BG, Canadian Superior in energy showdown
PORT SPAIN
Trinidad & Tobago Guardian
Petroleumworldtt.com
02 24 09
Conflict over a joint investment in Block 5 (c) off the east coast of Trinidad is at the centre of a row between BG and troubled energy company, Canadian Superior Energy Inc. BG last last Thursday succeded in having a Canadian court appoint Deloitte as receiver for Canadian Superior's share of exploration of Block 5 (c), which has three offshore wells. Drilling and test of two wells have been completed.
The company said last week that about US$290 million has been spent on the project so far. Canadian Superior owns 45 per cent of the partnership, and has been the operator, while BG owns 30 per cent and Calgary-based junior Challenger Energy Corp holds the remaining 25 per cent. BG Group said it made the move against Canadian Superior to ensure the last of the three wells is completed. But in a release last Thursday, Canadian Superior said it “questions the motives” of BG, given the fact that the Canadian company had been trying to monetise all or a portion of its Trinidad interests.
Canadian Superior said it had instructed its legal counsel to pursue all available legal remedies including an appeal. BG T&T said it would not comment as the matter was the subject of “potential ongoing legal action.” The block in contention is 94 kilometres off the east coast of Trinidad, and contains three wells. Two of the wells, Victory, Bounty, have been drilled and tested while there's still work to be done on the third well, Endeavour. “There must be bills that aren't being paid to the drilling contractors and of course BG would be on the hook as one of the owners,” said Josef Schachter an analyst with Maison Placements.
“At the same time, they want to finish testing on the last well, Endeavour, so they know how big the size of the prize is,” he said.
That's not the end of Canadian Superior's problems. Palo Alto Investors, the single-largest investor in Canadian Superior, with about 8.9 per cent of its common stock as of December 31, wants to replace the current board with a slate of its own nominees. Palo Alto partner David Anderson said,”We believe the board's action, and in many cases, their inaction, has left us no choice.” He said, “Recent developments relating to the company's key strategic assets in Trinidad, as well as the ongoing conflicts of interest at the board level, have forced us to take this step. The board has a fiduciary duty to act in the best interest of the company. Recent events suggest that this board may have lost sight of that duty.”
On Tuesday, Canadian Superior said it had received a letter from Canadian Western Bank demanding full repayment of a US$45-million credit line by February 23. Canadian Superior said it is in talks with the bank to extend its repayment deadline and is also in discussions with alternative lenders. Canadian Superior said it is also trying to raise money by selling its share of the offshore project. Schachter said that option may be a challenging one in such a tight time frame. “There's potentially a very big asset. The question is: what do you pay for it in this lower commodity price environment?” he said.
Story from Trinidad & Tobago Guardian
Trinidad & Tobago Guardian
February 18th, 2009
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