Quest Resource Corp. and Quest Energy Partners LP said Tuesday they have recovered $2.4 million in cash, some stock in a separate corporation and interest in two natural gas assets as settlement following an internal investigation of former CEO Jerry Cash.
Last year the entities launched a joint investigation into some "questionable transfers" totaling $10 million from Quest affiliates to an entity controlled by Cash (see Daily GPI, Aug. 26, 2008). As part of the investigation, Quest Resource and the partnership filed lawsuits against Cash, the controlled entity and the other owners of the controlled entity to recover the funds that were transferred.
Under the terms of the settlement agreements with Cash, Quest Resource received $2.4 million in cash, as well as 60% of the controlled entity's interest in a gas well located in Louisiana and a landfill gas development project located in Texas. The partnership received the stock of an unnamed corporation that owns oil producing properties in Oklahoma.
"Although we would have preferred to have received assets with value equal to the amount of the questionable transfers and the cost of our internal investigation, we believe the settlements are in the best interest" of the entities' stakeholders "given the cost, uncertainty and delay in pursuing our potential claims through litigation," said Quest Resource President David Lawler.
Cash was named chairman of Quest Resource in 2002 when the company acquired his former company, STP Cherokee Inc. He was named CEO of Quest Resource and the partnership in September 2004.
Quest Resource currently conducts most of its production operations through Quest Energy Partners, and it conducts gas transportation and processing operations through Quest Midstream Partners LP. The entities have the rights to develop around 105,000 net acres in the Appalachian Basin, including 97,000 acres in the Marcellus Shale.
Earlier this month Nasdaq sent a staff determination to Quest Resource stating that the company's common stock was subject to delisting because it had delayed filing its 3Q2008 report, the annual report for 2008 and the 1Q2009 report. The company has requested a hearing before Nasdaq to appeal the staff determination, which automatically stayed the delisting until June 3.
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