Pacific Rubiales ( Innumerate or deceitful? (UPDATED)


I hate to keep picking on this one company. But reader RR points us to an interview with Pacific Rubiales CEO Ronald Pantin in the Colombian magazine Semana:

La producción en 2010 creció casi un 80 por ciento, al pasar de 122.000 a 193.000 barriles.

In translation: “Production in 2010 grew almost 80 percent, to go from 122,000 to 193,000 barrels.”

A couple problems here. First, in the Bloomberg transcript of the company’s earnings conference call a month ago, the same guy said year-end oil production was 183,000 barrels a day, not 193,000. It’s possible that either Bloomberg or Semana misquoted him, and maybe he’s being consistent. I’d love to know: I called to ask about these numbers, and no one was available to comment at the company’s offices in Toronto. I called the offices in Bogota but was transferred four times to people who didn’t comment. Then the line died. When I called Bogota again, the line cut off without being answered. I sent an e-mail to the company’s investor relations officer and am awaiting a reply.

The company wrote back and said Pantin gave 193,000 on the conference call, and my transcript was incorrect. My apologies to readers for relying on inaccurate information. And thanks to the company for getting back to me.

The second error is harder to explain away. Pantin says output increased 80%. Sorry, dude, but no. The company wanted an 80% increase. That was the goal. Output grew 50% if you believe Bloomberg or 57%, if this 193,000 number is right.

Now, all this doesn’t matter all that much, right? The company keeps pumping more and more oil and making more and more money, which is good for shareholders. As someone who is unlikely ever to go long or short stock, I don’t really need to care about these corporate governance and communications errors. But here’s the thing. Oilfield, pipeline and refinery operations require people to be fastidious with their arithmetic (and calculus, for that matter). Carelessness in the oil industry can punish not just the company or its shareholders, but the entire world — as the Deepwater Horizon disaster reminded us. Pacific Rubiales has graduated from being a little company poking holes in the ground to being a significant oil company that’s looking to expand. It’s important for everyone that the company be detail-oriented. And since we can’t count on the local press to hold the company’s facts up to scrutiny, the job falls to some dude on the intertubes.

2 thoughts on “Pacific Rubiales ( Innumerate or deceitful? (UPDATED)

  1. westslope

    Good on you setty.

    In the last conference call, CEO Pantin made a couple of small data errors that were, for those paying attention, corrected by colleagues a few minutes later in the presentation. I suspect that he is data-typo prone. That in itself is not of major concern.

    The thrust of your conclusion is correct, and we own the shares! But let’s not get carried away by comparing to operator error in the BP Macondo well disaster in the Gulf of Mexico. Sheesh! At worst, the market capitalization shrinks a billion or two and guys like me step in and buy more. Market-weathered pension fund managers sit tight.

    I’m almost glad the company misses on the communications occasionally. Otherwise I would fall head over heels in love with Pacific Rubiales, the corporate culture, the whole kit. Es la honda. Sabes? And in the process lose all rationality and cool perspective.

    The upstream oil & natural gas sector numbers are complicated at the best of times. Clarity is helpful. The fact that Pacific Rubiales operates much more than own production is significant–very politically significant–but should not headline communications.

    Whether the company wants to use net to company but before royalty production volumes, or a net to company and after royalty (NAR) number to headline announcements, it does not matter so much as the company should ideally stick to one time series consistently.

    => NAR production would be preferable and should consistently headline. Before royalty own production numbers would facilitate comparison with Colombian and other peers.

    => Production capacity or production capacity awaiting infrastructure completion is good to know but in no way should substitute for bona fide production numbers.

    End of unsolicited, self-interested advice. Rock on Pacific Rubiales!

  2. Some Reader

    Thank you very much for digging into the PRE information, Setty. Why no mass press outlet takes them to task baffles me.

    I don’t quite buy what Pacific says now though. After their attempted cover-up to say that they meant PRODUCTION CAPACITY when they said PRODUCTION, in statements and graphs whose figures all depicted PRODUCTION, their now saying that they said 193,000 barrels a day to Bloomberg rather than what Bloomberg recorded, now requires verification in order to trust the truth of the statement.

    What I wonder is what the PRODUCTION numbers are independently of what Pantin says.

    All the best.

    PS I wonder if Westslope’s reference to errors in Pantin’s statements include the 183,000 production figure. If it does, then even if it was corrected later by colleagues , it was his statement and the Bloomberg transcript is not incorrect, as PRE says.

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