Asset Energy as the operator of the PEP11 title has appealed the Joint Authority's decision to refuse it's Suspension, Variation, and Extension application validly submitted 23/1/20.
The application was refused on three grounds being (a) Force Majeure, (b) finance, and (c) public interest.
I have reviewed various documents and I believe the case against Scott Morrison is strong and can be won, here is why:-
First and foremost, NOPTA's recommendation to the Joint Authority was to approve the application. NOPTA, as the regulator, has a team of industry experts that deal with offshore permit applications from all over Australia. Their views on the merit of the application carry the most weight. Approval advice attached.
I note the Joint Authority members made contrasting findings. The NSW JA member John Barilaro did not raise any concerns about the Force Majeure, Finance, or Public Interest. NSW decision attached.
In 2016, David Breeze was removed as Managing Director of MEC Resources. At the time, Asset Energy was a subsidiary of MEC Resources as MEC held a controlling interest in Asset's parent, Advent Energy. David Breeze claimed his removal was in contravention of the Corporations Law in that he had not resigned and nor had he been voted out by shareholders at a properly constituted meeting. Following a 4 year legal battle, the MEC board acknowledged that David's removal was illegal and reversed the decision to remove him, and deemed his Directorship as continuing through that period. Asset Energy claimed the illegal removal of David Breeze as MD constituted a Force Majeure. See attached.
NOPTA's assessment of the Advent reason of Force Majeure was that it did not meet work-bid criteria. I disagree, the circumstances of a Managing Director being removed from their position illegally falls well outside "common risks associated with the industry". This occurrence is very uncommon, highly irregular. See criteria attached
NOPTA made the Joint Authority aware of the risk of ignoring the Force Majeure by citing the potential loss of the case and the cost to taxpayers if the decision is challenged by referring to the Pathfinder Energy precedent. See attached
The primary issue that the Government faces in defending the reason of financial concerns is that it is outside the scope of a Suspension, Variation, and Extension application. In addition, NOPTA has stated that it is standard practice for titleholders to raise funding once they have security of title. Putting the above to the side, Advent had made clear and significant steps to raising the required funds. They released the Advent offer which in addition to providing entitlements to existing Advent shareholders, it welcomed subscriptions from third parties. See attached Then in February 2021, BPH raised $9M which exceeded it's entitlement and underwriting commitment to the Advent offer. See attached As at 31/3/21, BPH held $10M in it's bank account so to suggest there was a significant shortfall is blatantly false. See attached.
Given the above, and that Bounty has also demonstrated it's capacity to cover it's 15% commitment, the reason of financial concerns has no foundation or merit IMO
PUBLIC INTEREST
This area is quite grey and cannot on it's own be used as reason to decline. Therefore, if a Judge found that the Force Majeure and Financial reasons did not have merit, Advent would win.
Why is it grey? There is no guidance in the legislation as to what the test is for public interest.
What do we know? Save Our Coast Surfriders change.org petition paddle outs town hall meetings
Was the public involved? yes Were these events well attended? I would argue no Is the petition in an acceptable format? no Did NOPTA or any of the JA actually observe these events? no
So, there is anecdotal evidence of public interest but what is the benchmark? The population of Terrigal? The population of the Central Coast? The population of NSW? The population of Australia? I would argue it fails all these tests.
The "talking point" of the Government's public interest argument focuses on "pristine beaches" and "tourism" concerns. That argument is made without one single piece of supporting evidence and is inconsistent with NOPTA's other activities. There is no evidence of tourism or beaches suffering in other title areas, Broome/Kimberleys, Northern Territory, Otways/Great Ocean Road (12 Apostles, Bells Beach) and Gippsland (Phillip Island Penguin Parade, Wilsons Promontory, Gipplsand Lakes, 90 Mile Beach) That inconsistency is highlighted by the fact at the same time these arguments were being made against PEP11, The Resources Minister was releasing new acreage just kilometres offshore from the 12 Apostles. If PEP11 represented the risks the Government purports it does, those risks would apply equally or greater in other title areas. It is my personal view that the public interest component is pure NIMBYism and the areas surrounding PEP11 have an equal or lesser risk than other title areas. For example, Chevron's Gorgon project is located in a Marine Reserve making the marine life concerns equally unproven.
The final point surrounding public interest that I would make is that much of the public interest has been exposed to, and possibly derived from, misrepresentation. Activists and the media have used images of drill rigs in Sydney Harbour, drill rigs in the shore breaks, images of oil spills etc. These are not accurate and no judge would buy these arguments. Facts of the matter are that the well location is 26km offshore, will likely be invisible to the naked eye, and the exploration is for gas not oil.
So on that basis, Asset has a strong case IMO. But to me these are not the main strengths of the Asset case. The true strength lies in the allegation of "predetermination" in that Scott Morrison had already made his decision before "joining" the Joint Authority.
APPREHENSION OF BIAS
Scott Morrison first mentioned PEP11 on 4/3/21 when he was asked if he supported PEP11, he answered "NO" Scott Morrison again mentioned PEP11 on 21/4/21 when asked again, he stated "I have been crystal clear that it's not something I support" Scott Morrison made his position even clearer in a radio interview in May 2021
Scott Morrison acquired the DISER portfolio on 15/4/21
But why? If Scott Morrison wasn't interested in fundamentally departmental matters (which is what NOPTA applications are), then why acquire the portfolio? If Scott Morrison was ambivalent of the PEP11 outcome, or supportive of it, then why acquire the portfolio? If Scott Morrison was determined to cancel the permit, and had no legislative ability to do so, and his Resource Minister refused to cancel the application due to valid concerns, what could Scott Morrison do? Well he could acquire the portfolio using a trick he learned the previous year when he became Health Minister, Treasurer etc and make himself the Resources Minister, and then use that power to cancel the permit. To the best of my knowledge, Scott Morrison only used his purported power as JA member on one application, PEP11. See attached some interesting comments from DISER reps in Parliament.
This ladies and gentleman, is, in my opinion, an irrefutable example of "predetermination".
THE DISER INSTRUMENT
Asset Energy recently amended it's court documents to add the DISER instrument to it's arguments, stating that it is void. If the DISER instrument was found to be void, the JA decision would automatically be voided and the application returned to the Minister for further consideration.
Is it void?
The Solicitor General's opinion was that the appointments were legal under the constitution but held concerns that it breached the principles of good governance. A leading SC, Kim Rubenstein voiced an opinion that the instrument was flawed in that it conferred only administrative powers, and not the title which the OPGSS Act requires for Joint Authority Membership Former High Court Judge Bill Gummow voiced an opinion that the secrecy of the appointments made them invalid
These are all opinions and are none are right nor wrong until tested in court.
However, they are a primary focus of the Virginia Bell Inquiry and she will no doubt have more to say on the validity of the instrument. I very much look forward to Virginia's findings.
Bottom line, if the DISER instrument is not valid, the application will be returned to Madeleine King.
Unfortunately for Madeleine, she unintentionally wedged herself on PEP11 late last year when attacking Keith Pitt. Madeleine was not to know that Keith Pitt was telling porky pies pretending he still had a say on PEP11 and that she should have been asking her questions of Scott Morrison. See attached
I do expect PEP11 to come back to Madeleine King and it is going to give her and Anthony Albanese one hell of a headache!!!
The amendment to the Asset court case means that 2 of my 3 reasons are now combined into todays thread. I will post my 3rd and final reason in two weeks time.
Cautionary Statement - I am not a lawyer so the above are just my personal opinions and interpretations. The evidence, or lack of evidence, is not a guarantee of a particular outcome in a court case, just ask Lindy Chamberlain and OJ Simpson. Therefore, as always, please DYOR, and be aware that the above is not financial advice.
BPH Price at posting:
1.7¢ Sentiment: None Disclosure: Held
(20min delay)