Former BP CEO Tony Hayward is receiving hearty handshakes for the $2.1 billion deal he has organized for fields holding a reasonably rich 356 million barrels of oil in Kurdistan. The agreed merger of Hayward's Vallares with Turkey's Genel Energy is his "continuing professional rehabilitation," Forbes says in one on-line piece, and "Tony Hayward's Revenge" in another. "Tony Hayward Makes a Comeback," says the Wall Street Journal. "Turkish Delight for Hayward" says Upstream magazine.
Are these assessments correct -- has Hayward (pictured above in less-happy times), 17 months after the devastating BP oil spill in the Gulf of Mexico, demonstrated again that he has the right stuff? Mmmm ... no. What he has demonstrated anew is his taste for living on the edge, cutting corners and risk-the-company deals.
Those are not necessarily deadly attributes in the highly risky oil business. What makes them so hazardous is that Hayward does not appear to know his deals could jeopardize the company he happens to be running. He just stands on the ledge whistling. It is the same attitude -- one still apparent in his former company, BP (more on this below) -- that helped cause the Gulf spill of 5 million barrels of oil.
One can see what attracted Hayward to Kurdistan. He is in line to earn $24 million in shares in the merged company, and possibly more based on performance. He again is CEO of an oil company, albeit a pipsqueak compared with his old one. He is in one of the most exciting frontier oil regions of the world.
On the downside, Kurdistan is in perpetual dispute with Iraqi national leaders in Baghdad. The primary risk is that the entire deal could go south should Kurdistan and Baghdad plunge again fully into daggers drawn regarding the right of Kurdistan to sell and export oil. If that happens -- if Kurdistan or the Vallares properties alone are unable to freely export oil -- it would demolish the main rationale for Hayward's plans to list the merged company on the London stock exchange.
All of this risk-taking suits Hayward's new partner, Genel chief Mehmet Sepil. Last year, he was fined $1.5 million in Great Britain for insider trading, and thus could not have listed his company on the London exchange on his own merit, write Christopher Thompson and Anousha Sakoui at the Financial Times.
So the Hayward style (which to be fair was also his predecessor John Browne's style) continues in the land of wildcatting. But with his departure, it was supposed to be eradicated from BP itself. Yet as suggested above, there is evidence it has not.
We see this most recently in Russia, where Hayward's successor, CEO Bob Dudley, happily signed a blockbuster Arctic deal with Rosneft a few months ago that flouted contractual fidelity to an existing Russian partner. Courts effectively vacated the deal, and ExxonMobil, unhindered by any pre-existing marriage, picked it up last week in BP's place.
This has been so much blood in the water as far as BP's Russian partners are concerned, and they had masked Russian forces raid BP's Moscow office in supposed search of incriminating documents.
BP shareholders are clearly worried. In a piece this week, the Wall Street Journal's Guy Chazan reported that BP shareholders are demanding that management show that it knows how to right the company. He quotes Paul Mumford, senior fund manager at London-based Cavendish Asset Management, which owns BP shares: "BP is increasingly viewed as a company that's lost its way."
A few months ago, this blog argued that BP is such a serial offender, that it was time for shareholders to take matters into their own hands, and either totally shake up or say goodbye to the company. One option that's been discussed since the summer is breaking up BP into three or more parts. That is sounding more and more sensible.
Ex-BP Chief’s Firm to Buy Iraqi Oil Company in $2.1 Billion Deal
By JULIA WERDIGIER
LONDON — Tony Hayward, who resigned as chief executive of BP amid the fallout from the Gulf of Mexico oil spill last year, is set to become the head of another oil company.
Vallares, the investment vehicle Mr. Hayward co-founded with the financier Nathaniel P. Rothschild this year, agreed on Wednesday to buy Genel Energy International, an oil producer in the Kurdistan region of Iraq, in a $2.1 billion deal.
Mr. Hayward will be chief executive of the new company, called Genel Energy. Rodney Chase, the former deputy chief executive of BP, would become chairman and Mr. Rothschild nonexecutive director.
Under the terms of the transaction, Vallares will issue $2.1 billion of new stock at £10 ($15.99) a share to acquire Genel in a reverse takeover. The owners of Vallares and Genel will own equal shares in the combined company. The Turkish billionaire Mehmet Karamehmet currently owns 56 percent of Genel, while the company’s chief executive, Mehmet Sepil, owns 29 percent.
The deal comes months after Vallares raised £1.35 billion ($2.1 billion) from investors through a London stock listing in June, with the expectation of buying oil and natural gas assets in Russia and the former Soviet states, the Middle East, Africa, Asia and Latin America.
Genel has stakes in two producing oil fields, a major natural gas discovery and significant exploration acreage in Kurdistan, the semiautonomous northern province of Iraq, Vallares said.
“Our investors are acquiring a strong existing business with excellent producing assets, a fine team of technical and operating staff already in place, and immense potential for future growth,” Mr. Hayward said in a statement on Wednesday. “The Kurdistan region of Iraq is undoubtedly one of the last great oil and gas frontiers.”
Mr. Sepil, who will become president of the new company, was fined £967,000 by the British financial regulator, the Financial Services Authority, in February 2010 for trading in Heritage Oil based on inside information about drilling tests.
The newly combined entity plans to file a prospectus in October, allowing it to move forward with its listing in London. The deal is subject to the approval of the Kurdistan government, which the company expects to receive later this month.
Following the transaction, the company plans to have sufficient funds “to participate aggressively in the significant consolidation we expect to see in the region over the next few years and to expand elsewhere if good opportunities arise,” it said in the statement.
tim ohanlon...
aberdeen
Nathan Rothschild's listed cash shell Vallares is involved in a quiet, no holds barred fight in the distant oil fields of Kurdistan, with a secretive Chinese military controlled company Poly Energy. The fight which has important implications for Western oil companies is to acquire control of one of the largest oil field in Kurdistan, Tak-Tak.
Tak-Tak, one of the last so-called elephant fields is relatively under explored, but from the little that has been explored, experts estimate a reserve of approximately six. billion barrels in the ground
The field is presently owned by Sinopec a Chinese state company and Genel Energy, a company owned by Memet Kara Memet, the richest Turk in the world.
This is when Tony Hayward, the former boss of BP, who is Nathan Rothschild's partner in Vallares, sensing a good opportunity moved in, only to find himself in a head to head with Poly energy, who backed by the Chinese state, are trying to acquire complete control of the biggest block in Kurdistan for China Inc.
Poly Energy is, we understand, being advised by Shiv Shankaran Nair, a reclusive Maltese millionaire and deal maker, who has thrived on front ending transactions for Chinese State Companies in Africa.
Nair who counts The Barzanis, who run Kurdistan almost as a personal fiefdom, as his personal friends , has been shuttling between Kurdistan, Beijing and Ankara on behalf of his Chinese client, trying to persuade the Kurds to allow a 100 % Chinese takeover of their biggest field.
The Vallares bid which is around the 2.1 billion USD mark in a mix of cash and equity options has been trumped by a straight cash offer of 3 billion USD by the Chinese.
The only victor out of this fight is the diminutive Turk, Memet Karamemet, who is rubbing his hands in glee seeing an asset he paid a hundred million dollars for six years ago, being fought for at ten times what he paid for it
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