SLE AIM Market I can verify this.27 Feb 2018 15:17
The Sunday Times reported that shareholders have turned against small oil companies that seem to be run for the benefit of executives. The piece makes for astonishing reading. Advisory firm Hannon Westwood noted that 55 companies in London�s oil and gas industry had no reserves on their books as of last year. �In other words, they neither produce oil nor plan to. They simply exist. And write cheques,� said the publication. It quoted an unnamed pension fund manager as saying that �there is a casual disregard for shareholders in the oil industry�. Oil companies make up 15% of the FTSE All-Share index, noted the report. However, �an unnerving proportion of the 130 or so listed explorers and producers could be classified as what critics call �lifestyleR17; companies�. In other words, �groups of mates who managed to raise enough cash to pay themselves well, but not much more�. The newspaper went as far as to say: �Chief executives taking home big wads of cash while investors get nothing is endemic in London�s oil and gas industry.� Of the examples that abound, the report highlighted one case study: San Leon Energy. Its chairman, 55-year-old former stockbroker Oisin Fanning took home a whopping �3.2m (about R59m) over four years. The company, on the other hand, has racked up almost double that figure in losses, with its share price plunging nearly 90%. The trend highlights that shareholders have no control over the use of the money they invest in an oil or exploration company, pointed out Ian Norbury, of Hannon Westwood. The San Leon board has reportedly agreed to change Fanning�s pay so that he receives 80% of it in cash rather than shares. Still, I wouldn�t be in a hurry to invest my hard-earned foreign currency allowance in the next oil company that lists in London. I�d also think twice about a FTSE All-Share tracker, given the heavy dose of these companies in that index. A culture of greed seems pretty entrenched among oil company managers, putting other sectors in the shade.
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