santos boosts central petroleum, page-4

Serious answer,

Moribund and dysfunctional board

Let me say right up front JH was not perfect, I have said many times that we have pinned each other’s ears back on several occasions, but I do accept without question that he was only following the board directions when negotiating with third parties.

His style may have been a bit abrupt or not as soft as it could have been, but I am also sure that he felt frustrated by having to negotiate deals that he knew he could not get past the board and that frustration may (would) have come through in his discussions.

However, I am not impressed with the old board members, for a variety of reasons, not the least of which is that they have been there too long, they have been given every opportunity to move this company into the position we are today but preferred to take a belts and braces style of management and do seismic, and not make the company self-sufficient, by drilling Surprise.

If the s249D notices had not been issued and motivated the board in March, I suspect we would be wandering aimlessly along as we have for the past 6 years , no real plan of action, knee jerk reactions to problems and a dysfunctional board, out of tune with JH.

I accept what JH says about funding the additional drilling at Surprise, insofar as he wanted to go to Patterson’s and ask them to get in enough money to drill Surprise, I am told he had confirmation from Patterson’s that it was highly probable that they could get enough money to drill Surprise.

I have formed the view that JH was not in the wrong in regards to his proposed course of action and was thwarted at board level.

The board rejected that proposal, and preferred to use existing funds for 3D seismic. A decision that even RC was “surprised” at.

Cash was limited at that time and any sensible method of converting this company into a cash flow positive company must in my opinion have been the number one priority.

I am also informed that all the board (Including JH) voted not to hand over the operatorship of any tenement they had as part of the deal , so in that regards , JH must and does take some of the blame.

I observe that RC has done a deal that is not in accordance with that old company policy, but I cannot fault JH for simply following a board decision which he agreed with.

I can however fault the majority of the board for not making commercial decisions in the interests of shareholders.

The 3D aspect may or may not have been correct, it is history now, but it has added to my body of reasons for seeking the removal of the old board.

I also note that JH wanted to put the JV/FI out to a process with at least one international organisation locating potential JV/FI partners.

This apparently is a highly regarded method; this again was rejected by the board.

Conduct of the board

I look at the timing (after the Board received my March 7th letter inviting them to resign and informing them that a s249D notice was imminent) and the indecent haste, in appointing two more directors, I observe that at no time that I can recall, (and I stand to be corrected) had the board ever informed the shareholders of the need to increase the board from 4 to 6 thereby increasing administration costs.

I also look at who was appointed, Mr Whittle and Mr Elscholz. (Who subsequently resigned a short time later from the board position), the resignation of Mr Escholz fortifies me that it was a temporary measure up to and including the general meeting of the shareholders, rather than filling a void in expertise at board level.

I came to the conclusion that the filling of the two vacancies was a tactic to stop the “rebels” from getting at least two new board members onto the board.

Such a tactic was expensive and smacked of self preservation in my opinion.

Termination of JH

I look at the timing (after the Board received my letter inviting them to resign and informing them that a s249D notice was imminent) and indecent haste, in the termination JH and I look at the reasons set out in the statement to shareholders setting out reasons for terminating JH.

I have read and listened to what JH had to say,

I have read what was written in the statements to shareholders.

I much prefer the JH version.

I do not accept that JH did any wrong in relation to Mr Short, I have listened to JH and it has the ring of truth about what he says, I have essentially cross examined very closely him many times and his story has never changed.

I have significant experience in Industrial Relations and unfair dismissals (Breach of employment contracts), and in my opinion, the company has placed itself in the position of having to pay substantial compensation to JH.

This in my opinion was not in the interest of shareholders to place the company at the risk of litigation, which is now in train.

Nor do I accept, not for one second that JH did as is suggested in regards to spending company money inappropriately.

For the above reasons, I cannot support Mr Askin and Mr Dunmore, it is the right time in my opinion to let those two gents relocate and let the company elect other people to the vacancies and start of 2013 with a completely new board and energy and direction.

Clearly the events since March 2012, have given shareholders a substantial increase in the share price.

I am confident that this will continue to occur, but all being said, it should have occurred under the old board.
I am a firm believer in the old saying, “change they people or change the people”.

And that “you can’t teach old dog new tricks”.

Richard Cottee will do very good things for this company; but he needs to have an energetic and focused board.

So my answer is yes, I will (and so will others) be seeking to remove Mr Askin and Mr Dunmore at the AGM.

And if not at the AGM then by way of voting against the remuneration report.

Such disruption is unfortunate, but I have invited Mr Askin and Mr Dunmore to resign quietly on several occasions, if they chose not to take the hint, then a more direct approach has to be employed.

I suspect that there will not be the same Insto support for Mr Askin and Mr Dunmore at the AGM.

I suspect that the instos would prefer to see a new energetic board move the company forward in 2013.

The power of CTP shareholders was demonstrated very clearly in June 2012.

Now that the company is stepping over the threshold onto the National stage, it is time we do it with the right people in management.

CB