Dear Editor,
So, Exxon’s stock price fell 12% in the immediate aftermath of the ruling by Judge Sandil Kissoon relative to insurance coverage. The holding by Judge Kissoon is being hailed far and wide as a “landmark” one. The only exception, and it is a most conspicuous one, is all of the PPP Government, none more than the Vice President, Bharrat Jagdeo, and the even more Attorney General, Mohabir Anil Nandlall. Exxon’s shareholders ran for cover earlier in this merry month of May, when some of them unloaded their shares. To put this into perspective, a 12% stock price decline within such a brief period of market operations, all of three days, is not just a double-digit decline, but a precipitous one. This takes on added weight when one considers the highflying status of Exxon among Wall Street analysts, and others who look upon the company and its prospects (Guyana) as a special darling. In other words, Exxon is the stock that just has to be had.
It would have been some real heavy hitters to make that kind of dent in the share price. That is, shareholders with huge holdings of the Exxon common stock, such as in tens of millions of shares. For Exxon to decline in that short space by 12% is more than a hard fall. It is groundbreaking and all came about from the ruling of the same description by Guyana’s Judge Sandil Kissoon. From my reading, shareholders did not like what came out of Guyana, the most watched country in the universe. In fact, I would go so far as to say that some of them are more than nervous, so they headed for the exits. They remember Mocambo and Deepwater Horizon and the Gulf of Mexico involving the UK’s BP. They also recall the Exxon Valdez in Prince William Sound, Alaska, and Exxon’s spill into New York-New Jersey waters, decades ago, and that makes them highly uneasy. Highly uneasy because Exxon has a reputation among its peers for going past the limit. In a poor, technologically at sea new Third World oil producer like Guyana, that is paradise for Exxon, which now has an unlimited and uninhibited (literally both) range in its fields of operations offshore.
With a 12% share price fall, it means that in the space of 72 hours, tens of billions in market capitalization went down the tubes. Not to worry, because Exxon is poised in its fundamentals to bounce right back: the underpinnings are there, and so also are the robust prospects, a lot of which is vested in Guyana’s rich oilfields. Steve Coll, author of “Private Empire, ExxonMobil and American Power” made the point that Exxon has 25% of its production coming from Guyana, which gives this country a tremendous amount of leverage. Most inexplicably, definitely regrettably, this massive leverage is what the PPP Government, sitting in the driver’s seat, yields to Exxon without so much as a crumb for it, even the pretense of a fight for it. How does Vice President Jagdeo sleep, live with himself? To what extent does this strip the Attorney General of Guyana, Anil Nandlall, of his learning, his dignity, his standing?
Meanwhile, the shareholders of Exxon have paid note, and how. What was once the sure thing of Guyana, has now become a place of some uncertainty. Risks and probabilities, and the costs of covering those risks to a reasonable level. Finally, somebody (five of them in fact: Messrs. Collins, Whyte, Janki, Jairam, and Kissoon) have made the people at Exxon and their shareholders pause in their counting the fabulous eggs coming out of the Guyanese oil hatcheries, and arrive to a startling place. There are human beings over there in Guyana, and not just oil. Those flesh and blood people are concerned, more than apprehensive, about the devastations that could emerge out of a life changing oil spill, since they could lose thrice, and by irrecoverable margins. First, there would be the costs associated with internal damage to Guyana, which could be insurmountable by themselves. Second, the spread from a severe spill could reach into the region, which has its own liabilities, another unending instance of cringing. And third, the unhappy result would be that all the oil money that should have, could have, come to Guyana goes up in a puff of smoke.
So, in the runaway excitements about Guyana and its oil wealth-high quality and cheap-there is now that ‘but’ planted in the minds of the people, who were only too delighted to count their dividends, add up their profits, and cheer their shareholders. There is that one new thought now swirling in the canyons of Wall Street and the high corporate offices of State Street and Blackrock, and it is this: what are those Guyanese people going to coming up with next? It is what worries, sends scuttling.
Sincerely,
GHK Lall
