The founder of now-insolvent Canadian Superior Energy Inc. said he and the company's CEO were asked to resign last month by the board of directors.
Greg Noval, the founder and executive chairman of Canadian Superior, said he and CEO Mike Coolen had called a board meeting late last month to recommend bids for the company's interest in the Intrepid Block 5(c), which is located about 60 miles off the east coast of Trinidad. The discovery, made in 2005, is estimated to hold up to 5 Tcf of natural gas (see NGI, Aug. 18, 2008).
Canadian Superior reported last year that the offshore discovery could produce at a rate of 200 MMcf/d. The Calgary-based producer holds a 45% working stake in the block and is the operator. BG International Ltd., a subsidiary of BG Group plc, owns a working interest, as does Challenger Energy Corp., which is partially owned by Noval and his wife.
Noval had said that offers for Canadian Superior's stake in the Intrepid Block could help the company emerge more quickly from bankruptcy restructuring under Canada's Companies' Creditors Arrangement Act. However, the directors "chose not to even review or see the bids," Noval said.
The board, said Noval, may have been influenced by a group of dissident shareholders who have questioned whether to sell all or a part of the Intrepid Block. In a letter to the board in early April, institutional shareholder Palo Alto Investors LLC said it had reservations about the sale.
"While a sale of Block 5(c) may realize a significant gain for the company, we cannot be certain that such a transaction can be completed and no backup plan has been publicly identified," the letter from Palo Alto Investors stated. "Furthermore, (Palo Alto) believes that there may be a more opportune time to sell Block 5(c) -- that is, if the company maintains maximum ownership today, completes a development plan, establishes gas offtake agreements and obtains project financing commitments for the development."
The investor group also has urged Noval's ouster partly because of his conflict of interest as a shareholder and as a senior executive at Challenger Energy. Palo Alto noted that last September Canadian Superior loaned Challenger C$14 million to finance its 25% share of the Intrepid project. About a month after the lending agreement was completed, Noval resigned from the Challenger board, but he continues to hold about 9% of the company's shares. Challenger also has filed for bankruptcy protection.
In early April Noval threatened to file a defamation lawsuit against Palo Alto Investors. He also demanded a public apology.
Canadian Superior had no additional comment on the management changes. It appointed Jake Harp, now a director, as interim chairman. More announcements are pending, the company said.
Noval said he would for now remain a director of the company and would continue to push to sell the Trinidad stake. However, he said he would take more time for his family.
"I'm going to start enjoying life, because running a public company isn't a piece of cake," he told the Canadian press. "I have four young daughters. I'm going to spend some time with them. I have a lot of other interests in real estate, in ranching, in farming. And I'm going to do some community stuff and I'm going to look after my health."
Noval and the companies he has helmed are no stranger to lawsuits. In 2001 Canadian Superior launched a takeover bid for the former Canadian 88 Energy Corp., a company Noval also had founded and had run for 14 years (see NGI, April 30, 2001). Noval left Canadian 88 in 2000 after a change of control and formed Canadian Superior.
When the takeover for Canadian 88 was launched Noval was still a member of the board and the largest private shareholder. Canadian 88 subsequently sued Noval for C$150 million and alleged that he had breached his fiduciary duties as a director for attempting the hostile takeover (see NGI, July 16, 2001).
Several lawsuits also were filed against Canadian Superior in 2004 in U.S. District Court for the Southern District of New York. The complaints alleged that Canadian Superior, Noval and Coolen had issued several "materially false and misleading statements" about the company's El Paso Mariner I-85 well located offshore Nova Scotia (see NGI, March 22, 2004). In turn, Noval filed a lawsuit against Canada's National Post, its owners and certain reporters for C$75 million for damages related to alleged misleading reporting on the Mariner exploration project (see NGI, June 14, 2004).
In 2005 Canadian Superior agreed to pay US$3.2 million to settle the class action lawsuits over the Mariner I-85 well (see NGI, June 13, 2005). No admission of liability was made.
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