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Unless the oil industry keeps spending there will be fewer people about who can afford Aston Martins, Ferraris, Lamborghinis, Bentleys, Porsches, and Rolls-Royces. But perhaps these companies also need to spend a bit more on paying their staff - it hardly seems reasonable that share prices within the oil industry/bankruptcies have been so high whilst investors in psychologically damaging products such as Facebook/Sky TV/Netflix/Apple have seen returns on their investments of over 1,000% (one thousand percent) since 2010.

The average chav's lifetime usage of oil isn't going to be enough to pay back equity investors in the oil sector in my opinion.

Then again unless the oil industry keeps spending there will be fewer people about who can afford Aston Martin's, Ferraris, Lamborghinis, Bentley's, Porsches, and Rolls-Royces. The average chav's lifetime usage of oil isn't going to be enough to pay back equity investors in the oil sector in my opinion.

I never thought it was a good idea to borrow $100 million, guaranteed by 15% of Enquest's share of Kraken production, until it's all paid back plus a hefty wad of interest, fees, and financial charges - which were completely disproportional to the risk of getting paid back by a UK company operating mainly in the North Sea with a good working relationship with BP.

But now when you try and sell the equity you have a more complicated underlying financial structure. So now it's harder than ever for potential equity investors to know whether there are too many special advisers, financiers, and other non-job people overcharging the oil companies/within the oil industry.

I never thought it was a good idea to borrow $100 million, guaranteed by 15% of Enquest's share of Kraken production, until it's all paid back plus a hefty wad of interest, fees, and financial charges - which were completely disproportional to the risk of getting back by a UK company operating mainly in the North Sea with a good working relationship with BP.

But now when you try and sell the equity you have a more complicated underlying financial structure and it's harder to the people who might invest in equity to know whether there are too many special advisers, financiers, and other non-job people who are being vastly overpaid by the wasteful oil industry.

The issue is still the $1.7 Billion in debt and the fact the financial structure has grown more complicated in the 5 years since the oil price crashed to an inflation-adjusted 50-year-low and never recovered (2014-2019).

0.1% of citizens own greater than 99.5% of the financial wealth.

0.1% of citizens own greater than 99.5% of the financial wealth.

0.1% of citizens own greater than 99.5% of the financial wealth.

..I would say if shareholders want a return then forget trying to turn this into a profitable business in an economy that got f88**ked by the 2008/09 crash and then the policy response of pouring petrol on the fire to try and put it out.

If you have any high-end, luxury, parts of the business spin them off as separate companies in IPOs and return that money to TCG shareholders as special dividends - remember 0.1% of citizens own greater than 99.5% of the financial wealth.

Hence the economy is stuffed …. but float the high-end/luxury parts of the business off and give shareholders a special dividend of 50p - they deserve that after years of suffering.

TCG definitely needs it's own airline in my opinion - the flight prices for Jet2.com are often below the cost of the fuel and aircraft depreciation - then they still have to pay staff and airport taxes. Hence if TCG are buying seats off Jet2.com to send tourists to TCG branded hotels abroad then this is a business model that can't last more than a couple more years I wouldn't of thought. Also as a holiday company you want to be vertically integrated like Exxon Mobil is in the oil game. If you operate at every aspect/part of the value chain then as economic trends change/interest rates go up down, you are far more stable. We don't know which sector will have the biggest profit margins in the future - whether it be the hotel companies, the airlines, the entertainment/hospitality providers at the destination, or even the food/drink providers or the sun lounger companies, or the mountaineering/activity companies. In my opinion TCG needs to operate in all of these sectors in a vertically integrated way.

Someone said that holiday/flight prices have been on the rise for years and that airlines/holiday companies are reporting losses not profits.

Well that person needs to look at the waste within the system - especially the financial waste - the people on very large salaries who just do a bit of colour design on the branding for example - any company will become extremely wasteful unless shareholders constantly remind it that it's job is to provide a decent return on equity to the people who have provided a lot of capital to the business (the shareholders). So I would agree that shareholders need to be more vocal unless whilst everyone else jumps in to extract as much money as possible in an extremely short-term way we are the one's seeing our capital eroded over time.

Hence vertical integration, control all aspects of the holiday - airport transfers, flights, hotels, entertainment/activity, food/drink, and then you can control the costs - if you can't control the costs the equity is worthless - people have had enough of being hit by price rises (as the UK also have extremely high housing costs/rents, utility bills have been increasing for a decade, and people are still spending a load of money on stuff that doesn't even contribute to their well-being like a holiday would - such as drinking too much, smoking too much, spending too much on SkyTV and being couch potatoes). However we can't tell other people what to do - we can only control the strategic direction of TCG - and it needs to be vertically integrated in my opinion - oh yeah, and stop paying people a fortune for doing nothing but debating the colours of logos or for talking about how the trend towards Bobo-ism may come to drive the excess financial wealth which has emerged at the same time as significant wealth inequalities across society away from the TCG traditional offering.

I would say if shareholders want a return forget trying to generate a profit after the economy got f88

Hi all,

As I see things the economic policy-makers are making things worse not better for the majority of citizens ....plus their policies are completely contradictory ...they are encouraging oil production by keeping the oil price low (companies are forced to max out production and drill as fast as possible to try and achieve their return on equity promised to shareholders) and yet the policymakers are cutting infrastructure spend, bank lending, new business activity, and have told car companis to produce smaller engined cars etc.... so at the macro level you have policymakers foot full on the gas in terms of encouraging oil production (literally forcing the companies to drill/max out proeudction whether it's in their economic interest or not) and on the other hand they have bled the rest of the eocnomy dry, caused massive levels of financial inequality, and now won't invest anything like enough in resurfacing roads, electrifying railways, new roads and bridges, decomission old power plants and return site to nature reserve/natural condition, build up new utilities that are less carbon intensive such as gas-fired power plants and tidal farms.

So the policy at a macro level seems bizarre to me - from a financial perspective it's lilke it's been designed to encourage exactly what policymakers say they don't want the future to look like ....

Regarding TCG as a business it needs to continue to focus on broadening its range of destination, increasing quality, and lowering costs - however lowering costs and broadening its range of destinations are simultaneously mutually achievable - just open up new routes/hotels in places which are seeking economic development and cut down on the offerings to places that are increasing prices too much just because they are well-established - they are lucky to be well-established and benefit from a better economy than the other places which would love the business of TCG. Hence TCG has the bargaining power - not the hotels/resorts/destinations thinking they can bleed TCG shareholders dry.

Hi Kamakaze,

One reason is that holidays are good for a person's personal developmet in life - hence the tide of history could well be in favour of equity investors in the travel sector - holidays to interesting places broaded the mind and give people a chance to realise that what we are (in our own lives) is largely related to the culture around us/in which we live - just realising this is reason enough to make people happier and more cooperative - ergo holidays are better than sitting at home watching TV.

I think the only way investors in the oil sector are going to see fair returns on their capital is if the Green Party comes to power - as the way to reduce global emissions is not through low oil prices (the oil companies will not go bankrupt but with emerge from a restructuring with even more aggressive drilling plans to pay back the new loans), but to have higher oil prices as this will remove the pressure from oil companies to drill so much in future as they can satisfy their shareholders/lenders in terms of capital return metrics without needing to grow production (if the oil price is higher).

Guys, the USA rips everyone off who produces oil.

I don't even need to go into the details because for the past 30 years the US governments policy to keep oil artificially low in price has led to Gulf War 1&2, a complete lack of development/economic growth in Nigeria despite having some of the highest quality, largest, and most accessible oil resources on the planet, continued tyranny in Saudi Arabia and a lack of widespread spreading of the oil wealth amongst the population, I sort of think a lot of the rhetoric/cold war against Iran is to do with keeping the oil price low, the invasion of Libya in 2011/destruction of that country, the chaos in Venezuela, the green light for the oil sands in Alberta - Canada and the issues with the oil sands projects being they produce 4.5 times as much pollution per unit of energy produced as do conventional oil projects and are 450% more inefficient in energy use/water use in the extraction of the oil, the civil war in Cabinda, Northern Angola, the former insurgency in Columbia, the austerity since 2015 in brazil, the removal of 80% of currency in India in early 2016 which affected the poorest the most as they relied as small denominated bills/cash the most for trading, the agreement with Putin not to rock the boat and to keep a strongman in charge in Russia instead following democratic elections (and the subsequent annexation of Crimea and civil war in Ukraine), the use of almost slave labour in Qatar imported from Third World countries and often denied a ticket home until they have worked for several years for that ticket, the lack of economic development in Ghana and the very low tax rates on the oil industry there (about 28% compared to more typical levels of 45-80% globally), the reduction of environmental regulations to sort of say we don't really care if you continue to flare off natural gas to allowing drilling to proceed at maximum possible speed in the Permian, and Dakota, shale plays.

I could go on but if you look at the oil price you will nearly always see that whenever it falls is after some major war or insurgency/revolution in a major oil-producing part of the world.

Or it could just be coincidence, but if the US do consider themselves to be the world's police force, they it would only be in human nature to police things very much in their own interest - and people in the US tend to believe their self-interest is in having a low oil price - even when loads of oil companies went bankrupt as in 2016 somehow the major banks in the USA found another $40,000,000,000, which they leveraged up to $160,000,000,000 to refinance the shale sector, the oil sands sector, and pretty much any other company that was willing to load up on debt and keep drilling flat out (although often shareholders were wiped out it didn't put any of these companies out of businesses as they just did a pre-pack admin, loaded up with a load more debt, and drilled evern more/even faster).

Hi all,

Those hear who wiped out the equity
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I doubt very much you'll be able to clear your consciences by making a few posts on here saying that it's only money and suggesting people speak to the Samaritans if they are considering suicide.

The point is there has been far too much destruction of equity value over the past decade - the government needs to look into it and people need to realise that just because the City of London pays them a few million to destroy other people's lives it shouldn't (if they are normal human beings) ever be something they can clear their consciences of.

Time for the City to stop destroying equity value and to actually figure out an economic models that provides genuine growth which accords with what people what for their future lifestyles, along with more stable share prices.

However, for those brought up on stories of boom and bust I guess it's too much trouble to figure out if a calmer, more stable, more cooperative, financial system could be set up?

Hi all,

Those hear who wiped out the equity I doubt very much you'll be able to clear your consciences by making a few posts on here saying that it's only money and suggesting people speak to the Samaritans if they are considering suicide.

The point is there has been far too much destruction of equity value over the past decade - the government needs to look into it and people need to realise that just because the City of London pays them a few million to destroy other people's lives it shouldn't (if they are normal human beings) ever be something they can clear their consciences of.

Time for the City to stop destroying equity value and to actually figure out an economic models that provides genuine growth, batter lifestyles, and more stable share prices.

KaiSharp,

If you work for a bank or have influence then why don't you feel some shame …. people investing in PMO did so knowing that they were investing in growing Oil and Gas production and a growing global economy - these are the sorts of people who want to make the world a more fun and active place - they are not trying to hog the natural resources of the world purely for themselves (if everyone behaved like that how would you live?).

Hence if you have any influence, you'd use it to try and get the market to reflect a fair value for all PMO has achieved, the SeaLion assets, Zama, Big-P, Catcher, perhaps even Solan can produce 20,000 bopd if P3 and P4 wells are drilled in 2020). Given all of the assets, and the fact a world of 6.8 billion people need oil if they are going to serve the economy and raise the general standing of living - which as you seem to believe in self-interest will also benefit you in your life - then whatever influence in the markets you have I'd appreciate it if you'd consider using it to getting this share price up to a reasonable valuation of say £2.75. Surely this is much more in line with a true valuation of the assets and more in line with other companies with similar debt levels and EBITDA, such as Kaz Minerals which has a market cap of £3.2 Billion yet has very similar financial metrics to PMO in terms of dollar debts and future estimated EBITDA - yet PMO only has a market cap of £0.81 Billion.

There is no reason at all why Kaz Minerals should have this huge valuation premium over PMO - they are both producing natural resources - therefore both are equally disliked by the greens logically speaking - yet most of the world's 6.8 billion people highly value the efforts these companies are making to keep the global economy supplied with the natural resources which it needs to provide a decent standard of living for all the citizens trusting in the social/financial system instead of resorting to protesting/yellow best protests/violence/and other forms of behaviour which emerge when trust in the system is let down by the financiers and economists who are meant to be running it in a way which means it is easier for people to live within society than to form new systems and to break away from an old system which no longer serves them.

Hi Kaisharp,

If everyone is self-interested then that means that you are also …. hence the fact you posted was also in your self-interest (unless by your own reasoning you wouldn't have done it).

However, you say the price is the sum of all the actions of all the individuals (assumed to be self-interested actors) who have an influence upon it - from the person drawing up well-designs on contract for PMO, to the oil rig workers deciding what is the best speed of drilling to undertake the job at, to the financiers who are trying to increase their own bonuses/incentives by the financial actions which they take.

All I've come to conclude is that it's far too complicated for anyone to predict how the results of all these different actions of the different people will interact/(and intertwine with those of other people in other companies), in terms of creating shareholder value. And even if shareholder value is created by a company it may not be recognised by the market for many years …. the share price does not necessarily have to reflect the value of a company … but only of the views of the people/algorithms involved in setting the share price.

Unfortunately this means the market is not a very good place to go for companies wishing to raise money …. as why would you raise money from people who don't believe that the value created by your hard work should be recognised in the share price …..as traders seems to believe a Casino model is more appropriate for setting share prices rather than a fundamental value model.

Just some thoughts …. yes it's good to take some amount of personal responsibility in life in my opinion …. but also it's probably good to remember that there are way too many factors which can randomly impact a person's life than they can ever even become conscious of … never mind have any control over.

Also, there is nothing wrong in my opinion in people saying the market a few years ago valued PMO at £1.80 per share, and in 2011 it valued it at £5.20 per share.

What people need to debate is that is it a good thing to a financial market in which prices can become so irrationally exuberant (over-valued) and so irrationally depressed (under-valued) such as PMO at 20p in 2016?

I personally think the market encourages short-term greed because of these wild swings in price ...surely a steadier market which pays more attention to fundamental value would be appreciated by the majority of shareholders? Vote for a steadier/calmer market, more focussed on long-term growth, and which pays more attention to economic fundamentals/fundamental value (rather than algorithmic trading), is what I would like to see being the UK government's view on the City of London.

But why do companies listen to politicians - it's not like the voters elect one party or another on the basis of whether that party is going to ban drilling for oil or not - most voters will take into account a range of issues hence an election result never tells politicians what the voters think is best with regard to a single issue like drilling for oil and gas.

Also shouldn't it be down to local communities to decide on whether drilling for oil and gas is legal in their own local area?

I mean at the end of the day the central government is not omnipotent - they don't understand local issues as well as the local people themselves - what a crazy system of governance if economic decisions such as drilling for oil become the responsibility of politicians. The economy should be the responsibility of economists - if the economy needs more oil to maintain people's living standards, reduce poverty, and to provide a good quality of life, then why wouldn't people want this?

It is possible for central government to make mistakes you know - all I see if the communities around me becoming poorer, and people's lives becoming less worthwhile, due to lack of finances/high oil prices. Sounds to me the evidence is self-evident that the economy needs more oil and gas and that most citizens don't want to be poorer just because some politician thinks they would like to make the citizens worse off. So arrogant these politicians - respect to the oil workers who do a good weeks work and actually benefit me and you - don't disrespect these hardworking people who have done more for economic advancement in a few months of their working lives than any politician has ever done in years in office (paper shufflers and repetitive voice boxes they are).

A lot of people don't even seem to really understand that each billion is one thousand million.

Hence the cost of $61.6bn is 62 thousand lots of one million (in dollars).

I'm afraid I don't see how economics can work when most of the population, and especially many politicians, don't really understand arithmetic, scale, or proportions - in a financial sense.

The fines that BP paid bore no relation to the damage done - the Exxon Valdez oil spill off Alaska in 1988 was worse because the oil is still there clinging to the Alaskan coast - whereas in the warm water of the Gulf of Mexico the oil have dispersed, evaporated, and decomposed many of times quicker.

The fine was very convenient to the people who wanted BP to have to issue more debt - imagine what BP's share price would be now if they hadn't had to pay out $62Bn in cash - they would have zero net debt, and if you imagine the market would also factor in this would allow BP to borrow far more cheaply in today's debt market, as well as holding $62Bn more in shareholders' capital compared to today's financial position - then probably a share price of around double, or £12 per share would be a good guesstimate of the current share price without the Gulf of Mexico fines in 2010.

It's a real shame for all those long on BP shares as the company was clearly massively undervalued by the market from 2002-2009. Yet something then happened which was very convenient for those who had missed the boat on BP shares - i.e. a $61.6Bn fine.