Welcome!

API Journal Authors: Harry Trott, Liz McMillan, Pat Romanski, Flint Brenton, Stefano Stabellini

News Feed Item

Worldview Capital Management: Major Shareholder of Exillon Energy Plc to Requisition Extraordinary General Meeting for Board Overhaul and Strategic Review

LONDON, January 14, 2013 /PRNewswire/ --

Reasons for EGM:

  • Exit from FTSE-250 following share price plummet of over 60% since the $280m placing at 400p in March 2011
  • Board inexperience has led to ineffective management of assets and communication of a distinctly misleading impression of production development
  • Ongoing corporate governance failings and significant underperformance against production forecasts

EGM will call for:

  • Removal of current Chairman
  • Appointment of 3 New Non-Executive Directors well-qualified to review the Company's strategy, assets and operations and contribute to its successful development

Worldview Capital Management ("Worldview"), the Swiss-based investment manager, has begun the formal process of requisitioning an EGM at former FTSE-250 constituent, Exillon Energy plc ("the Company") (EXI.L), an independent oil producer with assets in Northern Russia. Worldview are seeking the removal of Chairman, David Herbert, and the appointment of 3 new Non-Executive Directors.  This follows a more than 60% decrease in the oil firm's share price following the $280m placing in March 2011 and a series of production setbacks. Worldview believe this performance is the result of an inappropriate Board who have implemented a flawed operational strategy and overseen a period of serious corporate governance failings.

Worldview's call for  an EGM comes as a last resort following a period of attempted engagement with the Board since May 2012.

Purpose and role of proposed new Non-Executive Directors

With a clear focus on recovering shareholder value, the proposed new Directors would provide vital operational and sector experience where the existing Board is currently weak.  Worldview have major concerns regarding the Company's current strategy and portfolio management. The new Directors' experience will play a crucial role in developing and executing the most appropriate strategy and driving operational performance improvement, whilst immediately improving corporate governance at the Company.    

Underperforming and inappropriate existing Board

Non-Executive Chairman, David Herbert, and Chief Executive, Mark Martin, were appointed in 2011, without a proper search process, despite both lacking relevant E&P experience.  Under their tenure the Company has experienced production setbacks on two occasions.  In the period from David Herbert's appointment on 28 April 2011 to date the Company's shares have underperformed the FTSE 350 Oil and Gas producers index by 65% and the Russian RTS index by 60%. Furthermore, during this time the Company has also dropped out of the FTSE-250, with the share price falling sharply (from 468p to 146p). In the absence of news of significant progress, Worldview believe that recent share price appreciation is the result of its share purchase programme that took place during the second half of 2012.  

The absence of a Finance Director further demonstrates that the Board lacks the expertise to properly manage the Company's activities.

Flawed strategy and ineffective portfolio management

Worldview believe that the Board has the wrong strategic focus by developing its high risk and less profitable assets in the Russian region of Timan-Pechora, which is diverting capital and other resources away from developing its assets in Western Siberia that have been shown to produce higher returns.

This view has been echoed by Otkritie Capital, an independent firm of brokers covering the Company, who stated in a research report in November 2012: "We do not support the company's aspiration to invest in Timan-Pechora due to the higher drilling costs and lower flow rates than in West Siberia. Nor do we support infrastructure spend ahead of production growth."

Governance failings

Lack of independence

There remain significant questions over the independence of the current Exillon Board. David Herbert and Mark Martin were UK bankers from Exillon's sponsoring investment bank. They were appointed to the Board as Chairman and CEO shortly after a major fundraising by Exillon and sell-down by the principal shareholder, Maksat Arip, of $130 million conducted at the Company's near all time share price high.  

Since that time the role of Mr Arip, who at the time of his resignation as Executive Chairman, was simultaneously appointed CEO of the Company's subsidiary companies has remained unclear. The latest annual report refers to Mr Arip as a "consultant" rather than an employee or by his announced title. Nevertheless, "Mr Arip assisted the Remuneration Committee in its decision regarding the remuneration of Mr. Martin [and] of Mr. Herbert" (Annual Report 2011).

This concern is reinforced by the fact that there appears to be precedent for this type of management manoeuvre by Mr Arip. When he stepped down as Director and CEO of Kazakhstan Kagazy plc ('Kagazy'), a London Stock Exchange-listed industrial group of which he was a principal shareholder, Mr Arip continued to hold the position of Director of its principal operating subsidiary "in order to focus [his] time on the strategy and business development of the Group" and that he would "continue to perform the same duties as [he had] to date". (Kagazy RNS 30 April 2008). Having raised $250 million on IPO in 2007, Kagazy is understood to still be negotiating restructuring terms with its creditors that have been ongoing since it first defaulted on over $100 million of bonds in November 2009 (Mr Arip having resigned as Director of Kagazy's principal operating subsidiary in July 2009 and disposed of his entire interest in Kagazy in September 2009 (Kagazy RNS 24 September 2009). Moreover, there are concerns that there may have been inadequate and misleading disclosure in Exillon's most recent prospectus regarding the Kagazy debt restructuring.

Misleading production figures  

Worldview believe that the Company's recent production announcements continue to be misleading.  As a case in point, they regard the announcement on 7 January 2013 detailing 2012 production results as exemplifying this concern. Worldview notes the inclusion of data in the year end production report for "peak production". Peak production is not a performance indicator that is in accordance with industry norms or best practice and in Worldview's view is easily manipulated and therefore cannot be used to suggest that the Company has met its production targets for 2012. The reality is that the actual average daily production has in fact fallen below guidance for both the full year (12,862bopd vs 14,303bopd or minus 10%) and for the final quarter of 2012 (15,218bopd vs 17,398bopd or minus 13%). In addition, it is well below the forecast average daily production from proven reserves as projected in the Company's independent geological report in February 2012 (12,862bopd vs 18,760bopd or a 31% shortfall).

FSA Fine

The issue of governance was brought into sharper focus in April 2012 when Exillon was fined £292,950 by the FSA for its failure to identify and disclose payments of almost £1 million to Mr Arip whilst he was Executive Chairman.

Breach of listing rules/ misleading information

Other corporate governance issues that shareholders are eager to see addressed include numerous examples of non-disclosure of key investor information such as the Company's prospectus and an accurate biography of its Chairman. During the appointment of Chairman, David Herbert, his previous Chairmanship of AIM-listed Timan Oil and Gas - a company that lost 88% of its value following its LSE AIM IPO under his stewardship - was not disclosed.

Remuneration

Worldview is also demanding to know why a remuneration package was agreed for CEO, Mark Martin, which included a salary of $825,000 p/a plus benefits - almost three times the amount of his predecessor - and a share package worth over £10 million at the point of issues, without any performance-related conditions.

EGM request and call for change

Worldview Capital Management, a significant shareholder in Exillon, has begun the formal process of requisitioning an EGM in the conviction that the introduction of new, qualified and experienced Board members, including two independent candidates who were identified following a thorough and professionally run search process, can address the issues currently undermining Exillon's operational and share price performance.

Restoring shareholder value - addressing strategy, portfolio management, executive and Board leadership, eliminating governance failings and assessing and improving operational performance.

Worldview is proposing the introduction of three new Board members with the relevant experience to evaluate the current operational strategy and ensure corporate governance standards in order to help realise the true underlying value of Exillon's assets and restore shareholder value.

Proposed Non Executive Candidates

Yves Mérer - Highly experienced oil executive with significant emerging market experience and a wealth of international oil and gas experience acquired over a 30-year career with Shell that included:

  • Governance of Shell's regional business  interests in French-speaking West Africa
  • General Manager of Salym Petroleum Development in Siberia, Shell's first successful  E&P Russian joint venture business
  • Chairman of Shell Syria
  • President of Shell China Exploration and Production
  • Shell Iran Country Chairman

He is currently Chief Executive of Caithness Petroleum, a privately owned, British independent oil and gas exploration and production company.

James Dewar - Qualified chartered accountant with 30+ years of experience in senior international roles

  • Held a number of Vice President and global/regional business CFO and finance roles for BP in the UK, Dubai, Kuwait, Indonesia, Singapore and the United States of America in multi $ billion businesses during a 27 year career.
  • More recently, Mr Dewar was Group CFO for Dana Gas PJSC, based in the United Arab Emirates, an upstream and mid-stream gas company with assets of $3 billion, quoted on the Abu Dhabi Stock Exchange. He then served as interim transformational CFO for Seven Energy International in 2011.   

He is currently a Non-Executive Director of East West Petroleum Corporation (TSX.V: EW), sits on the Advisory Board for Viking Services and is a Non-Executive advisor to Atlantic Energy, a privately owned UK and Nigeria based energy company.

Andrey Kruglykhin - Founding Partner and Chief Compliance Officer of Worldview Capital Management with significant oil and gas and turnaround experience in companies with management and governance failings, minority shareholders' rights, and corporate governance

  • More than 15 years' experience in the oil & gas industry and financial sector - currently Partner and Chief Compliance Officer at Worldview Capital Management;
    • Other current roles include as Executive Chairman at Bulgarian Stock Exchange-listed ELARG Agricultural Land Opportunity Fund REIT;
    • Has worked in advisory roles in the asset management industry since 2006, managing complex turnaround situations in Eastern Europe and Central Asia;
    • Previous roles include as Senior Advisor with QVT, Senior Advisor at ING Bank, London, CEO of Petrol Holding in the Bulgarian part of Naftex Group, a downstream oil company with an annual turnover of more than €500m and Deputy Director of Business Development at RITEK, a Russian upstream oil company;
    • Holds a PhD in Petroleum Economics from Gubkin Russian State University of Oil and Gas, Moscow; MSc in Physics from the Moscow Institute of Physics and Technology (University); Certificate in Crisis Management; CDip AFAskeri-ACCA; attended the Trium Global Executive MBA program issued by LSE, NYU, and HEC.

Worldview Capital Management Partner and Chief Compliance Officer, Andrey Kruglykhin, said:

"We have invested significantly in Exillon and currently control 13% of the Company's shares. This reflects our view that Exillon has a number of attractive assets, which have the potential to deliver significant returns. The proposed new, experienced team at Board level will bring about the vital changes needed to unlock the true value of these assets. It is for this reason that we have informed the Company that we are requisitioning an EGM, having been unable to constructively engage with the Board since May 2012.

We believe that now shareholders are in full possession of this information, and have a clear opportunity to remedy the situation and restore shareholder value, we can count on their support to vote for these changes."

Notes to Editors:

Worldview Capital Management is an investment management group based in Switzerland and UK (FSA authorised), which controls votes of more than 13% of the share capital of Exillon Energy.

http://www.worldviewcap.com

Enquiries:
Hudson Sandler: Charlie Jack/Andrew Hayes/ Charlie Barker
+44(0)20-7796-4133


More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to imp...
SYS-CON Events announced today that ReadyTalk, a leading provider of online conferencing and webinar services, has been named Vendor Presentation Sponsor at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. ReadyTalk delivers audio and web conferencing services that inspire collaboration and enable the Future of Work for today’s increasingly digital and mobile workforce. By combining intuitive, innovative tec...
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Connected devices and the industrial internet are growing exponentially every year with Cisco expecting 50 billion devices to be in operation by 2020. In this period of growth, location-based insights are becoming invaluable to many businesses as they adopt new connected technologies. Knowing when and where these devices connect from is critical for a number of scenarios in supply chain management, disaster management, emergency response, M2M, location marketing and more. In his session at @Th...
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his Day 2 Keynote at @ThingsExpo, Henrik Kenani Dahlgren, Portfolio Marketing Manager at Ericsson, discussed how to plan to cooperate, partner, and form lasting all-star teams to change t...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
There are several IoTs: the Industrial Internet, Consumer Wearables, Wearables and Healthcare, Supply Chains, and the movement toward Smart Grids, Cities, Regions, and Nations. There are competing communications standards every step of the way, a bewildering array of sensors and devices, and an entire world of competing data analytics platforms. To some this appears to be chaos. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Bradley Holt, Developer Advocate a...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, wh...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
industrial company for a multi-year contract initially valued at over $4.0 million. In addition to DataV software, Bsquare will also provide comprehensive systems integration, support and maintenance services. DataV leverages advanced data analytics, predictive reasoning, data-driven diagnostics, and automated orchestration of remediation actions in order to improve asset uptime while reducing service and warranty costs.
Vidyo, Inc., has joined the Alliance for Open Media. The Alliance for Open Media is a non-profit organization working to define and develop media technologies that address the need for an open standard for video compression and delivery over the web. As a member of the Alliance, Vidyo will collaborate with industry leaders in pursuit of an open and royalty-free AOMedia Video codec, AV1. Vidyo’s contributions to the organization will bring to bear its long history of expertise in codec technolo...