exit from the North American marketplace. The bankruptcy of many service industry providers and the cutting up of machinery and equipment for scrap metal to pay the rent. As people shun working in oil and gas as a result of the lack of demand for jobs. The unchallenged claim that it's dirty and can be replaced with a solar panel, early retirements and the field jobs that have rightly earned the reputation of difficult work that pays extremely well if and only if the oil and gas producer can afford that ever elusive second paycheck or the project itself doesn’t get cancelled. The fact that you can’t raise a family or take on a mortgage anywhere in oil and gas is a well earned reputation. However these jobs are still a big hit in the high schools. 

Last week's abandonment of Keystone XL provides us with the perfect example of what has been going on, where we’re at, where we’re headed and the difficulties we’ll be encountering in that future. What exactly happened and why is this representative of our future as it stands in the hands of these bureaucrats. This question needs to be asked in the context of the past forty years. What is it that the producers have done? In my over the top descriptions of where we are and what was going to happen, yet somehow eerily becoming more valid each day. I’ve belittled the bureaucrats for sitting on top of a primary industry with access to the capital markets through deceptive accounting practices. Relying on revenues that they believed were the result of their brilliance and failing to understand, as a primary industry, that they represented the efforts and consequences of the greater oil and gas economic system. The service industry, which provides no other services to any other industry, was a fundamental part of their alleged success and of which producers were wholly dependent upon. Their assumption that these service industries were businesses that were self-supporting and were not of concern to them other than to fulfill their next purchase order. Whether that was at 10% or at 300% of last year's activity it did not matter. Producers were where the money grew on trees and the sun shines only on them. 

As independent businesses pipeline companies, drillers, completion and frac companies and yes ERP systems providers were able to access debt and equity markets just as producers were, bureaucrats assumed. Therefore let them be subject to the discipline of that environment and that will be the most effective in terms of how producers' field activities are provided. Reasonable assumption. However that is not what happened. Taking away the consequences of the throttle junkies that bureaucrats are with their on again, off again activity levels. The relationship between the service industries and oil and gas are not in any way equal parties. On the demand side there may be few producers operating within the logistical area of a service provider, and producers preferred to only work with the “big boys” of the service industry. Limiting the number of customers to their products and services. Producers saw the market dynamic on these small service markets and understood they could dictate terms and conditions that were favorable to their side of the relationship. This behavior of the producer and the example they’ve been able to successfully implement catches on in the downtown offices with all the other producers. Soon all of the service industry is subject to the latest round of “ask.” This will be quickly followed up by said producers with their accusations of suppliers being greedy and lazy in the local press. Unable to earn the profits that are competitive to other industries these companies have had to be innovative and resourceful. They’ve scraped and clawed their way through the ups and downs and at the end of the day had $0.05 in the bank. When the storm of investor revolt began in 2015 it was felt throughout the service industries first. Covid was just the icing. 

In the case of pipelines the situation was different. Producers committed to provide any prospective pipeline company with the product they needed to go out and build the pipeline. As regulated businesses they are somewhat different to other service industries. However their treatment was a bit different too. Has anyone seen a producer's head office being picketed by any of these environmental groups? How about their facilities? Why is that? How is it that environmental groups can support all those activities and causes that they do? Where does the money come from? Well oil and gas producers don’t like their name in the media, that’s where the money in a primary industry is generated, do you think producers would pay the bounty? So while the pipeline companies face the environmentalists obstruction through right of ways, court challenges and regulatory issues alone. On the other side of these claims are the oil and gas producers' dollars and cents raised in the environmentalists bounty working against them. Would a regulator allow a regulated company to deduct the environmental bounty from their earnings? In addition to this, what producer stands next to the pipeline company saying we need the pipeline to ensure the consumers safe and secure, low cost energy demands are met? Describing how they provide the consumer with the fuel for their lifestyle? That energy is the oxygen that the economy breathes and without it we are reduced to primitives, heating their homes and providing for their transportation. It is the most powerful economy in the world that will also be the largest consumer of oil and gas commodities. This involves producers selling their book, as they say. No one saw this because it never happened, and why would they do that? That's not their business! They would allege.

The implications of this activity over the past forty years has now made the entire domain of all these industries the oil and gas producers business. Any of the $9 billion in costs that were incurred in Keystone XL will be absorbed into the rate base of TC Energies other pipeline operations. The producers will be the ones that ultimately end up paying the consequences of these actions. It could have been so much different though. Just as it will be so much different from this point forward. “You want to build a pipeline? You need to drill a well? You want what completed? Well I’m afraid that’s going to cost you. You’ll have to pay the full price of whatever it is up front, no questions asked. Don’t like the deal, neither do I, and if you do come back after you discover I'm the only game in town, the price will be higher. Take it or leave it.” No one in any of the greater oil and gas economy will be able to get equity or debt financing. Without those who are operating this primary industry c/w its primary revenues are honestly dealing with the greater oil and gas economic infrastructure. Earning a real profit and doing so for a time period that establishes a solid record will others begin to even look. Those in the service industry that have left will take many years of effort in terms of valid profitable performance in the producer firms to bring them back. Same as the pipelines. Until that time when producers can prove they are the appropriate, fair and reasonable custodians of the primary revenues of this economic system. They’ll be paying the full freight in advance. The alternative will be the high school kids who could learn how to do it. The adoption of the method in which the People, Ideas & Objects budget is financed fully in advance will be the commonplace expectation until then. When so much risk was transferred to the service industry over these past forty years. And the fact that they and their investors were the most significantly betrayed by the producers. It’s not a matter of if you were betrayed, it's only to what extent you were. Bureaucrats will chuckle and  say, but they have the money! And I would note that it just so happens to be this same method of financing that the pharmaceutical industry received in order to produce the vaccines. Although they did not have the disgusting financial record of the producers, they needed to ensure that their risks were covered. It’s called business.

The current reputation of the producers precedes them, investors and bankers are not biting. There are many reputable industries in which to earn real money these days. Just look at what's called the meme stocks! Producers have proven their business doesn’t mean that much to them and they’re not interested in it. They’ve drunk the kool aid and are on to the unaccountable clean energy dream bandwagon. Certainly not something investors, bankers or the service industry will need to step out and take any risk for. The stock prices of the producers have been raised to the point where much like their balance sheets, there’s no upside left for anyone now. No equity investment at these valuations, based on this history, would ever occur. It makes meme stocks appear like value based investing. If the exit of the bureaucrats is developing as a trend, I can’t for the life of me think what the upside is for these CEO’s to stay, and therefore this will cause much more distance to be created between the investors and these industries. 

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

My Retirement Plans

 I’ve decided personally that I’ll retire from my active working life in thirteen years. Which therefore allows me to define a period in which to build the Preliminary Specification. The one and only thing that has kept me here banging away on this keyboard. It also allows me at the end of that period to make an appropriate transition of the assets I’ve developed here. There are many elements of what are being built within the Preliminary Specification, our user community and their service provider organizations that I feel will become too valuable to oil and gas to remain in the hands of one individual. It has been this structure that has driven the configuration of how I’ve seen the future unfold. I intended what it was that I was doing to make a material impact in terms of the value proposition for oil and gas. I achieved that through our price maker strategy and the redefinition and further expansion of specialization and the division of labor throughout the industry. The latter being the only method known to man that enables the expansion of value in our economy. Providing an unquantifiable and unknown amount of additional value to our already substantial value proposition. These two elements alone, and there are others, are how the ecosystem of proposed software and services will provide for the most profitable means of oil and gas operations. Where it’s not enough to own the oil and gas asset, you’ll also have to have access to the software and services that make the oil and gas asset profitable. These are proven in the various models of the Preliminary Specification, our user community and their service provider organizations and as a result the proof of concept is complete. 

The manner in which the bureaucrats have managed the market of ERP software providers has precluded me from operating a normal business. And therefore all of the suppliers have had to depend on producers to fund 100% of their needs for development. Extensions of this logic and behavior were realized throughout the service sector and now that they’ve learned the lesson that I learned in the 1990’s they’ll also be demanding to be paid upfront for any development work from the producers. Our budget considers this critical point. The Preliminary Specification is proven, and the need for producers to fund 100% as the only means of funding. This provides me with the personal compensation that recognizes the value contribution made to the industry in the form of our value proposition. I’m not going to subject myself to the rigors of this development on the potential of “maybe” there’s a payday at the end of the rainbow. This would only put myself at the behest of the bureaucrats and render everyone else affiliated with it to be “blind sleep walking agents of whomever will feed us.” They would also control the outcome of the project. If after 10% was completed, they could then pull the funding. Causing the opportunity of this project or anything of this type ever to be resurrected again. Securing the bureaucracy for another generation. The people that would have been involved would have been cut loose with severe consequences to their career for participating in the active disintermediation of the bureaucrats. Not a successful proposition for anyone other than the bureaucrats. The bureaucrats have also established the method of issuing fat, ugly Service Level Agreements admonishing them of all responsibilities and obligations of success in the endeavour while they maintain authority over the financing. Pointing to a clause in the SLA  at the appropriate time to drop in their own people and take control. 

People, Ideas & Objects believes that our budget being funded upfront in the proposed manner will see the non-bureaucratic producers realize they have some skin in the game and work towards a successful software and service development and deployment. If not, our overall ecosystem doesn’t care, we’ll have the money and the stability within our organizations not to be concerned with our flank being accosted in unnecessary ways. I will have the personal financial resources I’ve earned and can focus my remaining working life on building the application. There is however a net benefit of this to the producers in the adoption of this methodology. A benefit that is above and beyond the trillions of dollars that are provided to them as a result of our value proposition. The Preliminary Specification and necessary services of the service providers will be built successfully even if the producers subsequently choose not to participate. Our focus is on the success of this initiative. We are working within the financial framework and constraints that these bureaucrats have set down in the industry by their behaviors. In our focus to disintermediate the industry and successfully provide the means in which to operate, the bureaucrats are redundant and obscure. We will be wholly independent of them and unconstrained. What could be better. 

The issue comes about with respect to the end of the term of my working life. Dealing with the disposition of these assets has taken a few turns here and there with the most recent being documented in the user community vision during September 2020. Where 51% of these are granted to the user community and 49% are sold to the producers. I believe now that this is inadequate for the purposes of the user community. They should be able to manage their operation within the service providers they’ve developed as they are needed. Based on the facts on the ground and as they develop them over the long term around the oil and gas industry. Their flexibility will need to be unconstrained in this sense and their capabilities independent too. I don’t believe that the September 2020 configuration as it was defined will provide them with that. Therefore I’m changing the grant of the 51% of these assets to 100% of the Intellectual Property. It will therefore be theirs to determine the ownership makeup and distribution of those IP assets and their associated rights across their community. I would not hazard to suggest a method in which I could contemplate the dynamic needs of that market at that future time. And therefore will leave it to them to determine. Possibly having them determined in the same manner that we have asked them to allocate the service provider process rights to the appropriate user community member based on their contributions. Where the quality and quantity of their contributions are evaluated in terms of what was proposed by them and what made it into the software. Having determined this allocation through an Artificial Intelligence algorithm. I have asked that they begin working on this algorithm themselves immediately when we’re funded. 

The operational company or as we call it, People, Ideas & Objects. Holds the commercial license for the development of the IP that I hold in this blog and Preliminary Specification. This configuration would change through the assignment of the IP to the user community. The sale of this operational company would include the development team in the form of DevOps as it’s referred to today, research and access to the user community. And anything we may have accumulated along the way. This would be a direct sale to the producers in order to suit their needs to own and control the universe they operate within. However, only to the extent that 75% will be sold and the other 25% will be granted to the user community. This will provide the user community with the currency in which they may want to monetize some of their investment in their service provider by selling these corporate interests to the producers without having to encumber their IP.

Lastly, just prior to closing of the sale of People, Ideas & Objects to the producers. And prior to the two grants to the user community. I will execute a new license agreement with People, Ideas & Objects for a continuation of the IP rights. This license will be for the term of five years and will therefore put the producers on a relatively short leash, if you will, that the user community could if it desired move their IP and license to another vendor if they were dissatisfied with the management of People, Ideas & Objects at the end of the five year term of the license.

This personally satisfies the key criteria that I have for this project. The user community is endowed with the power that is defined in the user community vision, permanently. Being that only they have the ability to create derivative works. Only they are seen as the source of exclusive contact by the developers in People, Ideas & Objects. And they are able to maintain their own revenues through the process of ownership of the underlying Intellectual Property. It should be noted at this point the commercial license will still reside with People, Ideas & Objects. The user communities budget will be funded through the People, Ideas & Objects license to assess the producers the amounts needed for the user community and development. With the five year license the producers management of People, Ideas & Objects regarding the user community will need to ensure that it is fair, reasonable, prudent and most definitely performance based. 

Although it will be seen as delusional, mostly by myself, I'm putting out the argument that the best time in which to start a development such as the Preliminary Specification would be September 1.

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Virtual Assets are Inflation Resistant

 This blog post is a direct appeal to those people working within the greater oil and gas economy as to what People, Ideas & Objects user community has to offer them. Throughout the Preliminary Specification and our user community vision the use of Intellectual Property as the value that is the foundation of what is deemed to generate prosperity within our software and service ecosystem. We begin by establishing that it’s no longer enough to own the oil and gas asset. It’s also necessary to have access to the software and services that make the oil and gas asset profitable. Which can only be attained at this time through the implementation of the Preliminary Specification that will be further developed by our user community, implemented and managed through their service provider organizations. That is the future of the dynamic, innovative, accountable and profitable oil and gas producer and industry. The Intellectual Property that makes up the foundation of the Preliminary Specification can only be enhanced through derivative works by those within our user community. Only they have the power through our user community vision and the licensing provided from People, Ideas & Objects to make any changes. Our developers only see our user community members as the source of their input. They are deaf, dumb and blind to all others. They are also not licensed to recognize anyone else. Our user community is the only point of contact for anyone in the industry to have their issues and opportunities addressed in the Preliminary Specification and their service provider organizations. No one else is authorized to entertain any other input. If the industry needs to have changes made, they’ll know exactly who to discuss this with, and will be quickly pointed to the specific user community member responsible. User community members will be the responsible ones and the only ones authorized to make the changes to accommodate the industry needs. People, Ideas & Objects sees our user community as our primary focus, our key competitive advantage and our customers. What follows is a list of their key competitive advantages that we’ve identified at this point. This is a summary list at this point, and is not limited in any way by this.

Quality, specialization, division of labor, automation, innovation, leadership, integration, tacit and explicit knowledge division between humans and software, design, planning, thinking, negotiating, compromising, observation, reasoning, judgment, ideas, research, collaboration, creativity, issue identification, issue resolution, the use of conflict and contradiction as analytical tools and of course decision making. Unlike bureaucrats we’re not of the belief that we can compete against computers in terms of storage and processing.

The method in which this ecosystem is managed is through the licensing of the IP that is contained today within this blog, the Preliminary Specification and their derivative works. I have licensed these to People, Ideas & Objects to be commercially exploited. They in turn have and will license the IP to our user community and service providers to operate in the method that has been defined within our user community vision and service provider definition. This license forms the virtual asset that our user community members can build as the foundation of their value proposition to industry and their personal value generation. In the future of work you will be working through one of three methods in terms of accessing IP. Either the development and deployment of your own IP, direct access to IP through a license or working directly for someone who has a license to some IP. This fact will entitle the individual to the rights and privileges of the earnings they can generate based on their proximity to the original IP. It will be IP that defines and enables what a firm will be able to conduct, and most importantly, what it will be precluded from. This has always been the case, however, in a world where IP is the foundation of the firm and industry, the security of the IP will become more established. The question therefore becomes where is it that today’s individuals in the oil and gas industry want to be in the near future? 

A quick refresher to define the revenue generating capabilities of our user community members as the principle behind the service provider organization, which are established under separate licenses, in the People, Ideas & Objects Preliminary Specification. First as a user community member the work that they will do is high level analysis that will define the needs of the industry and relate that information to our developers in a manner that they’ll be able to produce the software our user community member wants. [Please note. Once the assignment of process rights of the individual processes to each service provider has taken place and the service providers have been licensed to exclusive domains over the process they manage.] Our user community members will be able to make the changes they see as necessary and as the industry demands. This will be observed and understood as a result of the day to day management of the service provider organization, post initial commercial development. Our user community members will earn an hourly fee for the time worked with our developers to analyze and define what they want. And the service providers will generate transaction fees from the Joint Operating Committees and producers on the processes they manage on behalf of the industry. We have discussed the competitive advantages of our user community and the need to have this structure on many occasions. 

The structure and definition of this ecosystem, its operation and support all come about as a result of the contractual arrangements contained within the various IP licenses. Our user community member, as an entrepreneur, is fully engaged and responsible for providing the service and software to the industry that will ensure they are provided with the most profitable means of oil and gas operations everywhere and always. That will be their role and purpose as defined in the license. Profitability is not something that can be dismissed by the bureaucrats as irrelevant for four decades without the consequences we are experiencing today throughout the industry. It will take everyone who is involved in the greater oil and gas economy to pursue that objective for the long term, every day they’re on the job. If anyone needs to learn that they must be new to oil and gas. The damage and destruction has been devastating and consequential. But most importantly, unnecessary. The long term rebuilding of the industry will only be conducted through the revenues and profits that are obtained through profitable operations. All other sources of capital have been betrayed by the producer bureaucrats.

As with any business IP demands the daily tending of the garden. It is not a grant of value that will endow someone in the future unless they make it into the product or service that is possible as a result of the IP. It needs to be worked hard to make it as valuable and as profitable as it could be. In the wrong hands it will be worthless. And as in any business that is revenue generating, as a user community member who has a direct license to the IP. Those revenues will be generated on a nominal basis. That is to say these businesses will hold their value over five, ten or twenty years from now. Inflation is not going to diminish the value of the assets that are held by our user community members in the business they establish and build by way of a People, Ideas & Objects license. 

Those looking around the investment landscape today may be confused with the market's offerings. Disintermediation of industries, crypto currencies, inflation and interest rates seem to be dynamics that were not in our vocabulary a decade ago. I learned long ago not to give investment advice. And I’m certainly not doing so to this audience, I’m not qualified to do so and am only representing the opportunity that People, Ideas & Objects have been promoting as our user community vision and service providers since the first quarter of 2014. As it is said in business, I’m selling my book. Our product being the user community opportunity to our customers.

People, Ideas & Objects will also be providing the following to the user community throughout development. Service providers will be licensed and will therefore be responsible for implementation within the producer firm. This will need to commence planning from day one. And it will be as soon as possible after that, that our user community, service providers and developers will have access to the Oracle tools and applications that we’ll be using in the development of the Preliminary Specification. One of the features that we’ll be using throughout our development period is hosting the Oracle technology stack including the Oracle Cloud ERP offering. That may be a redundant sentence as the Cloud ERP offering is the entire stack. I just want to highlight the use of Oracle Fusion Applications and Middleware. This will provide a real time understanding of the system in terms of the Oracle foundation and developments of the Preliminary Specification as they stand at any point in time and the results of individual and collective efforts. What I feel is an effective use of the new paradigm provided by cloud technologies. 

It is within that context that we foresee at some point soon a time in which People, Ideas & Objects, our user community and service providers software and services will be needed in the oil and gas marketplace. Our application process for our user community is not onerous, however it’s also not easy. It takes time and effort to complete. We are looking for the specific people we think the industry will need in the role as we’ve defined them. What I want to do today is to step this process up a notch or two by saying two things. We need these people that we’re seeking to begin thinking of themselves as the leaders in the accounting, administrative and technical areas that our user community falls under and begin their application process. When confronted with issues and opportunities within the service provider organization by way of their use of the People, Ideas & Objects software and their services. Or brought to their attention by the oil and gas industry itself. These will need to be fully and completely reviewed by them before they are put into the software. It is our user community members and their service providers who have the responsibility and authority to make the changes and operate the process on behalf of the industry. Asking if it is innovative, is it correct, does it fit with the processes scope or is it the domain of another service provider, how will it be implemented, what effect will it have on the historical data of the producers? As only the beginning of the process of their review. It’s this responsibility that is mildly hinted at here that is paramount in the actions they take. The other point is that they’ll need to begin thinking about, not doing, some long term planning of their service provider organizations. When we’re asked to step up, we’ll all be expected to fall in line immediately and productively, which is an unfair and ridiculous expectation. However, sitting around like bureaucrats doesn’t help anyone now either. 

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

What's the Motivation for Production Discipline?

 The source of all the difficulties within oil and gas today is the lack of production discipline. Producers produce everything they possibly can at 100% capacity, all of the time. In what is known as the high throughput production model, maximum volumes are used to offset the firm's high fixed overheads. Never was the question asked if this was the appropriate model to use where the commodity produced was subject to the economic characteristics of a price maker. The objective of the producer was to attain the necessary production volume in order to sustain profitability once they were able to break even above the costs of their overheads. In none of the producers did this momentum ever occur as the price of the commodities were continually eroded due to the chronic overproduction, or unprofitable production as we call it, throughout the North American marketplace causing fundamental breakdowns in the prices of these commodities. Making profitability all but impossible. Therefore accounting “methods” were adopted to make it appear as if the producer was achieving the much sought after profitability by capitalizing the majority of its overhead and interest costs. The total amount of overhead that was and is incurred is unknown and unknowable as a result of the decades of the opaque nature of the systemic capitalization and reporting across the industry. In addition, annual shareholder infusions of capital were able to temporarily offset the deterioration and destruction of value as a result of selling their products below the costs of exploration and production, everywhere and always.

This business model of the producers was augmented by the “pressure” that if they did not meet their production target increases for the year they would immediately lose favor with the investment community. This happened to many producers and the event was usually terminal for said producer. This pressure existed in order to have the producer firm achieve the size it needed to become sustainable in the shortest period of time. If the failure of one year's production volumes was not attained that showed one of two possible scenarios that were impossible to overcome in the short term. The management was no longer up to the task. Or the properties they’ve chosen would never be able to achieve their chosen momentum to sustain the organization. Both of these being clear indications of long term failure. The question therefore that needs to be asked today is; for a primary industry such as oil and gas in the 21st century, is the high throughput production model appropriate? The investors had adopted, and were imposing the production growth demand, based on the producer's “cash flow” focus as their primary factor of concern. Profitability wasn’t the issue or the purpose in this high throughput production model until such time as the producer attained the overall sustainability they sought. This is commonly referred to as the “growth model.” A damn the torpedoes and get this company built type of scenario so that we’ll have a business in the end. Once again my question, is oil and gas as a primary industry, a growth industry in the same mode as technology, biotechnology or other growth industries?

I’m not of the opinion that it ever was a growth industry. The misguided adventure of the bureaucrats focusing on cash flow was the beginning of the end of the industry. Putting the industry on this treadmill was destined to experience the fantastic destruction and devastation that would eventually occur when the commodity prices were subject to extreme price variances from small changes in production and inventory. Or the technical qualification of a price maker. The other aspect of a price maker is that new production will only be brought on stream if it’s profitable. And profitable in the real sense of profits where all the costs that were incurred in the process of exploration and production of oil and gas were accurately recorded on a timely basis. This did not happen with the capitalization of costs of every type being stored on the balance sheet for decades in order to “build the balance sheet.” I guess the ultimate objective was “to the moon.” The demise of the industry was orchestrated with the commercialization of shale based technologies across the industry in both the oil and gas sectors. Shale’s high capital demands, vast reserves exposure and rapid decline rates were toxic to the high throughput production model. Exacerbating each of the symptoms of the production discipline problem as defined here and doing so in dramatic fashion. 

Clean energy is the most recent strategy selection of the industry to deal with these issues. Although we can’t discount the fact that they may be correct this time. I have a strong personal bias and preference for other solutions. It could be argued that the lack of focus on oil and gas will diminish the supply of the commodities and therefore increase the prices and profitability of the producers. Unquestionably, and so much for supplying the consumers with a ready supply of available and affordable energy. While producer bureaucrats are analyzing and speculating on the means and methods of reduction in the atmosphere of CO2 emissions, to ensure we never cross that bridge too far of xyz parts per million, the business of the oil and gas business will continue to be mismanaged for their own personal purposes or forgotten. The scope and scale of productivity through the willful act of bureaucratic navel gazing will always turn to the obscure and irrelevant. Accusations of chronic blaming, excuses and viable scapegoats, such as I have accused them of, are rendered inert when the atmosphere is turning allegedly poisonous. 

What is the solution then? We need to focus on the problems at hand and forget about those issues that we have no influence or control over. Consumers consume oil and gas in the process of economic production, transportation and heating / air conditioning among many others. If they choose to give those up then that will be their choice. Oil and gas needs to begin profitable operations and rebuild the industry brick by brick and stick by stick from the remnants that remain. Supplying the market with abundant, affordable energy from a healthy prosperous industry. Something that it has not done and refuses to listen to their investors who demand it. Before too much more is lost in terms of the capacities and capabilities of the producers and the service industry that are absolute extensions of the producer organizations. We can’t and will not be getting to the place we need to be as an industry in order to fulfill that objective in the condition we’re in, the lack of any viable plan in place and the leadership that is off chasing the ultimate viable scapegoat to cover their lies, deceptions and inactions. As I indicated on Wednesday, even the press is mocking Exxon for its attempt to act out a rival proxy battle. Next time maybe hire actors. 

Mike Tyson said that planning was effective right up to the first punch. And that is always the case. Plans are always never what come about and without the ability to make changes and accommodate the reality of the situation you’re either really frustrated or will find that people are laughing at you. I have a plan, I’ve called it the Preliminary Specification. Lately I’ve been less frustrated and no one seems to be laughing at me anymore. You should have seen it before 2010. We also have our user community which has the full scope of authority and responsibility, what I’ve summarized as the power to make the changes and build out the Preliminary Specification as the facts on the ground dictate. I have personal knowledge of probably a dozen specific jobs in oil and gas. That doesn’t do anyone any good when there are probably 12 million people working in these industries. Our user community will be in consultation with them during their work. Without a broad and diverse user community with access to the broader industry knowledge you’ll never have usable quality software that is of any value. At the same time our plan gives people a road map, a vision of where we want to go, what we want to do and the plan or model on how things will be fixed. Throwing vast numbers of people together without a plan as to what will be done and what is needed has proven to be a bureaucratic failure in oil and gas. Our plan is the Preliminary Specification. 

What the Preliminary Specification does do however is set out in broad strokes a vision of how the industry will need to solve the issues stemming from the systemic lack of production discipline. It removes the high throughput production model and replaces it with the decentralized production model centered around the Joint Operating Committee. The legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the industry. When we move the compliance and governance away from the bureaucracy and align it with the seven frameworks of the Joint Operating Committee. As a result we achieve a speed, innovativeness and profitability that we seek in the producer firms. 

Our decentralized production model turns all of the producer's costs into variable costs based on production. If the property is not producing it will not be incurring any costs and as a result will incur a null operation, no profit but also no loss. Ensuring that the producers are achieving their highest level of profitability when they’re not diluting their profits with unprofitable properties. Saving those reserves for the time in which they can be produced profitably. And those reserves will not have to consider as additional costs the losses that would have been incurred if the property continued to incur losses. Commodity markets will find the marginal price of the commodities when the unprofitable production is removed. Bureaucrats have accused me of devising a system of collusion. Which clearly indicates their level of business understanding. If making independent business decisions based on detailed, actual, factual accounting information at the property level is collusion? I’ve misunderstood something, but then, I would also never sell oil for negative $40. Marginal prices in the commodity markets will increase for the entire market across the continent. Establishing a new dynamic in determining what production is needed in the market. And the producers themselves will have to justify the expenditure of capital costs to ensure that they’re able to achieve profitability in order to bring those into production. Introducing a new capital discipline across the industry. 

And here is the new motivation for the industry to ensure production discipline is achieved and maintained. Profits, without profits producers will not attract investors. It will be the most profitable producers that attract the most investors. It will be the producers with the greatest production discipline with the highest profitability possible in their organization. Whether that is at 20%, 50% or 100% of their production profile is irrelevant. All of their costs are variable and based on the commodity prices offered, their production profile will change to ensure that all production that is produced is profitable at all times. 

The method that this occurs in the Preliminary Specification is contained within the name of the decentralized production model. The global business community is being disintermediated by Information Technology based on decentralized business models that deliver value in fundamentally new and innovative ways. Bureaucrats themes of centralization and consolidation are the odd man out in these scenarios and are actively choosing to fight the forces of disintermediation in order to sustain their personal gravy trains for as long as possible. Even at the tragic expense of the health of the industry and all those that were and are wholly dependent upon it. The scope and scale of the damage and destruction to the capabilities and capacities within the industry will take decades to recover. Issues such as how do Schlumberger and Halliburton return to the North American market? That’s easy, producer cash, paid upfront with no strings attached. At times like these it’s best to remember that the bureaucrats say they’re fine and they thank you for asking. 

People have actively stopped laughing at me as they did prior to 2010. They don’t say the Preliminary Specification is impossible anymore. Just difficult, and question whether it’s really necessary. I certainly have given the bureaucrats as much time as I think they need. Any more time is counterproductive, costly and depreciates the value in the industry further. Now that I see the press mocking, and in a sense laughing at Exxon during their 2021 Annual General Meeting on Broadway. It took me eleven years to go from laughing stock to “huh, who would have thought!” The only question I have is does that mean Exxon and all our good friends, the bureaucrats, will need to follow the same timeline in order to regain their credibility? 

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industry revenues away from the development of initiatives such as the Preliminary Specification. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here. 

Misguided Angel's or Devil's Incarnate

 I was thinking back to the 1960s when we would look towards where downtown Calgary should have been, and although only about five miles away, we were unable to see it. On windy days you might see the tops of the buildings but the full view only came on a late Sunday when traffic had been quiet for a few days. The pollution was horrific. Today you can see downtown from pretty much anywhere inside or outside of the city at any time of day of the week. Such is the nature of our environmental progress. Pollution as it was in the 1960s isn’t an issue today. Even with almost 4.4 times the population today compared to what it was in 1965. Therefore the “scientists” needed to create a new issue for the politicians to focus on. Environmentalism is what occupies the agenda in monopolistic fashion. I’m not against the environmental push, it is what resolved the pollution issue in the 1960s. A situation that would have become far worse than what we see in China today. I just don’t think it's a crisis that needs to be resolved through a fundamental remake of our economy and culture. To eliminate the pollution of the 1960’s was a constant push, but it never occupied the hysteria or priority that today’s agenda sustains. So many predictions from the “scientists” these past number of decades are concerning, especially when none of them have been validated. It appears to me to be a ruse in order for the politicians to access vast amounts of money and control from the economy. Democrats haven’t conducted themselves in any constructive manner in the past six months. Or is that six decades. 

What we’re unfortunately witnessing is big business in cahoots with the power grab of the democrats. Whether that is Delta or Coke, or any of the hundreds of other major companies that have piped in to comment and throw their support behind either pro environmental or political initiatives. Die hard entrepreneurs such as myself who believe in capitalism are reallocating the role of big business into the same category as the communists. The other consistent theme is big business’ focus on the environment as a result of CO2, which is not a pollutant. Can’t be seen, smelt or known to exist by anyone other than the most sophisticated “scientist.” Their models suggest we’ll all be dead in 12 years and need immediate triage to save ourselves. There is never any consideration that there’s a natural cyclical climate change, but they sure exploit that fact. They also seem to exploit that every person has a ready accessible hand held camera. The role of “science” here is somewhat consistent with the role that “science” has played in our lives this past year, inconsistent. The only difference is that we don’t have Dr. Anthony Fauci involved. Who is now stating that the Wuhan lab is the probable source of the virus. It is also now known that he had directed American funds, in unauthorized fashion, to fund Gain of Function research on Bats at that lab. And he is now found to have written in 2012.

In an unlikely but conceivable turn of events, what if that scientist becomes infected with the virus, which leads to an outbreak and ultimately triggers a pandemic? Many ask reasonable questions: given the possibility of such a scenario -- however remote -- should the initial experiments have been performed and / or published in the first place, and what were the processes involved in this decision?

Scientists working in this field might say -- as indeed I have said -- that the benefits of such experiments and the resulting knowledge outweigh the risks. It is more likely that a pandemic would occur in nature, and the need to stay ahead of such a threat is a primary reason for performing an experiment that might appear to be risky.

Within the research community, many have expressed concern that important research progress could come to a halt just because of the fear that someone, somewhere, might attempt to replicate these experiments sloppily. This is a valid concern.

In possibly a pertinent and related article by Virol, J. 2005; 2;69. Published online 2005 Aug 22 Entitled; Chloroquine is a potent inhibitor of SARS coronavirus infection and spread.

We report, however, that chloroquine has strong antiviral effects on SARS-CoV infection of primate cells. These inhibitory effects are observed when the cells are treated with the drug either before or after exposure to the virus, suggesting both prophylactic and therapeutic advantage.

And

Conclusion: Chloroquine is effective in preventing the spread of SARS CoV in cell culture. Favorable inhibition of virus spread was observed when the cells were either treated with chloroquine prior to or after SARS CoV infection.

We can stop the investigations into the source of the virus, we’ve found it. It was Dr. Anthony Fauci. The number one superstar hero of the media. I guess he has an affinity towards Bats. Genuinely likes the Chinese communists ability to hide things. And due to the fact that congress had shut off all funding to Gain of Function research. Fauci had to therefore indirectly fund the Wuhan Bat virus’ Gain of Function researchers into what Fauci identified as “an acceptable risk of a pandemic.” If you felt the purpose behind the corona virus was questionable. You’ve now been proven absolutely wrong. It had a decidedly positive purpose in terms of the scientific experiments that were conducted on you in order to better understand the virus. Dr. Anthony Fauci who was responsible for ensuring our safety was the father of the virus, understood that HydroChloroquine was a prophylactic and therapy, felt the risk of a pandemic was acceptable, illegally funded and conducted the Gain of Function experiments in China, hid these facts, denied that HydroxyChloroquine was an effective therapeutic and lied to us throughout the past year on a thousand different points of what the “science” involved. The cheerleading media is just as culpable. Big tech too. You and I have never been anything but experimental lab rats all this time. The government seems to want to have total control over us. For government funded lab experiments and such. Back to the point of this blog post and the issue at hand. Back on May 7, 2021, barely a month ago I stated.

Clean energy transitions are all the rage in oil and gas. Producer bureaucrats have been committing to the transition in hoards this past year in an attempt to outdo one another, please note it’s never on the basis of any performance criteria. It’s just the place to be, and if you’re not there, get your press release drafted quickly or hire a public relations firm before your Annual General Meeting. “Sophisticated” producers will have those greenpeace demonstrations and “smart” investors making their green new deal talking points well known during the Annual General Meeting question and answer period. Rallying support for the cause and the diversion of investment that must be considered a necessity when the “issue” is so prevalent in consumers' minds. Don’t fall for it. Outside of the producer firms talking points and Biden’s latest trillion dollar spending bill there doesn’t seem to be too much investment happening in the clean energy “industry.” Maybe it's all make believe? If Warren Buffet’s Berkshire Hathaway does not receive shareholder approval to file annual environmental reports. Where the voting was 75% against, I’m certain that oil and gas producers unauthorized diversion of their revenues into clean energy will be fine, don't you?  

It should be noted that electrical energy is one of Berkshire's four “Jewels” of their investment strategy and makes them the fifth largest utility in the U.S. Their electrical generation is derived 24% from the burning of coal and 32% from natural gas. Yet they can’t even get their shareholders to support enhanced environmental reporting!

The major producers AGM’s are in the bag and most of the majors passed with changes to their drive towards clean energy. Exxon lost two board seats to an unheard of environmentally focused “Engine No. 1” hedge fund of miniscule size, though with a strong team. Engine No. 1 holds 1% of Exxon common shares. Proxy fights have been impossible to achieve any success against management for decades. Just ask Carl Ichan who is famous for his battles. He doesn’t necessarily win the actual proxy fight the first time around. People don’t necessarily vote their shares, therefore they’re by default deferred to the management of the firm to vote in the manner of their choosing. These percentages are usually well in excess of 50% but short of the percentage necessary to have a ruling put in place. This precludes those that launched the proxy battle from gaining the required percentage of shares voting for those that launched the fight. Carl Ichan and other corporate raiders have other means in which to involve themselves in their targets in order to achieve their influence. Proxy battles are for show and inexpensive marketing of the Icahn brand. Therefore it needs to be asked why did Exxon management vote to have Engine No. 1 directors put in place? Or alternatively show me the vote count. For practical purposes Exxon’s share distribution is 53.47% of the float is held by 3,213 institutional investors. These shares are normally voted prior to the meeting and they’re known by management. Read the dialog of the Exxon meeting from this Forbes article and explain to me why you would think it wasn’t “play acting,” that it didn't have a “banana republic feel to it” or just good old “comic relief.” 

The Vote’ is a monumental and innovative theatrical achievement. This compelling human drama is Shakespearean in its depth and breadth while also being part musical, part improv, part comedy, and part theatre of the absurd. It even has some western partner dancing. At its heart, the play is a classic Greek tragedy with Darren Woods as the protagonist. He delivers a breathtaking and memorable performance as director and lead actor. ‘The Vote’ gets my vote as the best play of a shareholder meeting I’ve ever seen.”

The point I’m making is that Exxon’s management, as was Shell’s loss in its court case, one which will see them “forced” to reduce theirs and their suppliers environmental footprint. Appears to conveniently be directed to support clean energy investments. No discussion of performance. No expectation of performance from clean energy. Just the fact that all of the oil and gas bureaucrats can now hang their hats on this one vote and judgement to say that this was their day of environmental reckoning. Oil and gas has collapsed to the point where the press is actively mocking their attempts to deceive us. I just call them as I see them. A fundamental misrepresentation of the facts. The kind of misrepresentation that we’ve been subjected to in the other big “science” experiment that we’ve been in and were the lab rats for, “The Dr. Tony Fauci Pandemic.” They realize they can’t control us at the end of a gun barrel, therefore fear is all that’s left in their toolbox. Starting these epidemics of fear by introducing them in the schools.

This new act is nothing more than the same as before. Oil and gas bureaucrats want unfettered access to the oil and gas revenues in an unaccountable manner. And that is how all of these things start, it always starts with the unauthorized use of funds. In order to do as they like in their exploration of creative executive compensation. If they had any interest in performance they would have indicated that decades ago. Our “Betters” do not have our interests in mind. They want to tell us what’s right for us in a dictatorial style. Through lies and misrepresentations of their actions and desires for us. To take the value we’ve earned in society and to keep it for themselves. This absolutely and unquestionably disqualifies them. Political accountability must return, they work for us. Their deferral to scientists is inappropriate. We did not elect scientists to do these things to us. The media has diverted our attention away from these despicable acts and are therefore culpable too. Big technology has been instrumental in silencing other voices and provides only one side of the argument. Big business came out against the people in what was an attempt to rectify issues in the past election. None of this should be considered normal outside of the former Soviet Union. It is wholly unacceptable now. What we are witnessing is the end of what we considered the “enlightened age.” The time when common sense and logic prevailed. We can not afford the oil and gas producers taking this opportunity to feather their nests further with absolute unaccountability. Already there is talk that there will be far less drilling and field activity in North America. All the more money for the bureaucrats, and far less resources at affordable prices for us. I can see tomorrow’s headlines, “Oil and gas producers committed to clean energy, despite their repeated failures.”

The fact of the matter remains that we need to question the overall motivation of these “scientists and environmental activists. Expressed in man hours per barrel of oil we are currently leveraging each barrel of oil equivalent to produce 23,200 man hours of effort. This has been the result of standing on the shoulders of giants and building on the brilliance of those that came before us. The 21st century offers a new paradigm for building value for society. The leverage of intellectual thought. Just as we’ve mechanically leveraged the use of oil in the centuries before, we will spend our time determining how to expand our capacity and capabilities to process more and faster than ever before. In the decades to come maybe we’ll be able to double or triple the effectiveness of the number of man hours of effort per barrel of oil. Consider for a moment what would happen if we were unable to provide for the supplies demanded by our economy. The fact is it will be the largest consumer of oil and gas that will be the largest and most powerful economy in the world. Are we willing to cede that position to others willfully in pursuit of what may very well be another Dr. Tony Fauci scale lie? Oil and gas needs to refocus on the pursuit of profitability and ensure that the market is adequately supplied. Others will determine what it is they’ll do with the product and the efficiency with which they use them. When and if the climate becomes a trillion dollar market entrepreneurs will flood the area. Ours is a simple task yet the bureaucrats have capitulated these responsibilities to their greed and self interest. I say enough, one political leader will never be able to solve the myriad of issues that are suddenly upon us. We all need to start pitching in to make sure that these people are no longer successful at lying to us and misrepresenting what it is their actions have been. If we accept this, we are only inviting more of it. As I’ve stated before, in two years time which one of us will be the bigger fool, us or them. 

The only solution as it stands today, from a creative destruction point of view, is People, Ideas & Objects, our user community and their service provider organizations implementation of the Preliminary Specification. The natural forces of disintermediation and creative destruction are being obstructed through the diversion of industries revenues away from the development of these initiatives. And therefore are unnecessarily directly supporting the status quo behaviors that have been proven to be disastrous.

The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations, everywhere and always. Setting the foundation for profitable North American energy independence. People, Ideas & Objects have published a white paper “Profitable, North American Energy Independence -- Through the Commercialization of Shale.” that captures the vision of the Preliminary Specification and our actions. Users are welcome to join me here. Together we can begin to meet the future demands for energy. Anyone can contact me at 713-965-6720 in Houston or 587-735-2302 in Calgary, or email me here.