Streetwise Professor

June 20, 2013

Mullet Man Works Fast-At Destroying Value

Filed under: Energy,Military,Politics,Russia — The Professor @ 3:03 pm

The man with the mullet, Igor Sechin, works fast.  Only months after taking over TNK-BP, Sechin’s Rosneft has seen $19 billion of market cap vanish, or about 17 percent.  Most of the TNK-BP management has left, and Sechin gratuitously hosed minority shareholders, confirming to even those who are very slow learners that your money isn’t save with Igor.  Here are a couple of pithy analyses:

“They have taken over the most productive, efficient set of energy assets in Russia and many in the market fear Rosneft are already starting to impact them negatively,” said Michael O’Flynn, managing director of UFG Asset Management, which has $1.5 billion under management in Russia and doesn’t hold Rosneft shares.

. . . .

“Depriving the minority investors of their rightful dividend is penny-wise but extremely pound-foolish,” said Kraus, who doesn’t hold any Rosneft shares. “If this is how they treat minorities when they are trying to drum up interest in a privatization, how will they treat them once they have their cash?”

Rosneft named BP’s Bob Dudley to the board, where he can watch the value destruction up close and personal.   An important matter to BP, since it has a big stake in Rosneft as a result of the TNK-BP sale.  Well played again, BP.

There’s no doubt a silver lining in all this for Sechin.  The Russian government has proposed privatizing 20 percent of the company, something that Sechin has always opposed.  He’s always argued that the company’s stock price is too low, and that it is necessary to wait until it gains in value.  The price decline has given him more ammunition to fire in that battle.

And speaking of ammunition, another stockpile of artillery shells caught fire, igniting a series of explosions that have gone on for several days, this time in Saratov.

Sechin blowing up value, ammunition dumps blowing up.  Some things never change.

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  1. The Rus were originally Vikings or rather Norsemen. While the link is tenuous, one can’t help but think that Loki is rampaging through Russia causing chaos. Him or the Three Stooges are manifesting themselves as poltergeists and policy makers. God help the Russian people.

    Comment by Sotos — June 20, 2013 @ 3:28 pm

  2. Meanwhile the NSA cookie keeps crumbling with those ‘warrants’ entirely at analysts discretion (analysts like Edward Snowden!) and Sen. Paul confirms Clapper was given the questions by Sen Wyden in advance and still chose to lie rather than decline to answer, ala Eric Holder being asked point blank by Sen Mark Kirk whether DOJ spies on Congress.

    Who needs to go to Russia to experience tyranny when you can experience it here wrapped in the American flag?

    Comment by Nobody — June 20, 2013 @ 5:37 pm

  3. Given what Rosneft did to Yukos once it took it over, one can hardly be surprised it’s doing the same to TNK-BP. But then again, what do you expect to happen when you put a former translator in charge of what is now one of the world’s biggest oil companies. Even the Arabs are smart enough to put an oilman in charge of their OpCos.

    Comment by Tim Newman — June 20, 2013 @ 7:37 pm

  4. PS better add Canada Free Press to the Glenn Beck must be denounced pile. CFP journalist and private investigator Doug Hagmann’s source says DHS has spied on journalists and members of Congress in real time using NSA resources on behalf of Valerie Jarrett. In other words, Beck popped off to distract everyone but the real juicy details are now coming out – the very thing all the ‘tin foil hat’ wearers said the NSA was doing all along.

    Comment by Nobody — June 20, 2013 @ 8:09 pm

  5. Better add Russ Tice to the long list of whistleblowers who must be discredited. Maybe Beck wasn’t pulling the usual distracting stunts after all

    Tice: I saw wiretap of the State Senator Obama in 2004

    We knew of course Congress had been tapped, because Holder refused to say its not going on when directly asked by Sen Mark Kirk. But this goes so far beyond anything justifiable (like monitoring members of the intelligence committees) into J Edgar Hoover’s wildest dreams it’s not even funny…including journalists, non FISA judges including a sitting supreme court justice, and obscure State Senators (what possible classified info would Obama have access to at that time, I wonder, to justify such scrutiny?).

    Rut ro blind NSA defenders, the very type of abuses the Church Comittee hearings expose back in the 1970s that Prof Epstein insisted there was no evidence linking the NSA to now appear to have been exposed,

    Comment by Nobody — June 20, 2013 @ 10:55 pm

  6. There’s been news today on that $60 bn loan Rosneft has taken to finance the TNK-BP deal. Apparently they paid it back with money they got from China as a prepayment for a long-term contract.

    Comment by aaa — June 21, 2013 @ 12:16 pm

  7. @aaa I read that. But real super majors don’t have to do pre-pays/collateralized borrowing.

    I am still dying to know the terms on which Rosneft/Transneft borrowed from the Chinese to finance ESPO in 2009. My estimates at the time were that the terms were almost usurious. But that was based on some educated guesswork and tea-leaf reading.

    The ProfessorComment by The Professor — June 21, 2013 @ 2:59 pm

  8. Rosneft first took a loan of $6 billion from Chinese state banks as prepayment for oil exports in 2005. The company, in turn, used the money to finance its takeover of the largest production unit of Yukos oil company, after the imprisonment of the founder, Mikhail B. Khodorkovsky, an episode criticized by Western governments but not the communist Chinese mafia .

    The latest Chinese deal will most likely allow the Russian government to delay a planned privatization of 19 percent of Rosneft’s shares, which faced political opposition. It also suggests closer financial ties with the communist mafia in China, which could help Russia weather its current economic slump.

    Comment by Anders — June 22, 2013 @ 2:35 am

  9. It seems Rosneft has done a deal with the Chinese to supply 300k bpd for 25 years in a deal worth $270bn. That works out at $98 per barrel, which is a damned good price for Rosneft. I wonder what the catch is?

    Comment by Tim Newman — June 22, 2013 @ 7:29 am

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