Failure, not Failure

Success? It’s Coming.

It’s a funny old thing, but we are so focussed on success that we forget that the road to success, whether individually, at a business level, or even at a government level, the road to success is littered with failures.

Now all this is easy to say, so let me show you an example from the Australian Stock Exchange (the ASX). This is the story of a success that is about to happen. Yes, about to happen. When? Read on.

A few years ago, there was a company called Petrel Energy (it’s ASX code was PRL). That company’s shares fell to just 1 cent each. The company was in trouble and actually got bought out by another exploration and energy company called Warrego Energy (ASX code: WGO).

Warrego then entered into a joint venture with another company called Strike Energy (ASX code: STX) to drill for gas, on land, in Western Australia. The joint venture did this and drilled the deepest holes anywhere. They drilled down 5 kilometres and found gas, lots of it. And they were close to WA’s capital city, Perth; and also close to a gas pipeline and infrastructure.

Warrego’s share price jumped to 42 cents (imagine if you had bought even $1000 worth of PRL shares). Many would call such an increase a massive success. But shareholders were convinced the price would rise to over 60 cents, so they held on.

Fast forward about 3 years and get past COVID and we see that the share price has dropped to around 15 cents. Is this a failure? That depends on how deeply you look at it.

The company has discovered massive gas reserves very close to a major city, and very close to gas processing infrastructure. The company has proven that the gas is there and that there is lots of it. There is already a strong customer for a big chunk of the gas. Warrego has gone on to strongly investigate the feasibility of using the gas in a blue hydrogen project. Strike has also gone on to investigate the use of gas in the production of Urea. So, both companies in the joint venture have forward-looking approaches – a recipe for success, you would think. And yet their respective share prices have stayed stubbornly low.

Why? Is this a failure? To be honest, many shareholders see it as a failure of the respective managements. But are they looking deep enough? And this is the point.

Failure is often judged using the wrong criteria. What is actually a speedbump on the road to success can be mislabelled as a failure. And that label, that FAILURE sticker, can have profound impacts on personal and corporate decisions.

However, let’s widen the vision a little, closer to where it should be, and take a new look at this failure. The reality is that be joint venture is stalled because they are waiting for regulatory (EPA) approval before they can move on. And the wheels of government can turn very slowly. Until those wheels turn and everything locks into place, the 2 companies of the joint venture must sit on their thumbs, collect their salaries, and plan for the future.

From the outside it looks like failure. From the outside it looks like the management team is getting paid for nothing, after all, there are no results. And many shareholders buy into that. And yet, success is only a government approval away.

Now if the joint venture hasn’t done the right thing and got everything in place for approval by the EPA, then that would be a failure. Otherwise, it is simply another stage on the road to ultimate success. On a personal level, failure to recognise what is really going on would be a failure indeed and probably cause one to miss out.

And does missing out mean personal failure? No. It’s just another decision on the road to personal success.

So just because others label something a failure doesn’t mean that it is. Doing your own research may uncover a different truth. And in that truth you may just find an opportunity that others have missed.

When is this success going to happen? Soon. But as with almost everything, there are lots of outside influences on the exact timing.

It has to be said: This is NOT financial advice. This is just using a real-world situation (that may or may not present an opportunity to some people) to highlight that failure isn’t always failure.