In a Solaron report written in November 2011 and updated in June 2012, ESG risks in investing in OGX Petroleo e Gas Participacoes SA (OGX) were highlighted. Now, seven months after the report was first written, stocks of the company have fallen 25%!
The market has been stumped by deceptive estimates of oil stocks in the blocks held by OGX. However, readers of this report should not have been surprised as OGX was shown as corrupt and nontransparent by many stakeholders on the ground. If only investors had had prior access to this report a lot more than the proverbial nine stitches could have been saved today.
Let us illustrate:
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Press Reports |
Solaron OGX Report |
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"Investors are losing faith in Batista's companies after OGX cut its targets 'below all expectations'." - bloomberg.com, June 28, 2012 |
"…there is very less evidence indicating that the company has addressed the sustainability concerns in its operations." -Solaron OGX Report, November 2011, June 2012 |
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"The company… said… that wells at its Tubarao Azul offshore oil field have an ideal flow rate of 5,000 barrels per day, considered low by investors who were expecting stronger output." -Wall Street Journal, June 27, 2012 |
"…in the bid of the National Agency of Oil (ANP), OGX had access to very privileged information… in my evaluation, this is illegal." -Solaron OGX Report, November 2011, June 2012 |
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"OGX is the main pillar in Batista’s plan to become the world's richest man from Brazil’s natural resources…" -bloomberg.com, June 28, 2012 |
An important stakeholder "accused OGX of having been created through political corruption… after the pre-salt oil blocks were discovered." -Solaron OGX Report, November 2011, June 2012 |
When you can't trust what gets reported in Emerging Markets, you need a more reliable source for validation. At Solaron, we go well beneath the tip of the iceberg and source information from local language media outlets and stakeholders and thus identify hidden risks before they surface.
“Over the last five years, while the ESG industry was undergoing a difficult period of consolidation and the global economy was facing a severe recession, Solaron consistently and painstakingly built an exclusive research infrastructure, focusing on 15+ global EMs. As a result, we have been providing a unique information advantage to clients by conducting on-the-ground primary research instead of relying solely on publicly available information. Investors can leverage our local team, EM-focused research methodology and cutting-edge technology tools created over the last five years to invest confidently.”
Vipul Arora, Co-Founder and Managing Director
Solaron Sustainability Services
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Now you can order detailed ESG assessments of any 2 EM companies from the MSCI EM 850 index in your portfolios at Offer valid till August 15th, 2012. Write to vipul@solaron.in for more details. |