Becoming HRT board :-), fascinating stuff though, like Dallas...

Becoming HRT board :-), fascinating stuff though, like Dallas (JR=MM, well, MM is much more than a mere CEO).


http://online.wsj.com/article/BT-CO-20130513-712440.html?mod=googlenews_wsj

Wall Street Journal.

Investment Funds Seen Driving Surprise Shuffle at Brazil's HRT


By Jeff Fick

RIO DE JANEIRO--Brazilian oil startup HRT Participacoes em Petroleo SA (HRTP3.BR) completed a surprise management shakeup Monday in what analysts see as a push for change by two investors after a series of setbacks.

Southeastern Asset Management and Discovery Asset Management, which together control nearly 20% of HRT's shares, drove the change after gaining greater say over HRT's board of directors, said analyst Luana Helsinger of the Grupo Bursatil Mexicano brokerage in Rio de Janeiro.

Discovery fueled the shift on HRT's 11-member board by getting three of its candidates elected last month, Ms. Helsinger said. While four board members remain clearly linked to the company's founders, led by former Chief Executive Marcio Rocha Mello, the affiliations of the remaining four members are unclear, Ms. Helsinger said.

Discovery declined to comment for this article. Southeastern didn't respond to requests for comment. HRT declined to comment, saying it would discuss the matter in a conference call on Wednesday, after the release of its first quarter financial results.

Milton Franke was named as the new chief executive on Monday, after Friday's surprise resignation by Mr. Mello, the company's charismatic founder. Mr. Franke, who joined HRT in 2009, spent 26 years at state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR) in the company's engineering and research departments. Wagner Peres, president of U.S. subsidiary HRT America, also resigned Friday. Mr. Mello and Mr. Peres will remain as members of HRT's board of directors.

While Mr. Mello's enthusiastic salesmanship drummed up interest in the company ahead of a $1.5 billion initial public offering in November 2010, HRT has stumbled on some of its projects. HRT has discovered natural gas in a remote area of the Amazon jungle known as the Solimoes Basin, but has struggled to find ways to get it to market. HRT also struggled to attract partners for blocks it owns off the coast of Namibia.

HRT eventually sold stakes in its exploration blocks in Brazil and Namibia, but the delays raised concerns among investors about when the company would generate concrete results. HRT shares have tumbled more than 50% over the past year. On Monday, the shares declined 17.4% to 3.80 Brazilian reais ($1.89).

"The market didn't like the change very much," said Pedro Galdi, chief analyst at Sao Paulo brokerage SLW. But profit-taking and an overall weak day for Brazilian shares were also amplifying HRT's decline, Mr. Galdi added.

Merchant bank Tudor, Pickering, Holt & Co., LLC said in a note that the resignation could "ring some alarm bells" ahead of results from two key exploration wells in Namibia and Brazil, due in the next few weeks.

Ms. Helsinger said that once the dust settles, the changes are likely to be viewed as positive. Mr. Mello's enthusiasm created high expectations for HRT after he promised to deliver production quickly--a description that's rapidly becoming a meme in the Brazilian oil industry given the woes of another billionaire Brazilian oilman, Eike Batista.

Mr. Franke represents "continuity, but is more reserved," Ms. Helsinger said. "He'll create fewer expectations."