Are you afraid of the dark?

[j4j]

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

Thank you for the very interesting post.  You did discuss two items which I hope you could elaborate on.  First, you imply there are ongoing XOM negotiations, not the ones that failed to lead to a deal last fall.  Is my read of that correct?  Second, can you provide any more details regarding your belief that ioc is deep into talks regarding the next 4.6 T's of gas at e/a?