JT, I’ve heard the Halliburton theory floated by you a few times in the past. I’m certainly not one to say that you’re wrong, but instead suggest that there are alternative narratives opposed to the Halliburton acquisition. Would I be happy if you end up being correct? Sure. Does this theory provide a compelling answer to the China question? Yes. Does it offer an answer to why things changed with Temple? Yes, but I don’t think the official explanation was irrational either. So while it does do some important work, it raises new questions about recent company activity and makes stretches in other areas. Given this, I feel obligated to push you on a few of your connections. Just remember, these criticisms come from a place of respect, and from someone who is optimistic about the company's future:
1) All these people worked at Halliburton. That IS a bit weird, isn’t it? Except, of course, that Halliburton is one of the largest oil and gas companies on the planet. The odds that STWA would be able to avoid people with at least some Halliburton connection would be difficult. So while some folks have explicit or implicit connections with HAL, I’m not convinced that it’s all orchestrated. For example, you flag Don Dickson as a Halliburton guy. Why? Dickson worked at Kinder-Morgan for 26 years. While he might have worked with HAL at some point, why does this tangential connection make his connections with HAL tighter than with Kinder-Morgan? When seeing this tight of a connection, one might argue “Our next contract after TRP will be with Kinder Morgan!” as a possible reason for Dickson being around. In contrast to either of these explanations, I just think that STWA is putting together a qualified team of people who have worked at/learned from successful companies in the field. After all, we didn't need anyone from TRP to get a contract going with them.
2) Dominique/Jones Walker = M&A. Sure, Jones Walker does this work. But it’s just a bullet-point among about 40 things that they do. To say that’s their ‘specialty’ seems to be something of a stretch. One of their other specialties is with intellectual property, which is what STWA says Dominique was hired for. While Dominique himself worked at Halliburton, he worked there as a patent attorney. So making the connection from HAL -> Dominique -> Jones Walker -> M&A seems a bit of a stretch. Based on admittedly limited research, I’m not convinced. Jones Walker, in the area of Energy says: “We advise clients on the full range of energy and natural resources matters involving oil and gas (upstream, midstream, and downstream, as well as onshore and offshore), power generation, alternative energy, mining and water. We handle complex energy transactions help ensure regulatory compliance and resolution of conflicts with federal and state agencies, provide government relations services, and represent clients in all forms of industry-related disputes and litigation.” This seems to be a robust offering of energy services rather than specializing in M&A’s, which don’t make the list of services provided. However – I’m open to being wrong. I just want to see those acquisitions negotiated by Jones Walker that would be analogous to STWA/HAL before I’m willing to drink the Kool-Aid.
You also talk about Stubbs in this context as being another pawn in the Halliburton M&A, but I’d be curious to know, in your past DD, if either Stubbs or Dominique have actually been the headliners on any significant deals, or, if they took a few classes while in business/law school and keep that as a thing they could do on their CV.
3) Things that fall outside of the M&A thesis. If it’s true that an acquisition is right around the corner, why does STWA need to be concerned with increasing their maximum share count to 300m? Why did STWA feel the need to offer a revision to their 14a that says they are freezing Cecil’s salary and setting up a framework to have non-binding votes on compensation every three years (n.b. I will agree though, that a lot of the language in the 14a about Kyte and Bigger’s potential termination does speak to potential M&As, so there’s that)? Why would STWA keep paying money to a firm who specializes in NASDAQ uplisting if they are just going to be acquired? There might be some other statements which don’t seem to make sense if an M&A is right around the corner, but these are the ones which immediately come to mind for me. I’d certainly be interested to hear your input on those issues, and hopefully hear the context of past activities by the people/companies you flag as significant to prove that the chess board is set up the way you believe it to be.
AI
