Executives at oil and gas juniors may be indulging their personal aspirations at the expense of shareholder outcomes. The PortfolioDirect rating reviews of oil and gas sector stocks have been highlighting a common feature. Executives, often with large company backgrounds, are highly adept at identifying and defining interesting geologies. In most cases, they have been able to add meaningful value and attract investor interest through the quality of their analysis. The next stage - requiring large amounts of capital to validate their analysis with drilling results - is where they generally fail to add value. At this point, the balance of probabilities is working increasingly against their success. The message is clear: they should play to their strengths. Sure, the billion dollar pay-off is a hard temptation to resist but the chance of this happening is tiny. A more certain, albeit more modest, return from liquidating an asset by turning it over to a more solidly capitalised company able to withstand a drilling failure would better reward shareholders.



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