Smart contracts are self-executing contracts based on agreed criteria and written in code, removing the ambiguity of terms and reducing the requirement for lawyers to draft and interpret. When the criteria of the contract are fulfilled, ownership or payment, for example, will be automatically transferred. A smart contract could be amended if the parties agree, and would maintain a record of all versions and amendments to the contract. It then would automatically complete once the criteria of the most up to date version are satisfied. Criteria could include payment or even government approval for the transaction. This may save time and costs for interpreting legal terms and tracking records, and government authorities could potentially access relevant parts of contracts to audit or pre-approve the taxation treatment. Joint ventures are common in the oil and gas industry and generally require a suite of complex agreements (for example, relating to the sharing of costs or revenues), which could be implemented as smart contracts. Most contracts contain audit clauses giving the parties the right to audit each other to make sure that all parties are complying with the contract. Introducing a blockchain ledger to record joint venture transactions and using smart contracts to define, negotiate, and execute the contractual conditions will provide all involved parties, including the tax authorities, with transparency and consensus on what has occurred. This single audit trail, agreed upon by all participants, will significantly reduce the effort needed to ensure timely tax compliance and reporting, as well as the effort needed by the tax authorities to understand tax positions. As part of a global industry, oil and gas companies have to consider double taxation and transfer pricing implications. The use of smart contracts for transfer pricing profit allocation is another area of potential for simplification, increased transparency, and overall cost reduction.

Through the use of smart contracts, we can now replace paper and complex legal agreements that are cumbersome, difficult to transfer and can be hard to track for the average person and even for sophisticated investors. Our solution for commodity investing (mainly in oil) would be to switch to a digital system along the lines of Bitcoin but linked to an asset. This solution is the PERMIAN Token (XPR). Imagine a vault of oil barrels. The oil barrels are owned by ""Oil-owner Inc."" and the vault is owned by ""Vault Inc."" Vault Inc. has a spectacular reputation and third-party auditors who verify the amount of oil barrels in its vault. Oil-owner Inc. could offer a digital token to the public that represents ownership of the oil barrels and through a smart contract with Vault Inc. maintain a public off-chain registry that relates fractional interest in the gold with the tokens. For every token sold, Oil-owner Inc. transfers ownership to Vault Inc., who holds it on behalf of the token owner. Vault Inc. guarantees redemption of the value price of oil barrels by anyone who can prove ownership through a digital signature. Oil-owner Inc. can take advantage of the fact that Vault Inc. is trusted (and audited). Owners of the tokens rely on Vault Inc.'s representations and not on Oil-owner Inc. (even though Oil-owner Inc. is the token issuer). One of the main advantages would be that buyers of the tokens could know that they are the only person who has received the token, whereas a buyer of a paper certificate has no way of knowing that the same certificate hasn't been sold to multiple people.