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Post by astranticima on Apr 27, 2015 11:33:07 GMT
I thought we could get this forum started with a nice discussion of the May 2015 Preseen Industry. As you probably know, it's the oil and gas industry so there's a good amount of information out there to improve our understanding of the industry. The Astranti Industry analysis compares the preseen company to "Premier Oil" which is a real world company - has anyone else looked into this company? astranti.com/cima/strategic/casestudy/preseenvids.htmlPremier oil website: www.premier-oil.com/premieroil/What are the future sustainability concerns for Slide? Are there any new directions in which we can take the company? Thoughts on corporate governance? Please share your thoughts below Look forward to reading your comments! |
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Post by cimapb on Apr 28, 2015 13:27:45 GMT
Future direction for Slide could be to become an integrated oil and GAS company like BP,Chevron, Total oil, Petrochina etc.
New products, new markets - related diversification. Risky but since it's a related diversification it can leverage on existing market knowledge and product knowledge.
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Post by cimapb on Apr 28, 2015 13:31:46 GMT
The the non- executive Chairman do not have technical qualification and experience in oil and GAS industry.Hence, he may not be able to challenge/advice the decisions taken by the CEO or his team.
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azly
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Post by azly on Apr 29, 2015 17:02:45 GMT
The the non- executive Chairman do not have technical qualification and experience in oil and GAS industry.Hence, he may not be able to challenge/advice the decisions taken by the CEO or his team. But there is an abundance of expertise on the board and the chairman being independent and with a fair share of management experience at board level would be able to decide on the merits of the different points of view of all board members. Further there is nothing stopping him from getting independent expert opinion if need be. |
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Post by beccyr on May 11, 2015 16:04:54 GMT
There are definitely issues around governance with no nomination committee and the one NED with financial experience isn't on the audit committee.
I think there's some big areas where there's little info in the preseen which could indicate possible questions. Very little mention of IT, no mention of internal controls and the only KPIs are those mentioned in the director's remuneration report. There's mention that Carbon emmissions are reported in the annual report but no mention of any integrated or sustainability reporting. In a time of oil price falls and volatility what assurance can the board provide that their CSR reputation is maintained and is not just based on fine words.
The risk analysis identifies the risks but doesn't map them.
Product development or diversification with investigations into fracking or into other substitutes such as bio diesel could be a big topic to explore.
With subsidiaries in 7 countries political and currency risks could also be explored more.
What else have people thought about in connection with the pre-seen?
Beccy
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Post by beccyr on May 12, 2015 15:30:09 GMT
Another thought - i noticed in the examiner's report a slight tone of surprise that students hadn't looked in detail at the cash flow of Look. Has anyone prepared a cash flow statement for Slide? What comments could be made?
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tomw
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Post by tomw on May 17, 2015 15:42:16 GMT
Sorry but i am confused to where people are getting that there is no nomination committee. It clearly states that Sunny Tang and Anne Taylor sit on the Nomination and Remuneration committees.
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Post by beccyr on May 18, 2015 12:32:07 GMT
Do 2 people really make a committee? Also there's no chair? And neither have any oil industry expereience. I guess I should have said no EFFECTIVE committee.
And you could argue the same for the audit - only 2 people and no-one independent on it.
Also note that there's no report from either committee provided wheras there's a page for remuneration.
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dariaoffin
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Post by dariaoffin on May 19, 2015 0:04:34 GMT
Future direction for Slide could be to become an integrated oil and GAS company like BP,Chevron, Total oil, Petrochina etc. New products, new markets - related diversification. Risky but since it's a related diversification it can leverage on existing market knowledge and product knowledge. Not sure it this should be the first choice since it is left very clear that Slide wants to continue to build it's strengths of being an upstream company and even tries to sell it's operational wells to concentrate on exploration. It also goes against it's mission... |
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dariaoffin
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Post by dariaoffin on May 19, 2015 0:30:48 GMT
H! Here are a couple of comments as well: 1. I have also chosen Premier Oil as an example company... There are some differences but it is very similar to Slide. Premier made a loss... 2. I was also confused by no mention of metrics for the environmental and social reporting - may have a question about this and KPIs... 3. I agree that a good growth strategy will be fracking overseas and other sources of energy (especially clean). 4. Huge political and currency risks due to subsidiaries all over the world 5. Haven't done the Cash Flow yet but will do now  6. There is no mention of Risk Committee... It may be useful to have one since the company is large and does have a lot of different types of risks to manage... 7. Do you think Product Portfolio here is important or not? 8. Also, how does Fouce relate to all that? Shall we do the Fin Analysis on it as well? 9. What did you think about segment analysis? Will you diversify any of the segments? Which one? 10. This industry is very heavily reliant on technology for its activities, environment and H&S, as well as decision support systems. I think we might get a question here... Especially regarding the use of Big Data... 11. Any big issues in Financial Analysis? Reduction in margins despite increase in Revenue... Due to increased costs of sales ... Strange... Since decline in oil prices revenue would have decreased too... Current Ratio low... Huge dividends paid out... Otherwise all good... That's about it for me... Still doing some homework though... |
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azly
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Post by azly on May 19, 2015 17:23:24 GMT
If the Cima examiner now states that real world industry analysis was expected then why was it explicitly stated that prior to the examination that this was not an expectation. A confused examiner I guess.
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Post by vishnuchetty on May 19, 2015 19:20:46 GMT
should fracking be undertaken, considering that the potential risks such as water and air pollution, cause of cancer, huge amount of water consumption,etc
does this justify the return, surely there is a conflict of interest in its mission, to be most successful oil exploration company in the world, while contributing to the wellbeing of people and the environment.
Any responses?
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dariaoffin
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Post by dariaoffin on May 20, 2015 15:45:30 GMT
should fracking be undertaken, considering that the potential risks such as water and air pollution, cause of cancer, huge amount of water consumption,etc does this justify the return, surely there is a conflict of interest in its mission, to be most successful oil exploration company in the world, while contributing to the wellbeing of people and the environment. Any responses? Actually, according to the industry, it has not been proven exactly what fracking causes, but Oil companies do agree that it may be dangerous... So legally they are not breaking any laws, but ethically and morally it is not very good... But hey, how many ethical Oil companies are there really...? |
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keith
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Post by keith on May 21, 2015 2:28:33 GMT
Darriaoffin thanks for your analysis, In addtion to your points would also like to note the following :
1. Investment into a new/untapped field probably africa linked to stakeholder relationship, farm in-out, ethics etc...
2. Aquisition by fouce rational or logic for divestment and whehther to divest or not?
3. Slide's Strategic direction is investment or exploration focused and maybe unsuitable to the current enviorment plus the objectives doesnt meet the SMART criterion.
4. As you said governance, KPI, IT are all probable areas
thanks
keith n
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Post by eastbury13 on May 22, 2015 10:30:16 GMT
Hi All,
A quick question from me. If there is an acquisition opportunity in the exam, do we have to get our shareholders to agree to buying the potential target. I just wondered if our shareholders can block the acquisition if they don't agree with it.
Thanks
Steve
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dariaoffin
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Post by dariaoffin on May 23, 2015 17:36:01 GMT
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dariaoffin
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Post by dariaoffin on May 23, 2015 21:57:02 GMT
I'm trying to see if there is a way to calculate the sensitivity of Slide's operations to price of oil... Maybe using the relative drop in margins in relation to drop in oil prices... But that's assuming that all other conditions are the same (including gas price) which is not realistic...
Hmm...
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dariaoffin
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Post by dariaoffin on May 23, 2015 22:49:39 GMT
Hey, did anybody purchase the Astranti's written analysis of the industry and Slide? (not videos, the PDF documents)? There are so many mistakes in there... Bad... ;( Also, for some reason they say that Slide does not have a Nomination Committee... But they do... What's up with that...
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Post by eastbury13 on May 24, 2015 17:00:12 GMT
Hi Daria,
I did buy their industry analysis and found it strange they say they don't have a nominations committee! What mistakes have you found in there?
Do you know my answer to my question further up, I can't remember from my F3 days if all shareholders have to agree to being taken over, or if it is down to the director's to decide.
Thanks
Steve
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dariaoffin
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Post by dariaoffin on May 24, 2015 21:20:49 GMT
Hi Steve,
Yes, they did say with big exclamation mark that Slide has no Nomination Committee (and then discuss it in the next analysis)... Otherwise the mistakes were minor - numbers missing, spelling mistakes, etc.
But in their Analysis of Slide in Porter's 5 Forces one force is listed wrong way round, I believe. I haven't completed this document yet...
Regarding decisions by the shareholders. Usually Board of Directors present the decision and shareholders vote on it. Depending on the Articles of Association a specific vote "pass" has been set. Majority can be said to be 60%. If you remember on of the hostile takeover defences is to change the Articles of Incorporation to say that to agree on the takeover there must be at least 80% (or any high figure) agreed.
Hope this helps...
D
P.S. I have a question regarding Profit on sale of PPEs (operating wells). There are disposals in PPE during the year yet we have no indication of loss nor profit in P&L regaring these... Where do they go?
Thanks!
Daria
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Post by kathryn on May 25, 2015 13:43:13 GMT
does it mention what continent / area kayland is located? or am I just missing it totally?
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Post by eastbury13 on May 25, 2015 15:47:02 GMT
Daria - Thanks that really helps. I was just thinking about if a take over happened and how to write about the issues in the exam.
That is a good point you make about the disposal in PPE. you can see clearly the line in the P&L in regards to profit on disposal of the intangible Exploration and Evaluation Assets and not PPE.
It could be in Revenue or COS. Because if they are operating wells which are producing oil and gas which we are then being sold on, I assume they are posting the depreciation of those wells to the COS line to match the revenues generated. So maybe and loss/profit on disposal goes to the COS line where the deprecation maybe being posted.
Kathryn - It states that Kayland is a European country. So I think that points you to know that they are not in the OPEC regions.
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Post by kathryn on May 25, 2015 16:29:54 GMT
thanks! definitely couldn't see the wood for the trees!
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Post by eastbury13 on May 25, 2015 18:39:22 GMT
I am not surprised Kathryn! there is so much information to take on board for this Case Study  !! |
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dariaoffin
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Post by dariaoffin on May 25, 2015 21:44:55 GMT
Guys! It was suggested - and it makes sense - that the disposal of PPEs was without any profit or loss. Which explains the P&L. But again, that's a speculation... The Sales revenue can only be a. Oil and gas sold from production b. Any financial benefits from Farming in/out. Any other sale of the assets (whether PPE or E&E) will be disclosed separately. Also, I started to think about the treatment of Provisions - especially the long-term one as it's huge. And since it's not included in the note with PPEs, it had to go as Expense in P&L. And due to the huge figure it can only be in the Cost of Sales. Which means that real COS had dropped this year so Slide is actually doing great in terms of production performance... How about that? Turns everything around, doesn't it? Strategic advice - carry on with what you are doing Slide! Heheheh WOnder if examiners will accept that? Regarding the takeover. There are a number of issues relating: 1. The valuation of the Slide by Fouce and by Directors of Slide - need to agree on something 2. Synergies / benefits / cons for both sides 3. Any takeover defensive techniques by Slide - if it's a hostile takeover 4. How to persuade Shareholders of Slide to sell if the Boards decides to... 5. If it goes ahead, what are the integration issues and how to make sure it goes smoothly and the synergies are obtained... Anything else? D |
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Post by eastbury13 on May 26, 2015 11:24:50 GMT
Thanks Daria! Lots of good issues.
The only other thing is how Fouce fund the deal to purchase slide. They have a lot of cash themselves so they could just buy us outright with an all cash offer. But an all share offer could be made also. and that can make a difference to the shareholders of Slide. If an all cash offer is made and Slide SH accept then they will be taxed. But if a share offer was made then they would share the risk that the synergies do not materialise under then new combined company.
Steve
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Post by trudie on May 26, 2015 14:19:53 GMT
Nick / Astranti - you say in the pre-seen vids that you would not recommend Slide pursues a strategy of diversification into mid- or down-stream activities.
However, one of Slide's 2014/15 strategic objectives is to 'continue to investigate areas for exploration and diversification'. Thus if we are presented with this option in the exam can we say it is a good strategic fit?? Currently I would probably argue against it but would then mention as one of my points that it could be suitable, although perhaps it doesn't fit with their wider mission statement anyway as this wants to focus on exploration. So maybe Slide needs to rethink this strategic objective...
Can you please advise?
Thanks,
Trudie
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dariaoffin
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Post by dariaoffin on May 26, 2015 16:08:10 GMT
Good point Trudie! I am not sure if you will get the answer here - you might be better off emailing it to Nick / team and asking them to help you out here... But I would not advise it either... Remember the SAF framework - the others will not fit...
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dariaoffin
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Post by dariaoffin on May 26, 2015 20:36:20 GMT
Just saw it mentioned in one answer regarding the SAF framework: the strategy is also Suitable if it supports company's Strengths, improves Weaknesses, builds on Opportunities or overcomes Threats (all from SWOT).
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Post by jeanhan1 on May 27, 2015 2:08:08 GMT
Yes, I do agree with the Daria. There is no point to clarify with Nick since the core competence is on the E&P area. I do have a question in regarding with the two NEDs from Fouce. Their appointment and remuneration are still paid by Fouce. Is it practical? What is business impact or ethical impact for it?
Additionally, has any one noticed profit on disposal of exploratoin and evaluation assets stating in incoem statement in 2013 and 2014? Do you see the significant decrease in profit on disposal of exploration? If we take the profit on disposal out, the financial performance is actually better in 2014 rather than in 2013.
Please share your opinion. If I am wrong, please do correct me.
Thanks!
Jean
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