We get them by the truckload, the busload, baskets and bags full to overflowing, computer monitors tiled to infinity. I speak, of course, of stock analysts' releases. They all read about the same: this company or that failed to meet our expectations and we are downgrading them; or this company or that beat our expectations by a penny and we are upgrading them. In a practice now endemic, companies are regularly punished or rewarded on faulty, incomplete, misdirected or capricious analysis. The result, for our industry, has been a systematic destruction of share values that simply cannot be justified, especially given the performance of many upstream sector companies of late.

I have several problems with this scenario. First, who gave the financial analysts the right to set expectations? And, more importantly, by what training or through what industry experience, do they claim the ability to perform the task reliably? By what stretch of faith would anyone assume that a 30-year-old whiz kid, who last week or last year was analyzing fertilizer futures, knows more about the health of various sectors of the upstream industry than the corporate officers and management charged with their wellbeing?

Second, who was it that decided that the industry could be managed and measured quarterly? The last time I looked, this industry was built on long-term planning for reserves replacement.
Third, who was it that decided that companies are to be assessed by performance standards that bear no relationship to current economic conditions or to common sense?

And, finally, who was it that determined that measurement and management by real economic performance - good or bad - could be replaced by measurement and management by unrealistic expectation and unfathomable accounting gobbledygook?

To say that we have reached the edge of a precipice is hardly news. And, to say that the analysts are solely to blame is a mistake. Many shameless corporate executives have taken the quarterly reporting boondoggle - with its consequently questionable accounting standards - as an opportunity to line their own pockets at shareholders' expense.

What is really broken, and what must be changed, is the idea that quarterly performance reports represent the true performance - or value at any given point - of a company, especially in an industry such as ours that should be focused on long-term strategies. More to the point, planning driven by a focus on quarterly results denies any business the ability to structure for long-term health and growth. That the flawed process of quarterly live-or-die assessment has fallen into the hands of those ill qualified to perform the analysis compounds the problem. So long as this continues, we let others dig a hole we might not be able to climb out of.

In a completely different vein, things appear to be going a bit wacky in the tech world just now. New "automatic" doors have been installed in our office building here in Houston. They operate thusly. Approach the door, grasp the handle, and pull the door open and it "opens automatically." If that principle doesn't confuse you try this one. A recent technology pamphlet, issued by an notable technology group that shall remain anonymous, states the following in a discussion of new installation and decommissioning technology for complete deck units using cargo barges and tugs. "It relies on the principle that a huge floating mass can be stopped moving without any shock if it is stopped at the precise moment when its speed is zero."

Enough said.



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