Using our current price forecast to grade our “leadership” is ignorant. Real leaders must think long-term, but also plan for both good and bad times. In this, our leaders have failed us, planning for good times during high prices, and reacting inconsistently to lower prices. Here’s some examples:
(1) Go back to the long term price forecast at the time of the split. Look at our $16B in CapEx and out-of-control OpEx. These guys had lived through the cycles, but acted like gleeful 2nd graders in a candy store with their parent (JJ) gone. Exploration focus and spending was deep water with obviously wrong AFE’d values. How’s that gone for stockholders?
(2) The layoffs began with the Finance “Day of the Long Knives” where, if you were not a brown noser, you were walked out. Then, rather than zero base the company and cut once, we cut again and again and again. One ELT member used EOI as a loyalty weapon against employees. In February 2018 our “Leader” announced in front of all of us that ECO was dead, there would be no more layoffs, then let more people go 7 months later. If you were a member of the Leadership Forum or an executive near retirement, you were favorably severed with a three-year special package. How about that “P” in SPIRIT core values?
(3) Our focus is now on Alaska and L48 Unconventionals. All other BU’s be forewarned. Without a dying and declining Prudhoe Bay (discovered and developed in the 1970/80’s), our Alaskan portfolio and results is a disaster. Our Alaska leader is the same guy who brought us APLNG. How’s that worked out? Look at cumulative ATNI vs our investment in Australia. He’s best known for sniffing hair like Joe Biden. Our unconventional L48 portfolio is poorly led. Areas where others are successful we are unsuccessful. Where we have “increasing” production, we’ve gold plated and over-sized everything so an honest post-audit would show a huge asset disappointment hoping for success only through higher oil prices.
(4) Although it’s hard to exactly pinpoint our worst function, I’ll call Finance. Convincing our leader that our dividend was secure, raising it, promising six months later we would never cut it, then cutting it six weeks later shows an indescribable level of incompetence. Then we doubled down on this by promoting a non-Finance person to the top job, showing the world we had zero confidence in all our existing Finance leaders. So Finance is now led by someone who doesn’t know Finance leading employees who can’t forecast or lead. Get a hundred finance employees in a room and ask them about forecasting balance sheet and net cash flow, and you’ll immediately see the look of fear in their eyes. This is allegedly our surviving best and brightest, forecasting without knowledge or skill when we are most in need of cash and a strong balance sheet. So we sell assets and call it portfolio optimization to bring down debt that was used for things we’ve now written off or sold.
(5) The biggest prediction of future success for an E&P company is resources and reserves. Don’t believe me, go back and listen to what our leader bragged about at the time of the split. This is of course followed by low costs associated with developing and producing these resources/reserves. Look at our resources/reserves at the time of the split. Now look at our current resources/reserves. Look at our cost and manpower benchmarking results. Draw your own conclusions.
In summary, when leadership should have been thoughtful and strategic, they were reactive and arrogant, when they should have been compassionate, they were cruel, vindictive, and inconsistent, and when they had opportunities to listen and learn, they rewarded Brown nosers rather than truth-tellers.
The European accents and worldwide know-it-all only fools Wall Street for a while. Long term, all stakeholders will suffer from this failure in leadership.
Last, it’s ConocoPhillips, not Conoco. Who do you work for?