Keep fighting and investing, stoic Gilbert tells North Sea bosses

Aberdeen Asset Management chief executive Martin Gilbert has issued a warning to companies operating in the depressed North Sea oil and gas sector that a failure to invest, despite the downturn, “will come back to haunt” them.

Speaking at a breakfast event hosted by industry body Oil and Gas UK at the Aberdeen Exhibition and Conference Centre yesterday, Mr Gilbert, who is the longest serving chief executive of a FTSE-listed company, said: “What we are seeing is too many companies running their business for cash at the moment.

“There is a crunch to come where this lack of investment will really come back and haunt us.”

When Aberdeen meets as shareholders in oil majors, it advises the board of directors to maintain investment instead of spending it on dividends to shareholders.

“We have got to invest in technology to make the industry more efficient,” he said.

“That is my worry at the sector at the moment. When we are looking at it as a shareholder and we meet senior management, we encourage them to keep investing. Do not run the business for cash so you can maintain dividends.

“They are all obsessed with paying dividends, the big guys,” he added.

He likened the oil downturn to the banking crisis of 2008.

“We all allowed our costs to escalate. We thought the industry was going to keep going up and up. Then when prices hit the wall or the subprime crisis hits the banking industry, it happens unexpectedly.”

Mr Gilbert, whose firm is a top 10 shareholder in BP and Shell as well as the biggest single shareholder in Wood Group, also drew attention to the so-called “split-cap” crisis which nearly ruined his own firm eight years earlier.

“Asset management is the same as oil – we go through extreme cycles as well.

“I’ve survived a 95 per cent fall in the share price – no CEO tends to survive 90 per cent.

“I managed to take the market cap from £1 billion to £50 million, almost busting the company so I’m sure you all know what I feel like.

“Then from £50 million to £5 billion. By survive I mean you go into work every day and do what you can do. Just don’t look too far ahead – you’ll just feel depressed and resign.”