Welcome!

News Feed Item

Natlata Questions Details of PetroNeft Farm-Out Deal

LONDON, April 22, 2014 /PRNewswire/ --

Natlata Strongly Objects to Board Securing Their Own Future as Pre-Condition  

Natlata Partners Limited ("Natlata"), the private investment company that is the largest single shareholder in PetroNeft Resources Plc ("Petroneft"), notes Petroneft's announcement of 17 April 2014 regarding the farm-out agreement with Oil India Limited ("OIL").

     (Logo: http://photos.prnewswire.com/prnh/20140417/681309 )

Natlata has always said that it is not against the principle of a farm-out and that it would support a deal if it was at the right price and with the right terms.  On the information so far released it has difficulty to see if the announced farm-out fulfils these criteria, as:

  • Only USD35m of the announced amount appears to be unconditional
  • Terms and conditions for the payment of USD45m have not been disclosed
  • USD5m is subject to the current management reaching 7,500 bopd within just one Sibkrayevskoye field
  • In spite of continued failures and mismanagement, under the proposed transaction the current Board will successfully secure a further three-years of employment with the Company

Natlata believes that, as ever, with such complex deals, the devil is in the details, of which the Board has characteristically provided very few.  If the deal is as attractive as suggested, Natlata would consider supporting it.  Unfortunately the announcement only provided clarity with respect to USD35m, while the rest of the money is or may be subject to the current management actually delivering on its promises - which, Natlata notes, should sound alarm bells for shareholders, if past performance is anything to go by.

Natlata also finds it inappropriate that the Board should seek to guarantee their future employment with the company as a condition of delivering much-needed financing.  This is the latest example of questionable corporate governance from a Board that appears to look after itself before shareholders.   The same Board that has already burnt through USD200m with so little to show for it will retain sole discretion of the use of new funds. It will also be free to continue hiring the same drilling contractor owned by a member of the PetroNeft Board, that has until now failed to deliver, with nothing to suggest that the contractor will have a sudden reversal in fortune.

With respect to the headline figure of USD85m, whilst this is a superficially attractive one, critical details are lacking.  Natlata therefore urges the Board to answer the following questions, before it can decide whether it will support the transaction or not, and suggests that other shareholders stay their decision on how to vote until they have heard the answers:

  • What are the terms behind the USD45m for exploration and development expenditure?
  • Is the USD45m going to be in cash as part of the farm-out transaction or is it related to any debt or equity deal?
  • Is the USD45m conditional in part or full?
  • When will the USD45m be made available?
  • What are the regulatory approvals, which the transaction is subject to, to be obtained post "the rejection by shareholders of all resolutions at the requisitioned EGM due to take place at 11:15AM on 9 May 2014"?
  • If the board has completed this deal at such favourable terms as presented, this raises further questions about the recent stealth placement announced on 17 March 2014. Why did they need to incur the costs and shareholder dilution to place 10% with what seems to be a closed group of supporters so recently, which, with the proposed deal, effectively results in a 65% dilution of shareholders?

It is noted that OIL has the right to "second certain technical experts into PetroNeft's Tomsk team. OIL also has the right to become the Operator of the Licence should there be a substantial change in the management team of PetroNeft within the first three years."

  • What are the terms which will trigger either of these situations?
  • Are there any other terms, such as continued underperformance, which could trigger OIL's intervention or any pre-emptive rights?

Maxim Korobov, Natlata's controlling shareholder, said:

"I am pleased to see that shareholders are now going to be given a say on this deal, however I am extremely concerned that the Board has effectively given an ultimatum saying that shareholders either have to accept the status quo in the management of the company or the transaction will not happen at all.  Moreover, we disapprove of the Board's decision to call an EGM 45 minutes before our own, which is clearly an attempt to prevent shareholders from having a full discussion of the key issues that have been raised.  This smacks of the high-handed corporate governance that all shareholders have seen from this Board for too long.  My fear is that without fundamental change this will be yet another case of the Board of PetroNeft diluting shareholders and wasting even more money, with little or no result and at the same time securing a comfortable position for themselves." 

ENDS

About Natlata Partners Limited

Natlata Partners is a private investment company that seeks out investments with a focus on Russia and CIS countries that appear to be distressed or are at an early stage of development and which will clearly benefit from effective management and proven sector experience.  For more information about Natlata and our investments please contact [email protected].  More details on our proposals for PetroNeft can be found at http://www.value4petroneft.com.

For media enquiries please contact:


Stuart Leasor
[email protected]
+44-7703-5377211

or

Tom Blackwell
[email protected]
+7-919-102-9064

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.

Latest Stories
DevOps and microservices are permeating software engineering teams broadly, whether these teams are in pure software shops but happen to run a business, such Uber and Airbnb, or in companies that rely heavily on software to run more traditional business, such as financial firms or high-end manufacturers. Microservices and DevOps have created software development and therefore business speed and agility benefits, but they have also created problems; specifically, they have created software sec...
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
SYS-CON Events announced today that Roundee / LinearHub will exhibit at the WebRTC Summit at @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. LinearHub provides Roundee Service, a smart platform for enterprise video conferencing with enhanced features such as automatic recording and transcription service. Slack users can integrate Roundee to their team via Slack’s App Directory, and '/roundee' command lets your video conference ...
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
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...
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera M...
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...