The long awaited reply from the VIL board is shown below. I strongly believe that the issues raised have not been addressed by Greg Lee, but in fact, a "reply" and not a genuine "answer" has been provided.
Your response, comments and recommended follow up action will be appreciated.
Letter from Greg Lee:
I refer to your email, dated Thursday 1 December 2011 and provide the following responses to the matters you have raised: 1. Share price Verus is not alone with respect to ongoing volatility and not in a position to control the US and European debt issues or the world financial situation. Verus is being impacted by the current economic and stock market turmoil and uncertainty, as are many ASX and/or globally listed companies. We closely monitor our share registry and any significant movements by holders on both a weekly and monthly basis. 2. Fausse Point (FP) It is important to remember that the initial FP well was a wildcat exploration well and as is inherent in risks associated with the Oil and Gas industry the results are difficult to determine until a well has been completed and is on production. The completion and testing phase of FP#1 was undertaken in accordance with good oil field practise and was announced to the market as required. The subsequent review process of the results and the process forward to extract value from the prospect was and has been undertaken by Company and its partners and the Company believes it has been making appropriate updates to the market as is required. FP is still presently being worked on by independent technical Geological and Geophysical (G & G) experts for VIL as non operators to improve the chance of success. The VIL G & G group has been collating all the surrounding well data and reprocessing seismic data. The reason for having to do this again is that the initial interpretation was not considered of sufficient quality to enable a clear definition of the prospect. This was only completed late November 2011. There is a workshop to complete a final review of the independent technical review of the deep and shallow prospects, at which I am representing VIL. This independent technical review is critical for VIL to determine all the risks and try to ensure we understand all the geology and potential reservoirs/formations. We are doing everything we can (as non operators) to progress FP to allow an economically-driven de-risked decision on the project. A drilling program cannot commence on the shallower prospect until all the land where the shallow prospect is located is secured under lease. As previously announced this has been 75% complete for two months and we await the operator to finalise securing of the land.
3. Project assessment or selection When assessing prospects, VIL uses a balanced portfolio approach, whereby we undertake net present value analysis of the potential revenue streams minus costs on each project (for the working interest held or on offer) and then undertake a range of potential outcomes including reduced flow rates and cumulative production yields per well and increased/decreased well costs. These outcomes are then risked and compared with outcomes of other projects in order for the Company to make decisions to acquire an interest in a balanced portfolio. Due to the increased risk associated with FP, the Board has elected to attempt to reduce shareholders’ exposure on the drilling cost by finding a partner to assist with funding of the well. The Company will also take into consideration what exploration activity it has in place at any given time. Considering the time delays in getting FP to a decision point, the Company decided to participate in Sidi Dhaher and Lyons Point. Sidi Dhaher appears to have been a successful decision and Lyons Point was not. This is the nature of the oil and gas industry. 4. Changes to the Board Composition In respect of your queries in relation to the Board changes. The Company had not made any decisions or final arrangements in place as to the composition of the board prior to the AGM. Accordingly it was not appropriate to discuss such matters at the AGM. A Board meeting was held on completion of the 2011 AGM and a unanimous decision made to proceed with the changes as annoucned. The Board has sought the additional skills and experience that Mr Sam Russotti provides to VIL for some time. Andrew McIlwain had accepted a full-time CEO role for another public company and with his other directorships confirmed that he could no longer give Verus his 100% focus. David Calcei decided it appropriate to step down at the same time as Mr McIlwain. With the appointment of Mr Russotti it was considered that an appropriate skill set was available from a three-person board (at this time) and it also provides a saving to VIL of $54,000 p.a. in directors’ fees. I am available to speak to yourself or other shareholders to discuss these or other matters further.
Regards, Greg Lee Verus Investments Executive Director
VIL Price at posting:
0.5¢ Sentiment: Hold Disclosure: Held
