Death by Reasonable Decisions

A Warning to Pakistan’s Leadership

A company once worth £14 billion is today worth about £200 million. One and a half percent of what it was. I gave it 23 of my 33 years and I would give them again. It is still standing, still fighting, and I wish it well. These are the lessons of that boom-to-bust, learned first-hand. I am writing because I now lead exploration elsewhere, the same decisions cross my desk, and when I look around our industry in Pakistan, I recognise the road. Operator, regulator, financier, ministry every one of us is capable of writing this story again. So let me offer what that journey cost me to learn, before someone here has to pay for it twice. Though my lessons come from upstream oil and gas, they apply just as directly to decision-makers in other industries and in the government.

Understand What Was Lost

More than twenty countries. Into the FTSE 100 the index of Britain’s largest public companies in 2007. A mid-cap (medium sized) that out-explored the majors (the global oil giants), and brought a deepwater field onstream from discovery to full production in just 40 months, a record, and made real money for its shareholders. I was proud every single day I carried that card. It did not begin as a giant. It began as a handful of people in a small country with no oil of its own, on a contrarian bet: go and work the fields the majors had walked past. From a single gas project it grew licence by licence, discovery by discovery, the occasional bold acquisition — faster than almost anyone in the sector. Somewhere along the way, the name stopped being a place on a map and became a brand: a byword for finding oil where others had stopped looking, and for backing conviction with the drill bit. Across Africa it became, for a decade, the most successful explorer on the continent, the company governments wanted in the room, the one that opened a world-class basin and turned frontier acreage untested exploration ground into national fortunes. We did not inherit that reputation. We earned it, well by well. The technical work was never the problem. The exploration team was exceptional. The billions of barrels discovered were real. What failed was everything we built around them the commitments, the financing, the belief that a good story was owed a good ending.

The Rules of Engagement: “Never Fall in Love”

Never fall in love with the prospect or the idea, the plan, the deal. When the red flags come, let it go, however beautiful it looked on the map. In exploration, we have a discipline for it: kill criteria the conditions that would make us walk away set before the well, not after — write down what would prove you wrong, and honour it when the data arrives. The map is not the reservoir.

Never fall in love with the project. Once you honestly know it will not work, move early. Waiting in hope is never cheaper. The cheapest barrel is the one you decide not to drill.

Never fall in love with the role. A title is borrowed, not owned a place to add value, not a position to defend. The finest leaders hold it lightly, and know that passing the seat on at the right time is itself an act of leadership.

Never fall in love with the business you built. Business is about value. If informed people will not pay your number, that is information, not an insult. Refusing to share risk means placing the whole institution behind your own judgement.

Never fall in love with the organisation. Loyalty is not the same as contribution. An institution deserves your best work, not your blind allegiance and when allegiance replaces honest judgement, you stop protecting the company and start protecting its mistakes. The most loyal thing you can do is tell it the truth.

The Hard-Won Strategic Axioms

Consolidate at the peak. Every windfall we received became the funding for the next set of exploration commitments. The moment of greatest strength is the moment to reduce exposure — not permission to add to it. Strength feels like the safest time to reach further; it is the most dangerous. Had we divested even partially, at the right time, we would be in a very different place today. In divestment and M&A, timing is everything.

Diversify while you can — and keep your debt smaller than your options. With money in hand, we did neither. The debt climbed, and the strategy narrowed until it served the debt rather than the business. So when the one chance to grow appeared the one that might have saved us there was nothing left to reach for it with.

Never carry a risk that can bury you. What a major absorbs in a footnote can finish the rest of us.

Liquidity is survival. It outlasts profit, and it leaves quietly well before the crisis announces itself. And once the cost of borrowing climbs past 10%, the options all but vanish.

Balance data and instinct. Listen to the experts. A decision driven by intuition alone pie-in-the-sky thinking, deaf to those who know the detail invites disaster. But a decision driven by data alone, blind to the bigger picture and to instinct, is no safer. The wiser strategy is a balance of the two: evidence and judgement, expertise and instinct, held in the same hand. We lost our way through pie-in-the-sky thinking going bigger, too quickly.

Pay for bad news early and protect the person who brings it. The organisation that punishes the messenger keeps drilling its own mistakes.

The Sovereign Trap: Pakistan’s Mirror

Whoever funds you, directs you. The day we could no longer fund ourselves, others began setting our priorities. Not through any hostile act simply because those carrying the risk eventually shape the decisions. And when the clock of the balance sheet runs faster than the clock of the asset, you end up selling the very things that could have saved you. We once defined our destiny through our own decisions; we lost that control when we were buried under heavy debt and the high cost of financing it.

I ask our leadership to sit with that, because this is no longer just a corporate autopsy — it is Pakistan’s current orbit. Since 1950 we have entered twentyfive IMF programmes — bailouts — by the Fund’s own count, not a turn of phrase. We are in one now, and energy pricing and the circular debt (the chain of unpaid bills that ripples across the power and gas system) are not internal matters within it; they are commitments. Whoever funds you, directs you. That is not an accusation; it is an accounting identity.

Watch what that identity is doing to us. Domestic oil and gas output has fallen by roughly a fifth in five years while drilling runs below target, so we import more and every cargo widens the deficit that shortened the clock in the first place. Meanwhile, the state’s own system owes the E&P companies the firms that explore for and produce our oil and gas something like 1.5 trillion rupees in unpaid bills, quietly starving the drillers of the very cash that would have funded the drilling that would have cut the imports. Applied honestly, the accounts would have to write those receivables money owed but not paid — down by hundreds of billions, so an exemption is being sought to keep the loss off the books. That is not a sector problem. That is our story, written at national scale. Independence is a financial condition long before it is a strategic one. We do not become energy secure by declaring it; we become energy secure by protecting the cash flow of the people holding the drill bit ruthlessly, and in the years when it is least convenient. A receivable booked but not paid is not revenue; it is a loan you never agreed to make.

If we demand “kill criteria” to abandon a dry well before it bankrupts a company, where are the national kill criteria for policies that have failed twenty-five times? At what point do we agree to abandon a structural narrative that the data has proven dead?

The Illusion of the Swimsuit

The tide always goes out. Warren Buffett said it best: “It’s only when the tide goes out that you learn who’s been swimming naked.” At $115 oil, our debt looked like ambition. At $30, it looked like what it had always been. The storm did not make us weak; it only made our weakness visible. We are watching a version of it now, in slow motion. When the honest number becomes too painful to show, the instinct is to change the accounting, not the exposure. That is a costume, not a swimsuit and the tide does not care. A company’s tide is the oil price. A country’s is the exchange rate, the import bill, a closed strait that blocks its shipping. The mechanism is identical. So is the warning. If the tide went out tomorrow what would it show?

The Danger of “Reasonableness”

Here is the part that still keeps me awake. Not one of those decisions looked reckless on the day it was taken. Each one was perfectly defensible to a board and popular among the stakeholders just as deferring tariff reform or papering over circular debt is defensible to a cabinet. They were sensible, consensus-driven compromises, executed by good people doing careful work, walking calmly into disaster together.

That is the real danger. Not recklessness. Reasonableness.

In my experience across the oil and gas industry, serious institutions are rarely destroyed by foolish decisions. They are destroyed by sensible ones, taken one after another, until the sum of them is fatal.

Opportunity is free. Commitment is not.

Thirty-three years in, that is the only wisdom I am sure of. I hope it saves someone here a decade.