Wednesday, December 23, 2020

Oil, Oil Drilling, Oil Royalty, Oil Royalties and Oil Madness with the Grimpen Reprobates and Greed-lusting Lunatics in The Bahamas


IN TODAY’S PAPER, the Attorney General of the Bahamas intones that “if they find oil” we’ll negotiate a royalty!
Every hedge fund manager, investment banker, every bond investor, and investment grade insurance broker spilled his coffee at those petulant words. Every first year student in finance or graduate student in a negotiation or mediation seminar knows this statement goes against every basic rule of negotiation or even business strategy.
Here is the context any strategist sees immediately:

1. You (THE BAHAMAS) allows a no name company that’s no where near the best-of-brand to travel around the world flogging the name of the Bahamas in some ‘hustle and flow’, selling their eyelashes and toenails to raise money for what purpose? TO DRILL in the Bahamas...HEAR ME NOW: THE BAHAMAS!
2. This name (BAHAMAS) that evokes natural wonder GLOBALLY; a luxury brand that the world saves-it’s-money in hopes to enter and allow this BRAND to be flogged in every slopbucket across the globe...altering IMMEDIATELY 120 years of branding.
3. Just to emphasise: It’s not as if this company moved around saying “Hey man, this process is like we are exhibiting at the Louvre or in the Vatican. THEY ARE NOT HAVING TO SAY: this is the Bahamas. We have strict rules on who can participate in this deal, even stricter rules on how we mention the Bahamas’ name and still stricter rules on the methods: in fact, we have to work with the best engineers in the world and the leading environmental scientists...basically inventing a new concept and method for even preliminary exploration and it has to go before a global panel of experts and the science has to show a “Saudi Reserve level motherload” of potential oil”, with forward contracts for sales of $100 billion in 10 years”.
This is the language and pressure ANYONE WHO GAINS THE CONCESSION TO DRILL IN THE EARTH’s MOST PRISTINE ENVIRONMENT SHOULD SPEAK AND FEEL. This raises a question: WHERE IS THE SCIENCE? The science and engineering methodology that allows a company to DRILL IN THE BAHAMAS should be of a quality to win the Nobel Prize! It should have tongues wagging about a NEW BAHAMIAN SCIENTIFIC STANDARD! Where is the science?
4. The fact that the company does NOT have to speak in this manner and the fact that they NOW KNOW, gaining a concession to drill in the Bahamas is little different from selling fake hair, IT IS THEY who gained confidence in this affair?
THE BAHAMAS GAINED NOTHING: we didn’t set a new deal standard, we didn’t layout new green criteria...NOTHING! Instead this process shows any hustler can gain access to the world’s most pristine environment because we, to whom God granted stewardship, are low-information fools, who would sell our children’s tongues for disposable shiny objects!
5. Negotiations depend on leverage: so if this company knows we are so clueless, backward and morally vulgar toward our birthright, that we put them under ZERO PRESSURE to violate a 120 year old hospitality brand, under zero pressure to INVENT some new process for this privilege to drill in our environment, then we’ve lost already! UTTERLY!
6. What the AG’s apocalyptically dissonant statement says is this: WE permitted a nothing company a concession to VIOLATE the tranquility of our NATURAL LANDSCAPE THAT WE DIDNT CREATE AND CANT REPLACE, which the entire world envies, and now that they have this concession and USED THE NAME AND PRESTIGE OF THE BAHAMAS to gain notice in the world - FOR NOTHING - we will wait until they discover the two cups of dirty dishwater under OUR PRISTINE OCEAN FLOOR...then when that company goes from nothing to making an oil find in THE BAHAMAS...and once they HAVE ALL THE POWER AND LEVERAGE in the deal structure...we, THE BAHAMAS will negotiate a royalty!!!!!!

Are we smoking the hair of our armpits?
7. This telegraphs to the entire world that we are not just clueless to have allowed this TREASONOUS ASSAULT ON OUR ENVIRONMENT, but we have not even a basic clue how deal-structure functions. This leads to another question: WHERE IS THE DEAL STRUCTURE, BENCHMARKS, HURDLE PROPOSITIONS AND SPILL INSURANCE EQUAL TO THE RARE ENVIRONMENT THAT’s BEING PUT AT RISK? WHERE IS IT?
9. But here is the ‘coup d’ grace’, any deal specialist knows already the investment begging company can’t monetise any oil find. As such, they likely would have to flip it to a major oil company if they find anything. Given that the world is awash in cheap oil, and with major new oils finds in Russia, Brazil and with Iran set to come online forcing global prices lower, they would cap those wells in the Bahamas and we get NOTHING! NOTHING! usual!
10. BUT the world knows now that we are grimpen reprobates and greed-lusting lunatics, who would sell a priceless irreplaceable environment - with a 120 year global profile - for NOTHING, ignoring our competitive advantages in new hospitality models, for a dying industry in which we have zero and would have zero influence!