My friends,

One of the changes that Hession has brought to IOC is a super major communication style, which can essentially be summed up with the idiom “on a need to know basis”.   While I can’t be entirely sure, I suspect that he has implemented this style in the following ways:

• Limit who (including executives and partners) receives information.  I strongly suspect that Hession has done this with the XOM negotiations by bringing in his own team from Woodside to handle the negotiations.  I believe this team is sharing only high level updates (if any) with a limited number of IOC executive, aka people like CV no longer know all the details.
• Get buy-in from the government that infrequent selldown updates are acceptable and/or these updates are communicated to only one (O’Neill) or a small group of key officials.
• Make no announcement or reference to future plans that are not 100% controlled by the company.  For example, I strongly suspect that IOC is in advanced discussions regarding the next 4.6 Tcf of gas at E/A.
• If you have nothing new to report you don’t present at conferences – aka Westlake being cancelled.

I think it is pretty obvious some of the negative effects of this communication style, however if Hession executes, it will stop a large amount of volatility in the pps.  Why??  Because if Hession executes, investors will become conditioned to the fact that news will always be unexpectedly announced and that causes pain to those who bet the down side.  And as Freud implied, the strongest motivating factor of human nature is to seek pleasure and avoid pain.

So I believe, going forward, investors should get accustomed to being in the dark.

I believe super majors don't need to update as often because news will not move the needle like it would with a company like Interoil.  Once they make their first major announcement then the news flow can be at a lower frequency.

I think management owes it to the shareholders to tell them what is going on with the company.  I feel like I'm in the dark and I'm looking for the sun to rise.

From experience I can tell you that conference cancellations are not a minor issue and are not done simply because there is nothing new to say.  Public companies present at conferences quarter after quarter and year after year through good and bad periods and even when there is not much new to say.  IOC  should be out telling what is a compelling long term story whenever they get the chance.  Westlake is particularly curious given they picked up coverage this year and the conference last week was in Houston, I believe.  This is  frankly a slap in the face to Westlake.  Companies just don't do this without a reason.  I have seen cancellations due to weather, health, and material news but never for "nothing has changed".  Institutional investors use these conferences fir 1x1 meetings and idea generation.  The recent PPS decline is more due to lack of buyers than manipulation.  Companies build credibility by delivering results AND being accessible.  If IOC cancelled because there's nothing new to say then I consider it a mistake and amateurish.  My belief is we are late innings on a deal and the conference was cancelled because material new information (within weeks) could render presentation material irrelevant.  I am very comfortable with MH not commenting publically and clamping down on leaks but attendance at institutional investor conferences is critical for public companies.  Inexcusable in my book to cancel.   Investor relations is and has been in the dark.  WA has presented in tougher circumstances  - RJ  in March 2012 when WA's message was no FID by March 31st but probably before the May elections.  Y you read that right.  So Westlake should have been a friendly environment with low expectations.  I hope the cancellation was for a good reason otherwise I would consider this a sign of poor judgement by whomever made the call.

Ran across this post searching for something else.  Sure seems to still ring true today.

I can add one more item to this style:  When asked any questions to provide detail at investor conferences - be as vague as possible and when asked any questions about prior screw completely avoid the question and give a different answer that still makes the person asking the question feel good about their life.

'efi426hemi' pid='29843' dateline='<a href="tel:1381801 Wrote:

My friends,

One of the changes that Hession has brought to IOC is a super major communication style, which can essentially be summed up with the idiom “on a need to know basis”.   While I can’t be entirely sure, I suspect that he has implemented this style in the following ways:

• Limit who (including executives and partners) receives information.  I strongly suspect that Hession has done this with the XOM negotiations by bringing in his own team from Woodside to handle the negotiations.  I believe this team is sharing only high level updates (if any) with a limited number of IOC executive, aka people like CV no longer know all the details.
• Get buy-in from the government that infrequent selldown updates are acceptable and/or these updates are communicated to only one (O’Neill) or a small group of key officials.
• Make no announcement or reference to future plans that are not 100% controlled by the company.  For example, I strongly suspect that IOC is in advanced discussions regarding the next 4.6 Tcf of gas at E/A.
• If you have nothing new to report you don’t present at conferences – aka Westlake being cancelled.

I think it is pretty obvious some of the negative effects of this communication style, however if Hession executes, it will stop a large amount of volatility in the pps.  Why??  Because if Hession executes, investors will become conditioned to the fact that news will always be unexpectedly announced and that causes pain to those who bet the down side.  And as Freud implied, the strongest motivating factor of human nature is to seek pleasure and avoid pain.

So I believe, going forward, investors should get accustomed to being in the dark.

Keep it on Ice,

Hemi