Another good yah** post................................
Re: Gulf of Mexico...A PXD loss may push a unit/share of MOSH over $40 (in 2008)
22-Dec-07 01:12 pm
The MOSH litigation has clearly not been trivial in the minds of the two judges who have dealt with it over the past several years--and who have consistently decided issues in favor of the Plaintiffs against PXD. Obvioiusly, the Plaintiffs' proposed multi-billion judgment against the Defendants could easily push PXD into bankruptcy. In addition, the Plaintiffs obviously do not think it so trivial given the multi-billion dollars that are sought by them and there are typically rules of judicial conduct that preclude frivolous litigation and PXD has not made any progress on such a claim to stop the litigation.
I submit, however, that there is yet another reason that the MOSH litigation is not trivial for PXD and why the problem at PXD is far greater for PXD shareholders than just the possible multi-billion judgment against PXD and its co-Defendants. Studies have shown that where top management is perceived as unethical the entire culture within the company suffers. Even if it is not absolutely true, lesser employees are influenced in their conduct by the fact that such might be true. The value of having the perception of an ethical culture (with a Code of Conduct) in a company has been measured in various ways (some say it can increase a company’s profits by 18% annually) and to have top management perceived as a group that is doing what the MOSH litigation claims has a very negative impact. Such things as expense report fraud and employee theft of assets all tend to go up significantly when a company is not perceived to abide by an ethical code of conduct. Although Wall Street may be slow to calculate that into PXD's market cap, many observers have already noted that the company's stock price has not been comparable to others given oil and gas pricing. (If 6% of Annual Revenues are lost to employee theft and fraud in the average company, imagine how large an impact an increase in such loss could have on a stock’s price when earnings per share are dragged down even more by such employee reaction to a company’s senior management.) Given that PXD's internal culture is undoubtedly suffering in the aforementioned manner from the MOSH litigation that is causing a very dramatic impact on its stock price and capitalization, it becomes very obvious why the company may actually need to go into bankruptcy and be re-organized under new management to recover from what has developed over its many years of facing the MOSH litigants.
You need to recognize that very few stock analysts are trained to analyze legal proceedings such as what PXD has with MOSH. Although stock analysts are typically taught a little business law they are not legal practitioners who can readily venture to make interpretations of complex court cases. Stock analysts are taught to use accounting/financial analysis, macro economic trends and industry specific knowledge to offer commentary and make very narrow forecasts. (A stock analyst, moreover, would quickly run into problems of professional misconduct and potential liability if there is too much legal analysis in any analyst report.)
Finally, it is at times frustrating to read the recent messages on this Board from those who have not been following the situation for very long and have just begun to consider PXD and MOSH or—alternatively—have no intention to consider anything but just “pump/jump and dump” one way or another. Things do seem very bad for PXD at this juncture and MOSH could actually get its $40 plus per share (unit) in 2008 or soon thereafter if the MOSH Defendants continue to allow the situation to progress to a Texas jury. (Remember this is all just my opinion.)
