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Why didn't Hession take the Exxon offer. - Printable Version

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Why didn't Hession take the Exxon offer. - oilybug - 02-17-2017

Hello all. First time posting long time here watching. I bit of my history as an IOC stock holder. I bought in the day after the Exxon deal fell through and Total was chosen. I bought at 58.00 and brought my cost average down slightly to $56.00. Recently I sold all shares for $49.00 at a loss because I did not see a better outcome and after years of wishful thinking and feeling like I was deceived by Hession and BOD I did not trust the outcome and so I decided that it was time to let this toxic stock go. I was always amazed at the knowledge that some on this board have and their willingness to share. Probably the only good thing to come from this stock is the friendships that have developed because of IOC and this website. I should conclude that I believe that the resourse is there and will be proved when IOC is out of the way. At terrible injustice to the shareholders that deserves that those doing the deceiving rot in hell.

I started this thread in response to Northoils reply in the ByeBye thread:

The $400 million credit line, now $470 million, showed their dire financial condition.  THEY DIDN’T HAVE ENOUGH MONEY TO REMAIN INDEPENDENT!  Hession was brought in to sell the company.  That’s why they sold the refinery for cash, streamlining the E&P assets for sale.

What the BOD and Hession did was not irrational.  And it’s not unusual for a board to incentivize a CEO to accomplish a specific difficult task.  Hession gets both cash (yes, a lot, pre-Canadian tax), but also stock options.   Therefore, he and BOD members who hold options, benefits the same as shareholders in whatever price they’re able to negotiate.  Did they short-cut and even mis-manage the Fairness Opinion?  Yes.  However, as it turned out, they spent a lot of money and lost a lot of time to get the same answer.  So they were actually right in the first place.

I somewhat agree with this statement now but I think it bears the question that if Hession was brought in to sell the company then why did they not take the Exxon deal instead of choosing Total? I believe that if they had taken the Exxon deal we would be in a whole lot better position today as an Exxon partner likely leading to an Exxon Buyout.

As I said earlier I am no longer a share holder but I wish the best for those left holding.



RE: Why didn't Hession take the Exxon offer. - katytrader - 02-17-2017

'oilybug' pid='79458' datel Wrote:

Hello all. First time posting long time here watching. I bit of my history as an IOC stock holder. I bought in the day after the Exxon deal fell through and Total was chosen. I bought at 58.00 and brought my cost average down slightly to $56.00. Recently I sold all shares for $49.00 at a loss because I did not see a better outcome and after years of wishful thinking and feeling like I was deceived by Hession and BOD I did not trust the outcome and so I decided that it was time to let this toxic stock go. I was always amazed at the knowledge that some on this board have and their willingness to share. Probably the only good thing to come from this stock is the friendships that have developed because of IOC and this website. I should conclude that I believe that the resourse is there and will be proved when IOC is out of the way. At terrible injustice to the shareholders that deserves that those doing the deceiving rot in hell.

I started this thread in response to Northoils reply in the ByeBye thread:

The $400 million credit line, now $470 million, showed their dire financial condition.  THEY DIDN’T HAVE ENOUGH MONEY TO REMAIN INDEPENDENT!  Hession was brought in to sell the company.  That’s why they sold the refinery for cash, streamlining the E&P assets for sale.

What the BOD and Hession did was not irrational.  And it’s not unusual for a board to incentivize a CEO to accomplish a specific difficult task.  Hession gets both cash (yes, a lot, pre-Canadian tax), but also stock options.   Therefore, he and BOD members who hold options, benefits the same as shareholders in whatever price they’re able to negotiate.  Did they short-cut and even mis-manage the Fairness Opinion?  Yes.  However, as it turned out, they spent a lot of money and lost a lot of time to get the same answer.  So they were actually right in the first place.

I somewhat agree with this statement now but I think it bears the question that if Hession was brought in to sell the company then why did they not take the Exxon deal instead of choosing Total? I believe that if they had taken the Exxon deal we would be in a whole lot better position today as an Exxon partner likely leading to an Exxon Buyout.

As I said earlier I am no longer a share holder but I wish the best for those left holding.

  My guess is that PNG government  wanted to diversify its supermajors and made this clear to all parties.  It is also possible that Hession hoped that he could stimulate a bidding war and that Exxon chose to walk away and wait.



RE: Why didn't Hession take the Exxon offer. - Palm - 02-17-2017

PNG flip-flopped all over on that issue. They applauded when IOC announced the exclusive agreement to negotiate with Exxon. O'Neill announced it in Parliamentary and Parliament clapped and cheered. But later the gov't said they liked Total coming in as they wanted diversification. That's PNG.

As far as Hession and Exxon, when Phil was canned because he refused to come to reasonable terms with anyone and wanted to be Operator, etc. Byker took over and made an exclusive agreement with Exxon to negotiate a sale of some sort. A big no-no in the rules of deals. When Hession came in the first thing he did (after convincing the BOD that he was a seasoned CEO and the right choice; really he was the only person who they could get) was break the exclusivity clause and open things back up.

Supposedly things were going well, but Total and others kept upping the stakes. All kinds of rumors on what Exxon really proposed, but reliable sources who used to post here said that a final pitch was made to Total and that included an unheard of payment for potential resources depending on the volume proven up. Supposedly on a wish list of some 12 items Total said Yes to all or all but one.

So at the 11th hour when everyone (due to comments by Hession) was expecting the deal to be announced with Exxon, suddenly a "transformational" deal was announced (and botched) with Total, and pps plunged and never recovered.

IMO at that point Exxon and OSH schemed to undermine the deal and that started with the crafty move by Botten to snag the minority shares from PacLNG and then file a Dispute on the SPA between IOC and Total. Hession never anticipated this move due to his extreme inexperience in being a CEO. His big move? Hire a consultant to work on IOC's culture and teamwork; thus fiddling while Rome burned around him. His underestimation of the Dissent work-out had him stating that within 3 months things would be worked out, IOC would prevail and there would be laughing and dancing in the streets. That 3 months turned into 6, then 9, then almost a year and during that time no drilling was done as Total didn't want to risk capital if the Dissent went south.

The cluster only continued when Wahoo was hurriedly spud, they made a dumb choice to repurchase a chunk of shares all in a short few week period (hoping to avoid dillution when the warrants on notes would be exercised because IOC's pps would shoot above the mid $90s), and soon after the markets fell apart and oil, LNG prices and E&P stocks went to hell defeating the purpose of the share buy-back as they ended up paying off the convertible notes..... And on and on and on.... Right down the shitter everything went.

Hession absolutely lost control of the company, but with the support of the BOD he didn't care as he made out like a true bandit.

That's my story and I'm sticking two it.

RE: Why didn't Hession take the Exxon offer. - Stavros - 02-17-2017

Palm: Two bad too say that you to are correct.

RE: Why didn't Hession take the Exxon offer. - MartiniStocks9756 - 02-17-2017

Agree unfortunately.  I keep $50 shares just to see what happens.



RE: Why didn't Hession take the Exxon offer. - Palm - 02-17-2017

Yes Hession waz knot reddy fore this job and hiz inexpeerients kost wee shareholderz weigh two much and hee gets aweigh with hiz pocketz stuffed full

RE: Why didn't Hession take the Exxon offer. - oilybug - 02-17-2017

Thanks Palm. As I read your explanation of events the only reason that Hession did not take the Exxon deal was because at the time he wrongly thought that he had the ability to turn IOC into a viable company. An easy risk to take when you have a large payout coming in the event that you F**k the whole thing up. The BOD screwed the shareholders and should be accountable.

RE: Why didn't Hession take the Exxon offer. - Palm - 02-17-2017

Oily,
Without knowing the details of the Exxon offer it is hard to make a real judgement on that offer vs Total's. Rumors are that Exxon wanted to pay for PRL15 only, possibly in a substantial amount of cash, but also possibly without IOC participation in any LNG plant(s). Hession at one time mentioned a philosophy of find it, prove it up, sell it and move to the next prospect(s). However he also mentioned a desire to participate through minority interests in LNG production.

Total offered "more" in the way of participation in projects, but not only in PNG. There was a bit of fanfare about opportunities outside of PNG, and the carrot of payolas for resources/reserves as they were discovered and developed. This came at a cost of pay-as-you-go which the markets heavily discounted in valuation; thus the pps plunge in Dec 2013 from which we never recovered.

Hindsight is 20/20 but what happened after the "transformational deal" (including the botched announcement in joint with Total) exposed Hession's (IMO) extreme inability to function as necessary in the CEO role. He simply (again IMO) was a rookie when what was needed was a seasoned veteran. BUT he seemed to be the only interested party after the BOD and PM parted ways. Problem was the BOD offerered Hession a pay package that in many ways exceeded even what a seasoned veteran earned. And they let him get away without living up to the corporate requirement that execs be substantially invested in IOC stock. He took what was part of his pay package in options, but did next to nothing as far as putting his own cash at risk. Unlike PM and others who were part of IOC's earlier days and used own cash to invest substantially in IOC stock. Hession simply had very little to lose by his actions and everything to gain. That never works in an an exploration company like IOC.

Pretty amazing debacle.

RE: Why didn't Hession take the Exxon offer. - sageo - 02-18-2017

'Palm' pid='79467' datel Wrote:Yes Hession waz knot reddy fore this job and hiz inexpeerients kost wee shareholderz weigh two much and hee gets aweigh with hiz pocketz stuffed full

Palm & Kal -You guys are a "riot" 1 <img src=" border="0" class="smilie" src="http://shareholdersunite.com/mybb/images/smilies/tongue.gif" /> In my former life, I must have been your English teacher . Pam,loved your last words on a recent post, "pretty sad debacle" .



RE: Why didn't Hession take the Exxon offer. - sageo - 02-18-2017

'sageo' pid='79485' datel Wrote:

'Palm' pid='79467' datel Wrote:Yes Hession waz knot reddy fore this job and hiz inexpeerients kost wee shareholderz weigh two much and hee gets aweigh with hiz pocketz stuffed full

Palm & Kal -You guys are a "riot" 1 <img src=" border="0" class="smilie" src="http://shareholdersunite.com/mybb/images/smilies/tongue.gif" /> In my former life, I must have been your English teacher . Pam,loved your last words on a recent post, "pretty sad debacle" .

Correction --"Pretty amazing debacle".