The Battle of the Falkland Islands

- Monday, December 22, 2014

Amidst all the doom and gloom of the tanking oil price this week’s blog looks at a small event in the Falkland Islands this week that commemorated a very large event that took place on 8 December 1914. 


Falkland Islands


There is a tenuous link to the oil industry as Rust Resources has an office in the Falklands and is working with the major players as exploration is due to start in earnest in 2015. The event in question took place on the seas around the Islands and is known as the Battle of the Falkland Islands. Not to be confused with what happened in 1982 this was a little known but significant First World War Sea battle.


Admiral Graf Spee of the Imperial German Navy headed to the Islands following his victory at the battle of Coronel off the coast Valparaiso, Chile on 1 November 2014. Rear Admiral Craddock had been out classed and outgunned by a more modern force. It was the first British Naval defeat in over 100 years with the loss of two armored cruisers and nearly 1600 crew.
The victorious German force eventually headed south to raid the Falkland Islands relying on out of date intelligence that the British fleet was not in the area. Ironically they had already taken on coal from a captured auxiliary and didn’t really need to go the Islands but decided to anyway.
Unknown to Spee there were 9 British Naval ships in Stanley harbor. Their number included 2 Battle Cruisers and 3 Armored Cruisers. These ships were faster, better armed and had superior armor to the German ships.
The approaching fleet transports were spotted and the alarm raised by a great Aunt of two of the Falkland Islands Company directors; Cheryl Roberts and David Spencer. Before the Imperial Fleet had a chance to block the British fleet in the harbor they were fired upon by the 12-inch guns of Canopus, a pre Dreadnought class ship that had been beached at the end of Stanley harbor to create a stable gunnery platform.
The Germans took flight. Spee bravely made a stand and waited to engage the British and give the rest of his fleet time to escape. It was in vain and the British managed to get steam up in very short order (reportedly burning wardroom furniture to speed the process up) and ran down and engaged the German fleet. The battle took a number of turns but strategically it was essentially a stern chase the British won. Of the German force of 8 ships only two escaped. The losses included the armored cruisers Gneisenau and Scharnhorst (flagship) and the light cruisers Leipzig and Numberg. Spee lost his life, as did his two sons. The British casualties and damage were very light in comparison.
The December 2014 ceremony was to unveil commemorative plaques to the lost and to the commanders.
It was attended by descendants of some of the participants including relatives of Vice Admiral Doveton Sturdee, Vice Admiral Christopher Craddock and Admiral Graf Von Spee. Guests also included the Mayor of Coronel and the Naval Attaché to the German Embassy in London. It was held in a spirit of reconciliation and was heralded as a symbol of a new relationship between Germany and the Falkland Islands.  

Is cost cutting the right response?

- Wednesday, December 10, 2014

OK so the price of oil has fallen dramatically since June. The factors around this are well documented now, lower than anticipated growth from China and India amongst others, OPEC’s unwillingness to turn the tap off and the shale gas revolution in North America.


For those of you that have been in the industry for a long time this is not particularly new. Oil is after all a commodity and the price goes up and down as structural factors and confidence change. Indeed some of the factors are not new, the demand outlook, the vagaries of OPEC and changes in the sources of supply. Yes shale gas has been a game changer in many ways but it is just another source of supply as is oil sands. Reading the press at the moment one can be forgiven for thinking that the price of oil has never fallen before.

We have been in a bull market for a number of years and, of course, it wasn’t always going to the case. But the reaction by many commentators and companies has been interesting.

I have seen a plethora of graphs recently and they are all heading south between now and some arbitrary point in time in the future. Topics covered include the price of oil, North Sea production, capital projects and headcount. The list goes on.

There is no doubt that industry cost base has crept up over the last few years and some correction was inevitable. In reality many of the operators were already onto this before the recent price falls and pressure on the supply base was increasing. Perhaps not to extent of Premier Foods in the UK where they have written to all suppliers asking for upfront cash payments. Refusal to pay will result in removal from the PSL! Nonetheless the pressure was on. Late and over budget projects was becoming the norm (it was ever thus I hear you say).

But is it right to slash costs at this point? It is what shareholders generally want but this highlights flaws in the publically listed corporate model. Many investors hold global oil company stock, as the dividend return is good. Many global oil companies now seem to be looking at deferring projects and cutting costs to maintain dividend levels in the context of falling revenues due to oil price changes. Headcount is often the first in line. Given Rust’s line of business we would say this is wrong but of course. I have heard complaints of film star wages being paid and this is a reason for reducing head count. It is true that pay rates have risen during the boom times but in many cases this has been driven by the fact that when we last had a fall in prices the industry stopped recruiting and training so now we have an acute shortage of certain disciplines with the right experience.

This brings me on to the question is cutting costs the right answer?

Running a cost efficient organization is fundamental to a success so being sensible with the cost base cannot be wrong. Slash and burn, however, cannot be right. This is especially true for staffing cuts done in a very public manner. It satisfies some members of the Board and Institutional Shareholders but the remaining workforce gets the wind up (to use a First World War expression), general morale falls, good people leave due to the public uncertainty created and key positions become very difficult to fill.
Perhaps the better question to ask is “Will we have the right cost base, projects in play and resources when the market picks up?” When the market does pick up, good people will be few and far between. They will be very selective about where they work and what package they expect. That sounds familiar doesn’t it!

Lake District Charity Walk

- Monday, August 11, 2014
I have done a number of fund raising challenges over the years and all of them have involved running distances ranging from 3 miles to 26 miles and 385 yards. 

Lakes challenge team

So when a group of close friends, all them deeply affected by cancer either directly or indirectly, suggested we all get together for a walk to raise money for a range of cancer charities I thought to myself “a walk – how hard can that be?”

The walk in question turned out to be one of toughest challenges I have ever done. The challenge was to walk from the most westerly lake in the Lake District to the most easterly; Ennerdale water to Ullswater in 24 hours. So when I heard that I thought that sounds like a decent walk but still OK and plenty of time to do it in. However, just to make it more interesting, the plan was to do the walk overnight. Hmm “time to buy a head torch” I thought…

After lots of planning, some training (although not much due to work travel), changes of route, drop outs, using the challenge as an excuse to buy lots of unnecessary gear we were ready to go.

10 hardy (ish) souls set out from Ennerdale Water at 10 pm on a humid Friday at the end June full of optimism. The first 5 miles were relatively flat and we averaged over 4 miles an hour. Spirits soared high and at this rate Ullswater was a handful of hours away we thought. Then the first climb.

Coincidentally and perhaps not surprisingly as soon as we hit our first real climb the sun went down and we lost the track. After a couple of hours of slogging uphill in what seemed to be the right direction we hit top at Windy Gap exactly where we should have been. Where it was, err, windy. Our average pace had dropped to just less than one mile per hour. I was seriously wondering how I was going to finish. Everything hurt and staying awake when we stopped was an issue. After another energy bar (now in double figures) it was time to make the descent to Sty Head Tarn. Going down can be just as difficult as going up especially when most joints are feeling the pain. We got to Sty Head and then traversed the valley before our next big climb to Sprinkling Tarn.

One of the advantages of walking over night is the sunrise. Watching the sun come up over Langdale Pikes was amazing and (almost) worth the pain. The second big climb was the worst. We lost the path (again) and as the climb we ended up on was so steep I resorted to counting 50 steps and then stopping to rest for 10 seconds and doing the same again until we eventually reached the top. From there we could see our breakfast destination at Grasmere.

I was drinking water from a Camelbak that I had last used in 2004 on a trek to Everest basecamp. With hindsight that probably wasn’t too bright. 10 year old iodine (used at the time to sterilize the water) doesn’t taste too good even after a last minute rinse before it was thrown in the car. I will treat myself to a new one at some point. Food and drink was interesting as given the timing of walking overnight I didn’t actually feel like anything but obviously needed to take on enough fuel to keep the effort going. So it was a case of forcing it down.

We rolled into Grasmere around 9 am and a few of the team promptly order a full English breakfast. I am not sure how they managed it. A roll was enough for me. We stopped for about an hour that with 20:20 hindsight was a mistake. My limbs had all but ceased to function at all and my bruised and blistered feet were giving me serious grief. Getting mobile again for the last big climb was near impossible but with the help of some hefty painkillers (“you can’t get these over the counter” said our self-appointed team medic) I managed it. Well something worked as for the last leg I rallied and as long as ignored the pain the final pull past Fairfield and Dollywagon Pike wasn’t too bad.
The walk into Patterdale and the last lake seemed to go on for an eternity but we got there eventually taking my boots off and paddling in Ullswater at 3pm was an incredible feeling. We all made it and are still raising money, which is the most important thing.

So in the end we walked just short of 27 miles in 17 hours. It seems easy with hindsight but if I think carefully about it was in fact very difficult indeed. We haven’t decided what the next challenge will be but it will almost certainly involve better training and a new Camelbak.

Rust goes to Normandy

- Sunday, July 27, 2014
Following a company wide meeting in London CEO David Spencer and Houston Business Development Director Brad Haygood headed to Normandy for the 70th Anniversary of the Normandy D-Day landings. 

Utah Beach

Compared to the original crossing in 1944 the channel tunnel was very easy indeed followed by a four hour drive to Grandcamp-Maisy situated on the coast between Omaha and Utah beaches.

The whole area is a very picturesque part of the world that still echoes of its violent past. It was very moving to visit the actual sites of some of the toughest encounters of the war. Point Du Hoc being among the toughest. It is hard to believe that the US Rangers got up the shear cliff face in the face of intense resistance from above to destroy the big German Guns that had been hidden away from their anticipated location at the top of the cliffs.

Incredibly we bumped into a coach load of Texas A&M Alumni. The Aggies were on a guided tour. Accompanying them was “Mac” Evans a veteran of Omaha Beach. We had a very interesting conversation with him. He survived the landing by clambering over the side of his landing craft and cutting all his gear off and swimming to the beach. It put his ordeal into perspective when he said that 17 of his comrades were lost during the assault. He went on to run a bar in Paris for GIs at the end of the war and now lives in Louisiana!

If you like military hardware it was the place to be. Enthusiasts from all over Europe were in attendance in every make of 1994 military vehicle imaginable from Deuce and a Halfs, Shermans, Schwim Wagons and Kettenkrads to DUKWs and various gun platforms and wreckers. All in excellent condition and in their original Normandy specification.
The lasting memory of the trip though is of the bravery of those young soldiers that struggled up the beaches or parachuted behind the lines in darkness and of the losses they sustained in reaching all of their objectives. Admiration is too small a word...


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