Asset sales concern shareholders

JUNIOR explorer and producer Central Petroleum has relinquished control of its geothermal exploration permits. In an ASX announcement, the company stated that heavy expenditure obligations on the geothermal permits, amounting to $11 million within four years (including $7 million during the first two years), would not constitute the best use of the
company’s existing funds.
The company stated that the decision to relinquish the non-core assets was part of an ongoing portfolio review, taking into account the recent discovery of conventional oil at the Surprise-1 well within its Amadeus Basin acreage in the Northern Territory.
“The relinquishment of these non-core holdings allows the company to focus on the assets that are expected to deliver the best return on investment,” Central acting chief executive officer Dalton Hallgren said.
“From both a financial and management perspective, the expenditure required to advance these geothermal assets was not considered in the best interest of the company and its
shareholders.”
Instead, Mr Hallgren said Central was considering farm-out options with a third party for some of its tenements, to increase cash flow and reduce its risk portfolio while remaining an operator.
During discussions held earlier in the year, the board noted that the company was “significantly underfunded” in relation to required exploration expenditure for the remainder of 2012,
and that it was not in a position to fund any future wells on the Surprise discovery. Instead, the company would have to “focus heavily” on farm-outs to move forward.
Following his refusal to sanction farm-out options, John Heugh was removed from the role of company director, with board members agreeing that his conduct “in not acting on and exercising his powers to perform duties assigned to him by the board or its nominee in relation to farm-out responsibilities” was in breach of his employment agreement.
A company meeting is set for June 22, at which time shareholders will be asked to vote on the appointment of new directors. Central has stated that it would like to immediately place businessman Richard Cottee, who has ties to the oil and gas industry plus experience in growing early-stage exploration companies into major gas suppliers, into the role of company director.
Meanwhile, Clive Palmer, who holds a 4 per cent interest in Central, told The Australian that while he was not a controlling shareholder, he still felt compelled to “speak up on behalf
of other shareholders”. He called on the company’s investors to dump the entire board, and warned that he would withdraw his support of the oil and gas junior if the current directors remained.
“The board is not acting in the best interests of shareholders and are thinking about joint ventures with major oil companies that are foreign to Australia,” Mr Palmer told The Australian.

 

By Zana Kaic

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