Petroleum Geo-Services (PGS) Markets and the Anonymous Executive (09-Feb-2016)

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Why Whistleblowing is Important to the Marine Seismic Market

Secrecy, being an instrument of conspiracy, ought never to be the system of a regular government. ~ Jeremy Bentham

We have all suffered many forms of abuse. But, the least talked about is “The mind game” otherwise known as the silent treatment; i.e. deliberately ignored to cause harm to another person’s mental well- being. ~ Teresa Cooper, Silent Abuse – The Mind Game

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Under common law, to constitute defamation, a claim must generally be false and have been made to someone other than the person defamed. An exposé is the exposure or revelation of something through a formal elucidation of facts. A whistleblower is a person who informs on individuals or an organization engaged in an illicit activity. A boycott is a lawful attempt to express displeasure with a company by refusing to do business with them.

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I am betting with notable business thinkers like Peter Drucker and W. Edward Deming that enterprises managed with toxic cultures which are led by fear are bad for strategy and business performance and the markets where they compete, especially in the long run. I am in agreement with the advice from Amy Rees Anderson, who writes in her article Success Will Come and Go, But Integrity Is Forever, “Avoid those who are not trustworthy. Do not do business with them. Do not associate with them. Do not make excuses for them.  Do not allow yourself to get enticed into believing that “while they may be dishonest with others, they would never be dishonest with me.” If someone is dishonest in any aspect of his life you can be guaranteed that he will be dishonest in many aspects of his life.” On 16 November 2015, I published an article on LinkedIn Pulse™, Boycott Petroleum Geo-Services (PGS) Capital Markets Day 2015. On 1 February 2016 this article was removed from access on LinkedIn due to an anonymous complaint which was made to LinkedIn™ asserting that the content was defamatory. Interestingly, the actual PGS Capital Markets Day 2015 event was held 4 December 2015.

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There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest. ~ Elie Wiesel

I do not fault LinkedIn™ for removing the article. Quite frankly, LinkedIn™ has been very helpful through providing a platform and vehicle to share a variety of information to LinkedIn™ users. However, in this case the content was not really defamatory, as it was generally true. But, it was an angry piece.  (Because, I am angry).  The content was actually written with the hope to elicit a direct response.  In fact, the article suggested that PGS agents had a duty to do so.  There has been no direct response disputing the veracity of my writing from the individuals named in the article: Jon Erik Reinhardsen, President and CEO; Per Arild Reknes, EVP Operations; John Greenway, SVP Marine Contract; Terje Bjølseth, SVP Human Resources; Simon Cather, President Marine Contract Africa, Edward Von Abendorff, VP Marine Contract Sales Africa; and David Nicholson, EAME HR Manager. Neither have I received any comment or communication from recently promoted Rune Olav Pedersen, EVP Counsel, Marketing and Communication, although I have solicited his direct attention through PGS’ LinkedIn™ space and invited him to connect to my LinkedIn™ network.  The article references the letter that Reinhardsen himself signs stating that he would be very interested in hearing views on how PGS can improve.  I have made many attempts to be heard and requested redress.  It has been frustrating and disappointing.

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During the communications with LinkedIn™ Customer Service regarding the claim, I inquired about the name of the person(s) who made the complaint, as well as what exactly was considered defamatory. I offered to redact portions of the article. I also wanted to preserve a copy with the final views and likes counted. These requests were denied by LinkedIn™ out of privacy concerns for the anonymous executive(s). The question is who is really being defamed in this claim? LinkedIn™ is a platform for content publication and interaction. LinkedIn™ employees have no direct knowledge of the details of the disputed content.  I never even knew an anonymous person could be defamed. On posts, there is the opportunity to comment directly and publicly to bring to the attention any issues and provide perspective or enhance the factual accuracy of the post. Also, there is the opportunity to post one’s own defense. PGS has their own company space on LinkedIn™. It is of course in the interests of certain PGS executives to suppress inculpatory information and to hide malfeasance. This effort is deliberate and should actually sound more alarms to those who believe that transparency is at the core of ethical conduct.

A people that values its privileges above its principles soon loses both. ~ Dwight D. Eisenhower

On the one hand, an anonymous executive is able to claim being defamed, while on the other hand they are able invoke their right to remain silent and avoid addressing and clarifying the very issues that harm them.  The very real problem and truth in this case is that PGS executives have been reported to both English and Norwegian police fraud investigation units. This may be unpleasant, but it is nonetheless true. The reports were made some time ago and have been updated with content, including LinkedIn™ publications. The irony is that the reported (alleged) fraud involves PGS senior executives supplanting defamatory information into falsified/forged documents. This was all done to protect and then retaliate against claims of executive workplace bullying, mobbing, and harassment. Does the anonymous assertion waive PGS executive’s right to be silent during criminal investigations? After all, the silence has been broken by protesting that they are a victim of defamation.  Likewise, I accuse PGS (rogue agents) of workplace bullying and harassment, defamation, but add to this, falsifying documents/forgery, conspiracy to defraud myself, conspiracy to defraud UK Information Commissioner’s Office (ICO), and lastly wrongful termination underpinned through PGS’ breach in their Duty of Care and Duty of Mutual Trust and Confidence legal obligations. The police have not told me to stop. The police criminal fraud investigation will determine the authenticity of PGS’ held records and communications. Further action is predicated on that outcome. Therefore, what I failed to state in my anger (perhaps PSTD from being a target of bullying?) viewers should not form any conclusion until that time, as the process is on-going.  However, this is really what Pedersen et al. need to address responsibly and to properly investigate, as agents of PGS to be true to ideas in Reinhardsen’s letter.  This matter should have never even reached this stage.

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PGS has a senior executive management team, a marketing team, and a legal team to address the claimed defamation directly. Instead, PGS chooses to suppress and kick into the long grass allegations of wrong-doing. They contact LinkedIn™?  Choosing to suppress facts this way is actually a common tactic used to silence whistleblowers. Google™ search results are also manipulated. To clarify what this exposé is; it’s whistleblowing.

These exposé writings are hoped to hasten a response from senior executives. I believe corrupt and illegal activity has been perpetrated by rogue PGS executives which has involved conspiracy and cooperation beyond only the named executives, but extends to the HR department which shared compromised documentation, the legal department who vetted personnel file documents and agreements, and the marketing group that actively promoted an ideal image with these issues known in the background. Evidence for these allegations has been publicly provided through other articles. The silent and secretive behavior and intentional decisions to not respond directly to the real and serious concerns has been very harmful to me and my family. However, PGS’ behavior is also detrimental, and has broader implications, to the marine seismic industry sector. The thrust of the removed article was that company culture matters in business more than strategy in terms of enterprise performance outcome. It was a call to transparency and fulfilling the vested responsibility through bylaw of PGS agency to protect PGS’ reputation. The inability of PGS agents to publicly defend against allegations in a constructive and transparent way seems to be more compromising than the allegations themselves. My opinion. O&G offshore license operators do care to know about how businesses is conducted by the companies that they contract with. I have been directly involved with collecting and preparing due diligence requests for license operators who had planned seismic projects on the horizon. In capital market participation there are rules and ethics that stakeholders are expected to follow which make the capital market a fair operation. A capital market runs on trust, reputation, knowledge and ethics. Stakeholders who deviate from these fundamentals corrupt the market place and could possibly even collapse the entire system (from removed article).

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The PGS Capital Markets Day 2015 event has passed and so it will be interesting to consider points made during the event. There have been many developments within the marine seismic sector since the removed article was posted. PGS’ latest broadcast decision was to add to their executive management team with the appointment of Pedersen, EVP Counsel, Marketing and Communication. Pederson is also a non-executive Director of Azimuth Ltd., a subsidiary of PGS. In many respects Pedersen’s role and responsibilities coincide with the issues which were brought-up within the removed article. During the PGS Capital Markets Day 2015 event PGS has evidently only recently found the need for executive level counsel guidance. However, there is a very real possibility of conflict of interest with the appointment of an entrenched insider and should be aware of the events which transpired during the months around September 2013 until now within PGS.

Operationally, PGS’ largest man-made moving object on earth record was short-lived, as Polarcus took over the top of that list since the event.  PGS has only recently (to the event) taken the record away from Dolphin. While such records are operationally impressive, it points to cost saving for license operators, but also strains vessel utilization opportunities through surveying larger areas faster.  Another issue is that source technology and configuration is impacting survey streamer configurations and more recorded data in less time. Broadband data acquisition and wide-tow capability has been commoditized to the extent that even Reinhardsen himself states cost is the main driver for customers. I thought salespeople no longer even used the word cost. It was always a value proposition. But, value is a derivative of product differentiation and not only cost. The decline in oil prices indeed has made everything a cost game as many geophysical surveys are being conducted because of license operator commitments.

PGS’ strategy for control of capacity was always risky.  When survey prices do move upwards there are both excess vessel and streamer instrumentation capacity available if the market turns around end of 2016.  Skillsets will still be available and current for vessel crews that work 4-5 rotations a year, anyhow.  Noting that PGS core business is 3D marine seismic streamer data acquisition and processing, PGS nonetheless is pushing the 2D seismic + EM which they have developed.  At the end of the day, what will make or break PGS is 3D vessel utilization in a cost sensitive, base requirement, kind of market.  Delivery of Ramform Tethys is scheduled toward the end of Q1 2016, where it is now into February. This will add to the continued over-capacity during a period of continued declining operator spending and considerable uncertainty in oil prices. As for PGS keeping the acquired flexible capacity vessels busy along with their Ramform vessels, Q4 showed an overall 73% vessel utilization. The operating fleet would need to operate at 37% above cost base to make a profit.  However, since the PGS fleet / vessel capacity changed during Q4, this number would need more clarification. The Q3 2015 EBIT with 83% vessel utilization posted was posted at $ -62.7 million USD. Idle time is a main factor that Reinhardsen even highlighted. It will be interesting to see EBIT for Q4 2015 EBIT after assuming the Sanco charters.

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If you don’t have a voice that forces you back to basics, you’re a dangerous person. Or to put it another way: You’re at risk, and the people with you are at risk. I’m not a daredevil. I don’t fly without a safety net. ~ Steve Wynn

Operational safety is also a key concern to stakeholders and where PGS states records above industry standards. A recent article in Maritime Executive cited a study of over 1,000 Norwegian offshore oil and gas workers found that workplace bullying is a stronger predictor of mental health problems than risk perception.  The UK Trades Union Congress also ranked workplace bullying as one of the top 5 workplace hazards. This is important because Reksnes and Bjølseth presided over my grievance hearing citing workplace bullying and harassment, amongst other things. A settlement contract was initially offered rather than responsibly investigating the claim implicating high-level executives. However, the real issue is that (alleged) forged and falsified documents were placed into my personnel file to suggest that proper processes were followed.  PGS also requested an examination and occupational and health professional report.  The report suggested workplace health risks and my claim of a hazardous workplace, and so the report was withheld and destroyed. Reksnes and Bjølseth (alleged) bogus grievance meeting record was recklessly prepared citing wrong dates and non-existent documents.  The grievance process did not even complete due to the settlement reached.  It was titled to my attention, but never received while I was employed.  All this was discovered through a DPA 1998 subject access request.  Again, this has been alleged and presented to the police fraud units. Redacted portions of these documents have been published on LinkedIn. PGS should be commenting about these issues. The real point is that the culture and process is more important than the managed published results.

There was investor interest in the book value of Azimuth Ltd. PGS was actively promoting their Azimuth Ltd. subsidiary. PGS owns 45% of Azimuth Ltd. with international private equity firm Seacrest Capital owning the balance. PGS EVP Pedersen is also a Director for Azimuth Ltd., so this will likely continue to elevate interests in Azimuth Ltd. The business model for Azimuth Ltd. is the exchange of license acreage for services. At the time of the event, Azimuth Ltd. had an interests in 52 licenses globally. The equity model is another dimension expanding multiclient offerings. PGS’ direct equity investment would be a conflict of interest and therefore Azimuth Ltd. is the vehicle used where the equity business can be conducted at an arms-length. Both Azimuth Ltd. and Seacrest Capital are based in Hamilton, Bermuda. Certain advantages of a limited partnership in Bermuda are tax advantages with little regulation. There is not much financial information posted on the Seacrest Capital website. However, referencing PGS year end financials Azimuth Ltd. information reveals that Azimuth Ltd. has mostly posted losses since 2011. Without splitting with the other businesses, since 2011 Azimuth Ltd. has lost $67.9 million USD. This would make Seacrest loss to be (55%) $82.99 million USD, which then would be a combined loss estimated to be around  $150.89 million USD (?).   Is this correct?  The investment is aligned with other private equity portfolios. However, it is reasonable to assume equity opportunities prior to the fall in oil prices were different not only in terms of valuing seismic services, but also the license acreage. So, the question is have both declined in balance. This may impact and delay the normal portfolio return. It seems as though PGS executives entertaining a Capital Markets Day 2015 were relying on investor speculation and analysis rather than sharing numbers and information which only PGS, as Reinhardsen admitted, would realistically have the best values for. 2016 EBIT guidance and Azimuth Ltd. financial historical financial performance could have been more clearly discussed at the Capital Markets Day 2015 event. Sharing some views about the prospective value and growth of license acreage since the decline in oil prices. Simply, the way you reduce uncertainty to investors is through applying the metrics which are generated and understood well and not submitting to a guessing game.

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Who conducts high-stakes and high-risk business with and enterprise that cannot demonstrate that they deliver on their commitments and can transparently quash allegations of wrong-doing? Capital markets, during times of uncertainty especially, look for strength, confidence, and integrity from enterprise executives. It is from this basis which trust is demonstrated and earned. Trust is not a given. One should not enter into a contract that they know they cannot honor. Likewise, one should not broadcast on a website commitments which they are unwilling to fulfil. In conclusion, there is a difference between being a disgruntled former-employee and being a target of workplace bullying and crime. And it is not the kind of crime to gain something necessary. It is mean-spirited and vindictive. Evil, in my view. Some people might think what ramifications such behavior toward an individual has to the broader markets. But, one can rob a bank and steal the money of a collective of account holders, or they can rob an individual. Both are crimes. This is what I believe: process matters. If an organization departs from process then outcomes are unstable. All outcomes.  If an organization is taking short cuts and protecting bad-behavior of top executives, what else are they hiding? Corruption occurs in unstable systems where it cannot be easily detected. And so small problems point to larger ones. Small secrets and silence regarding a single former employee can seem insignificant. But, it really is not. Because, it really suggests that there are bigger secrets not being shared or managed correctly. Such organizations are dangerous investments because senior executives seem incapable of handling what should be simple problems properly. That is why workplace bullying is so destructive. It is an unwarranted departure from what should be thoughtful processes which illuminate poor process control and tolerance for bad behavior and predicts high risk outcome. So, I expect something big on the horizon. And it won’t be pretty.  But, this is just my opinion and prediction.

There’s a natural law of karma that vindictive people, who go out of their way to hurt others, will end up broke and alone. ~ Sylvester Stallone

Revenge is an act of passion; vengeance of justice. Injuries are revenged; crimes are avenged. ~ Samuel Johnson