It seems Warren Buffett bought the wrong oil company. His multi-billion dollar loss in ConocoPhillips was not just a matter of misreading the commodity bubble but coveting its low earnings multiple and forgetting that “price is what you pay but value is what you get”.

After spending aggressively for years, Conoco has now made a U-turn by promising to shed assets, cut debt and boost its dividend. In other words, it is trying to emulate the capital discipline of ExxonMobil, the company Mr Buffett probably should have bought. Exxon paid 2.4 times as much cash through dividends and buy-backs as it spent on capital investment over the past three years, a ratio four times as high as Conoco. In fairness, peers such as Total, BP, Shell and Chevron divvied up cash in much the same way as Conoco, but none put the money to quite such poor use.

To put Conoco's value destruction into perspective, consider that Exxon's shareholders could have taken the cash they received since 2005 and bought all of Conoco twice over, with change to spare. Going the other way, Conoco's shareholders received enough to buy about 10 per cent of Exxon.