BUENOS AIRES, Feb. 10, 2015 /CNW/ - LAIG Oil Investments ("LAIG") announced today growing support from the shareholder base and expressed concerns with recent claims made by management of Crown Point Energy Inc. (the "Company" or "Crown Point").
LAIG is very encouraged by the support it has received from Crown Point's shareholders, many of whom have expressed disappointment and concern with the direction of the Company and its leadership. In particular, LAIG has obtained the support of Mr. Martin Walter, who is not only a current shareholder and the co-founder of the Company but also has a successful track record in Argentina. Mr. Walter stated, "as a co-founder, former director and currently a significant shareholder of Crown Point I have been disappointed by the direction in which Crown Point has been taken. Since my departure, Crown Point's stock price has plummeted and management's salaries have grown. I have reviewed LAIG's turnaround strategy and believe that it is significantly better than the strategy that the Company currently has in place." Mr. Walter is in the process of voting the Gold proxy accordingly.
Questions for Management
LAIG also urges shareholders to carefully consider the critical issues facing the Company and not be deceived by the "smoke and mirror" tactics being employed by the board and management. LAIG has significant concerns regarding the lack of experience, expertise and track record of the recent Argentine appointees to the board of directors, including that they completely failed at managing oil assets in Argentina. Further, shareholders should be aware of the inevitable result that, if the proposed financing is approved, Liminar Energia S.A. ("Liminar") and its partner GORC S.A. (the "New Investors") will gain full control of the Company. LAIG believes this creates substantial risk for shareholders; these new investors' intentions have not been disclosed, and conflicts could exist between their own assets and the Company's assets in Argentina.
In light of foregoing, shareholders should be asking themselves::
- Why is management agreeing to hand over control of the Company to a relatively unknown third party that does not have adequate experience in the oil and gas upstream industry?
- What have the New Investors promised management that hasn't been disclosed to shareholders? For example, what is the purpose of the Areas of Mutual Interest Agreement entered into with the New Investors?
- Unless there are undisclosed arrangements between Liminar and Management, wouldn't it have made more sense for the Company to engage in financing discussions with LAIG – a significant, long-term shareholder whose principals have executed far more substantive and successful investments in the energy industry in Argentina and whose offer was superior in every respect?
- Why has management refused LAIG any representation on the Company's board, yet allowed Liminar two representatives?
- Why has management refused to address any of the concerns LAIG included in its detailed, comprehensive and constructive letter to the board? Management seems to have plenty of time available to put out press releases attacking LAIG; shouldn't they spend some of that time answering these critical and valid questions, or ensuring that the Company has the right of first refusal to which it is entitled, with respect to its ability to grow its stake on Tierra del Fuego, the Company's most valuable asset, in the context of the sale of APCO to Pluspetrol?
- A year from now, when the Investment Agreement expires, Liminar will have full control of the company. WHAT WILL HAPPEN TO THE VALUE OF YOUR INVESTMENT THEN?
LAIG is dismayed by the refusal by Management and the Board to respond to its letter, which includes a comprehensive list of valid concerns of a long-term shareholder. "I am very concerned that Management and the Board of Crown Point continue to mislead shareholders with deceptive allegations against LAIG," said Jorge de Pablo, founder of LAIG. "Their refusal to address the very real concerns we articulated in our letter, and their rejection of our financing offer as 'not bona fide', is a disservice to all shareholders and further evidence of their failure to protect the interests of the Company's shareholders. The facts are clear and speak for themselves."
Ultimately, shareholders must choose between control by Liminar, an essentially unknown entity and the substantive proposals set forth by LAIG, a long-term shareholder with a proven track-record in the energy industry in Argentina and a credible turnaround plan who has attracted a key operator willing to work with the Company, in order to ensure efficiency and productivity. LAIG and its nominees will work tirelessly to ensure Crown Point becomes the company we, the shareholders, expect it to become: a well-run, efficient operator with a management team that makes a daily effort to run the Company with the lowest possible costs and with a proper alignment of interests, between management and the board, on the one hand, and the shareholders on the other, including "skin in the game" and compensation based on measurable success and not based on what some third-party consultant decides, based on dubious and/or irrelevant data.
LAIG's interests are 100% aligned with those of the other shareholders. The current management and the New Investors can't say the same.
In response to management's deceitful attempt to discredit Hispania Petroleum ("Hispania"), a well-established oil operator in Argentina and other countries, LAIG has clarified several key points. Hispania has indicated that it would be willing to provide services to Crown Point following the appointment of LAIG's nominees to Crown Point's board of directors. Hispania is willing to work hand in hand with Crown Point and its new board to allow Crown Point to achieve its potential. To be clear: LAIG is not an operator of oil companies. LAIG is a private investor in energy companies. Its strategy, which is backed by results, consists in ensuring that its portfolio companies have the right combination of assets and management teams to create shareholder value. LAIG, therefore, in pursuit of a viable turnaround plan for Crown Point, has sought an established operator with experience in Argentina and no potential conflict of interest with Crown Point. That operator is Hispania.
Jose Peñafiel CEO of Hispania stated, "Hispania has been present in Argentina since September 1991 when it was awarded the UTE Puesto Guardian Concession (with a 60% interest). In August 2003, Hispania through its subsidiary Petrolera San Jose S.R.L. took over Operatorship of the block in partnership with Antrim Energy. During its time as Operator of Puesto Guardian Petrolera San Jose distributed over USD15MM in dividends to the Puesto Guardian partners, this was achieved by increasing production from 200 BOPD to 2000 BOPD and by keeping costs down. The Hispania Group's subsidiary Petrolera San Jose S.R.L operated the Puesto Guardian Concession for a USD 60 thousand dollar monthly fee, which shows the level of operating efficiency and low costs with which the group operates. In February 2010 Hispania acquired the minority 40% working interest from Antrim Energy. Later in 2011 President Energy acquired a 50% working interest from Hispania. In July 2014 Hispania agreed to sell its interest in Puesto Guardian to President Energy, and in December 2014 handed over Operatorship. This strategic divestiture aims to reallocate capital to other productive Basins in Argentina mainly the Neuquen and Austral Basins. Hispania believes there are greater opportunities in this area and is also focused on acquiring exposure to unconventional resources that are complementary to its activity in the Permian Basin where it is producing from the Wolfcamp Shale formation."
LAIG recommends that shareholders vote only the GOLD proxy in support of LAIG's recommendations as the primary step towards real value creation. A completed GOLD proxy will replace any previously voted proxy. In order to be counted at the Special Meeting of the Company's shareholders, the GOLD proxy should be voted well in advance of the proxy voting deadline of Thursday February 19, 2015 at 10:00 a.m. (Calgary time). Please do not attempt to mail your proxy unless you have no other alternative.
Shareholders who require assistance voting the Gold proxy should please contact Shorecrest Group at 1-888-637-5789 or by email [email protected].
The vote is scheduled to be held in the Bonavista Room in the Westin Calgary, located at 320, 4th Avenue S.W., Calgary, Alberta on Tuesday, February 24, 2015 at 10:00 a.m. (Calgary time) and at any and all adjournments or postponements thereof (the "Special Meeting").
SOURCE LAIG Oil Investments