Home' Trinidad and Tobago Guardian : February 5th 2015 Contents SEPTEMBER 2012 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | PAGE BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
Fax: (868) 623-2050 (Editorial)
Fax: (868) 623-2050 (Advertising)
22-24 St Vincent Street,
PO Box 122.
Last Friday, former Central Bank Governor
Ewart Williams asked an interesting question
at the end of a seminar at the St Augustine
campus on the issue of the diversification
of theT&T economy in light of the decline
in the prices of our energy exports. Mr
Williams questioned whether T&T would
wait for a crisis before make serious adjust-
ments to the economy.
He also suggested that this country may need to run down
its foreign reserves to 1988 levels before it got serious about
the need for adjustment.
On Tuesday, two of the largest energy companies operating
in T&T, BP and BG, reported their results for the quarter
ending December 31, 2014.
BP reported a net loss of US$4.4 billion for the quarter of
2014, which analysts said was mainly due to write-downs of
about US$5.5 billion on the value of assets in the North Sea
and Angola because of falling oil prices and the lower estimates
BG wrote down US$8.9 billion in the quarter, and reported
a net loss of US$5 billion for the quarter, which was mainly
attributable to a decline in the value of its liquefied natural
gas (LNG) operations in Australia. The fact that Asian LNG
prices are linked to oil prices means that the lower price of
the commodity in the future would decrease the value of its
Australia LNG holdings by US$4.1 billion.
In the CEO s statement accompanying the result, Bob Dudley
said something that every serious businessman knows. "We
have now entered a new and challenging phase of low oil
prices through the near and medium term. Our focus must
now be on resetting BP: managing and rebalancing our capital
programme and cost base for the new reality of lower prices
while always maintaining safe, reliable and efficient opera-
BP announced that it would cut its capital spending by 15
per cent in 2015 by reducing exploration spending and post-
poning marginal projects. It also indicated that it was serious
about reducing its recurrent expenditure in most of operations
across the world. Here in T&T, BP has offered its staff a vol-
untary separation plan
In the analysts meeting after the BP results were released,
Dudley said the company was focusing on a clear set of pri-
orities, which he spoke of under the four headings of delivering,
divestments, discipline and the dividend.
On the issue of discipline, Dudley indicated that it had two
parts: "Firstly, resetting the capital budget to ensure every
dollar of capital spend delivers value for shareholders, paring
back activity as necessary and taking advantage of deflation.
"Secondly, rightsizing the cost base to match our footprint
and withstand a sustained period of lower oil prices, and most
importantly, the dividend, which is firmly established as the
first priority within our financial framework."
But, more interestingly, BP s chief executive of Upstream
Lamar McKay said: "We fully intend to make use of the current
environment, to secure reasonable contract rates, to continue
negotiation of fair price and fiscal terms in certain regions
and to access market deflation by phasing investment for the
The language used by these two oilmen in a meeting with
analysts is noteworthy: It is all about resetting the capital
budget, paring back, taking advantage of lower prices and
making use of the environment to negotiate better fiscal terms.
Last week, I was telling a former colleague who now works
at an oil company that I distinctly remember Norm Christie,
the current president of bpTT, telling a group of journalists
at a luncheon that he hosted in June 2013 that the cost of
operating in T&T had gone up significantly. I got the distinct
impression then that Mr Christie was implying that some of
the higher costs of operating had been unreasonable.
The pain felt by the two British-based energy giants will
have implications for how they operate here and there could
well be that London takes new decisions in the future to make
further operating and capital expenditure cuts in T&T.
But the more telling point is the fact that some compa-
nies---and no doubt some countries---are using the opportunity
of this period of low prices to get their costs back in line with
what is realistic.
This means that when prices do increase, those companies
and countries that made the adjustments during the period
of low prices would be much better placed than those entities
that did not make the adjustments.
The way that BP is handling the downturn should be a
model for the Government here.
Politics aside, T&T is in need of some serious adjustment
that would lower the cost of doing business here.
Will this adjustment have to wait until after the general
For the Year Ended December 31, 2014 (YE14), all three
indices closed in negative territory on the local equity market.
The Composite Index closed the year at 1,150.91, down 2.88
per cent or 34.14 points, the All Trinidad and Tobago Index
fell a nominal 0.53 per cent or 10.54 points to 1,983.18 and
the Cross Listed Index declined 15.60 per cent or 7.71 points
to end the year under review at 41.72.
In the fourth quarter alone, the Composite Index, All Trinidad
and Tobago Index and Cross Listed Index posted gains of 0.51
per cent, 0.35 per cent and 1.51 per cent respectively.
Overall the year saw 16 stocks advancing and 13 declining.
The First Tier Market saw a 6.56 per cent decline in trading
activity for YE14 with 91,559,129 shares traded compared to
97,984,389 shares traded in 2013. Q414 on Q413, volumes
traded fell 2.88 per cent from 24,290,021 in Q413 to 23,590,706
When compared to the previous quarter (Q314), trading
activity rose 30.76 per cent from 18,041,250 shares. The value
of shares traded increased 0.95 per cent from $1,105,243,367.06
in 2013 to $1,115,708,421.05 in 2014.
The volume leader for the year under review was National
Commercial Bank Jamaica Limited (NCBJ) with 31,928,936
shares changing hands or 34.87 per cent of the market. Next
was Jamaica Money Market Brokers Limited (JMMB) which
saw 14,497,283 shares traded or 15.83 per cent of all trades.
This was followed by Trinidad Cement Limited (TCL) with
6,923,742 shares or 7.56 per cent of the total volume traded
for the year.
The fourth volume leader was Sagicor Financial Corporation
(SFC) with 5,455,333 shares changing ownership or 5.96 per
cent of market activity. Guardian Holdings Limited (GHL)
rounded off the top five with 4,138,949 shares traded or 4.52
per cent of the trade volume.
Last year also saw 1,035,500 Sagicor Financial Corporation
Convertible Redeemable Preference (SFCP) shares traded. The
price dropped 4.35 per cent or US$0.05 to end the year at
On the TTD Mutual Fund Market, a total of 13,153,666
Clico Investment Fund (CIF) units traded in 2014 with a value
of $290,222,090.60. CIF rose 4.87 per cent or $1.07 to close
2014 at $23.06.
Additionally, 245,653 Praetorian Property Mutual Fund
(PPMF) units traded with a total value of $844,157.50. PPMF s
price dropped 1.41 per cent or $0.05 to end at $3.50.
On the USD Mutual Fund Market, 2,729 Bourse Brazil Latin
Fund (BBLF) units traded with a value of US$25,425.50. BBLF s
price fell 5.00 per cent or US$0.50 to US$9.50.
L.J. Williams B Limited (LJWB) was the top performer for
2014, up an outstanding 53.85 per cent or $0.35 to end the
year at $1.00. The second major advance was One Caribbean
Media Limited (OCM) which registered a 35.14 per cent gain
or $6.50 to close at $25.00. National Flour Mills Limited
(NFM) was next, rising 21.05 per cent or $0.20 to $1.15
Waiting for adjustment
WISE 2014 report
Former Central Bank Governor Ewart Williams
BP CEO, Bob Dudley
Links Archive February 4th 2015 February 6th 2015 Navigation Previous Page Next Page