Benjamin, having just gotten back from this year’s SME conference, starts off by discussing a concept that kept on coming up: how are majors going to manage selling off assets? Traditionally what is done (and what they should be doing) is buying assets in bear markets, and selling them in bull markets, but the reality is that they do the opposite.
Benjamin contends that there are two options: divesting them to their shareholders, or liquidating them for cash. All stakeholders must be looked at, and management may not always be doing what is best for their shareholders. Benjamin states that the best way for management to get good value for their shareholders is for Majors to spin out unwanted assets into a new junior or mid-tier company, as opposed to liquidating them into private equity funds. This would not only be good value for shareholders, but it would be much better for the industry.
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