ConocoPhillips announced today that it is breaking itself up into two piece – a exploration and production company and a refining and marketing company. This is a huge deal to Bartlesville. Say hello to depressed home prices, high unemployment, and a lingering economic malaise, a la Ponca City. And poor Ponca City. You might as well stick a fork in it and call it done!
Ironically, the second betrayal of Bartlesville is being perpetrated by the same villian who did it the first time, Jim Mulva. It was in 2002, as the CEO of Phillips Petroleum, that Mulva decided that in order to survive Phillips must merge with Conoco, and then proceeded to move the headquarters, along with several thousand employees, to Houston. Got to get bigger and merge or die, was the argument. Can’t stay in Oklahoma, it’s just not international enough. No access to airports, even though Tulsa, a mere 45 minutes from Bartlesville, has a fine airport. And an international one, too, thus the moniker “Tulsa International Airport”. To make the betrayal easier, Mulva promised that the combined company would have a strong presence in Oklahoma for decades to come, as it will not falter! Too big to fail, and that kind of rot! Of course, while the rascal was talking nice to us, he was laughing with his chums about how those stupid Okies bought the bologna-sausage hook, line, and sinker. And we did! So, we went from having 10,000 employed in Bartlesville and several thousand employed in Ponca City to 3,500 in Bartlesville and 850 in Ponca City.
Well, Mulva has announced that he is retiring next year. And, as is customary, much of his retirement is in stock. Now, being a smart man, he wants to boost the stock prices as much as he can. If you have been following the stock of ConocoPhillips the past several years, its performance has been lackluster at best, as the company has been weighed down with a huge amount of debt due to poor acquisitions. Also, the value of shares was rather diluted. So, Mulva decided to sell the poor assets and take the cash to buyback stock, thus increasing stock value. The problem is that he couldn’t find any buyers for some of the assets. What to do, what to do.
Marathon Oil was in a similar situation, and devised an ingenious plan – it lumped all of it underperforming assets together, and spun them off as a new company. Brilliant! So, today, Mulva, the man who said that Phillips was just too small and had to merge with Conoco to survive, decided that ConocoPhillips is just too large to survive and it must be smaller! So, he took the underperforming assets, the refining and marketing operations, and expelled them, or should I say made them a new company! And, wouldn’t you know, prices of ConocoPhillips stock jumped at the news. Imagine that! With a stroke of the pen, Mulva just raised the value of his retirement by millions of dollars!
Of course, in doing so, he threw Oklahoma under the bus yet again. The 3,500 employees are for the combined company. Many of these employees will not be needed by either of the two smaller companies. More than likely, the new companies will headquarter in Houston, and those Oklahoma employees attached to the management of the divisions that will soon become independent companies will go to Houston as well.
What will really shock the Bartlesville economy is the removal of the corporate money. Big corporations give big money; smaller corporations, not so much. Pretty much every entity in Bartlesville, the schools, the churches, the scouts, the arts, rely heavily on donations from ConocoPhillips. When ConocoPhillips ceases to exist in a few months, those donations will cease to exist as well. The effect of the breakup will ripple through every aspect of the local economy. The grand new hotel which was built to please ConocoPhillips will no longer be needed, because there will no longer be a ConocoPhillips to serve. Dance schools, gymnastic schools, and other such entities which serve the children of ConocoPhillips employees will cease to exist, as there will be no more children to serve. The schools, both private and public, which rely on ConocoPhillips to help operate, will find themselves prostate; programs will be gutted, schools will be closed. Bartlesville will be a shell of itself.
There is hope, however. If Bartlesville embraces the metropolis to the south, and redefines itself from a stand-alone city to the coolest and trendiest of Tulsa’s suburbs, it will weather the storm. It will take a lot of effort and the willingness of the ruling elite to cede their grip on power and control and accept their new role as vassals to Tulsa. This is the only hope for Bartlesville to survive and thrive and not suffer the slow, depressing, unavoidable stagnation that is occurring 75 miles to the west in Ponca City.
