Chinese Unocal, #3
Posted by TFG on June 26th, 2005
Tom Barnett on the CNOOC bid for Unocal:
Threat or rival or opportunity? It’s simply better for China’s rising economy to become more connected to ours. They benefit. We benefit. The world benefits. My man Alan Greenspan is a long-time backer of the notion that China and U.S. must come closer together economically. Watch for him to dampen the typically idiotic response out of Congress to try and stop this bid, which could easily fail on its own because Chevron is already on the inside track to closing this deal.
I’m still queasy about CNOOC owning Unocal, and here’s why:
Unocal’s a successful private company. If they accept the CNOOC bid, it is effectively nationalized by the ChiComs. Now, do we have enough data on the mystery of the Chinese brand of Commie-flavored markets? Probably not. We do have enough data on Commie-run markets and Commie-run companies, though — they’re failures. Always. Can’t think of a single success. Maybe, though, the Chinese have it figured out…I guess it’s in the realm of possibility, despite all the evidence to the contrary. But if you’re a Unocal shareholder, do you want your shareholder value being managed by central-planning socialists? I wouldn’t. And if CNOOC do win the bid, I’d dump in a heartbeat. Just sayin’…
I’m still not clear, though, on where “We benefit.” Or even who “We” are.
And just so there’s no misunderstanding what I’m saying here: the US Congress and the rest of WDS don’t need to poke their nose in here, except maybe that international commerce bunch (can’t think of the name right now — they ruled on the IBM PC sale) to verify the deal’s square and we’re not giving away national security secrets somehow.
June 26th, 2005 at 12:03 pm
hey tfg look at campingworld.com under maintaince then electrical and has perfect meter for you 69.00
June 26th, 2005 at 12:23 pm
I can’t find it. Can you give me a link to it?
June 26th, 2005 at 12:55 pm
I tried to send but comes back, http://www. campingworld.com.
June 26th, 2005 at 12:59 pm
Digital line monitor Catalog item # 24900
June 26th, 2005 at 3:56 pm
It takes capital to explore for and develop unconventional oil (as the Hubbert Peak cultists call it). If this boosts Unocal’s ability to do so, then hydrocarbon consumers benefit.
June 26th, 2005 at 5:49 pm
My only question is will CNOOC do that? OK, two questions — have they ever done it? Well, three — do they have the management expertise to do it?
As I say, why am I expected to give the Commies the benefit of the doubt, given their track record so far?
June 26th, 2005 at 8:26 pm
Scott, only time will answer your questions, but those answers will come as quickly as it takes to assess how successful Cnooc is in retaining Unocal’s management and operating teams. If Cnooc takes a hands-off approach and leaves the capitalist incentives in place, good things are likely to happen, not the least of which will be yet another lightbulb coming on over some good old boy Commies as they begin to think that maybe old Mao was full of crap after all.
OTOH, if they try to impose the central command, top-down management structure that would have been a given 20 years ago, all the intellectual assets will flee Unocal, and the whole thing will eventually grind to a rusting halt.
Keep in mind that the chairman of Cnooc is US-educated, and pretty savvy in the capitalist way of doing things. Also, 30% of the company is held by non-government shareholders. I just don’t think this is as black-and-white as you paint it.
Cnooc is no slouch in the awl bidness, by the way. Here’s something from the Motley Fool:
Whether the deal goes through or not, there’s a lot to like about CNOOC. Not only does the company have the nice margins and return on equity that you’d expect in the midst of an oil boom but also it has a pretty good production and reserve profile as well. Best of all, its production and finding costs are quite competitive ($9.93 per barrel and $4.68 per barrel, respectively), and that’s one of the real keys to long-term value and success.
June 26th, 2005 at 9:48 pm
All well and good and understood. But 70/30 is a pretty black-and-white ownership number. That’s undeniable.
And I’ll say this — with that kind of ownership split, is there any possible way to trust the books? Who’s doing the audits? It is decidedly not where I’d want to put my money, or where I would want my company to be sold. But I’m not a share holder, so my thoughts aren’t terribly relevant anyway.
Having said that, I am sitting here in a puddle of my own sweat thanks to broke-down AC, so what the hell do I know about markets or economics?
June 27th, 2005 at 11:35 am
Who’s doing the audits?
Um, that would be Ernst & Young. I know, they’re just a bunch of hacks.
June 27th, 2005 at 12:19 pm
OK, now you’re just poking fun of the hayseed. Like Billy Joe Shaver says,
I got an eighth grade education,
And a good Christian raisin’,
There ain’t no need in yall treatin’ me this way.
Seriously, I’m asking the questions with all sincerity towards learning. If you think it’s a good deal, then that’s fine by me.
June 27th, 2005 at 4:25 pm
Ah, you know me better than that.
This is good stuff…