Tuesday 12 December 2017

The week ahead in Business

Brian O'Cathain, chief executive of Petroceltic
Brian O'Cathain, chief executive of Petroceltic
John Mulligan

John Mulligan

What's in store this week


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Petroceltic and Worldview set for Clash Wednesday

Showdowns between company boards and shareholders are always interesting - for journalists at least. Some notable ones from over the years come to mind: former and now late Taoiseach Albert Reynolds lost control of now defunct Bula Resources at a noisy annual general meeting in the summer of 2002.

More recently, investment firm One51 had a boisterous annual general meeting in 2010, when Philip Lynch saw off a challenge led by disgruntled shareholder Gerry Killen. A year later, Mr Lynch was ousted by the One51 board.

But despite the fact that corporate bust-ups make for good stories, neither shareholders nor companies tend to emerge particularly well - at least in the short term - from such melees.

On Wednesday at 11am at a venue on Dublin's Kildare Street, the board of Irish exploration firm Petroceltic will attempt to thwart efforts by its biggest shareholder - Swiss investment firm Worldview Capital - from making significant changes at the company.

At the extraordinary general meeting, Worldview Capital, which owns almost 30pc of Petroceltic, wants to oust the Irish company's chief executive, Brian O'Cathain, and appoint two of its own nominees to the board as non-executive directors.

Those two nominees include Worldview founder Angelo Moskov.

The two sides have been engaged in increasingly bitter bouts of invective over the past few weeks, with both trying to make their respective cases to shareholders.

Worldview has accused Petroceltic of investing too much money in capital expenditure and injecting that money into the wrong assets.

It also claims that Petroceltic, which has a market capitalisation of €390m, hasn't been developing a gas project in Algeria quickly enough, and that assets in Egypt aren't being managed properly. It has claimed Mr O'Cathain is the "main architect" of Petroceltic's "failing strategy".

Petroceltic has countered that Worldview is setting out to destroy the Irish company and trying to take control without actually buying it. It insists that Worldview fails to understand the technical issues behind its assets, and that its proposed strategy "risks serious damage" to its assets in north Africa.

It also insists that the removal of Mr O'Cathain could "materially prejudice" the business and its operations because of his understanding of the company and his relationships with stakeholders.

Petroceltic claims that Worldview has put forward "no credible reason" as to why Mr O'Cathain should be removed.

Shareholders - many of them small retail investors - are likely to turn out in force on Wednesday for the EGM. Mr Moskov could struggle to reach the 50pc+1 of the votes he needs to make the changes he wants, but says he's confident he'll succeed.

But even if he leaves the College of Physicians building on Kildare Street on Wednesday having failed in this battle, the saga won't be over.

Worldview will still own its Petroceltic shares and is likely to return after licking its wounds.

That's assuming, of course, that it fails.

The other prospect is that Worldview succeeds.

Mr Moskov said he's confident that changes would then result without Worldview having to direct such change.

But it would be naive to think that Mr Moskov and Worldview would then simply sit back to see what happens.

In the background to all this is Dragon Oil.

Last year it pulled a planned €665m takeover of Petroceltic. But it's still nosing around. Last week, the Dragon Oil chief executive said he's still interested in Petroceltic.

Just where all this drama leaves Petroceltic's small shareholders remains to be seen.

Newsmaker - Brian O'Cathain, Petroceltic

Brian O'Cathain, chief executive of Irish-listed explorer Petroceltic, is a perfect advertisement to young people for taking a gap year and following your heart.

The foundations of the Belfast man's career lie in a teenage decision to disappoint his father, by turning down an offer to study medicine at Trinity College Dublin.

Mr O'Cathain decided to earn some money to go travelling instead.

He set off in the late 1970s to the Shetland Islands, where business was booming thanks to the recent discovery of North Sea oil.

The future chief executive's first job was sweeping up oil and dead birds from the beach in the wake of a major oil spill.

From there O'Cathain (55) worked his way up to lab assistant for an exploration company, before saving enough money to travel to India.

There he met a group of fossil hunters. This cemented his interest in rocks, eventually leading to a degree in geology at Bristol University.

That, in turn, led to Shell, jobs on rigs in New Zealand and the North Sea and a stint at another Irish explorer, Tullow Oil.

He also headed up Enterprise Oil's operations in Mayo to extract gas from the Corrib gas field, a process that is only nearing completion 20 years after the first gas find. He was brought in after a series of PR blunders and he is still scathing about the State's failure to help companies extract oil and gas from our waters.

Mr O'Cathain joined Petroceltic as an executive chairman early in the last decade and since then has slowly pushed the company into the big time.

Like most exploration companies, Petroceltic concentrates on the far-flung parts of the globe that the big companies ignore.

It is active in Bulgaria, Egypt, Greece, Italy, Kurdistan Region of Iraq and Romania but its biggest asset is in Algeria, the former French territory which was wracked by a bitter civil war in the 1990s.

Petroceltic discovered a massive gas field in the region, which was among the top 10 finds worldwide in the year it was unearthed. The company revealed a $2bn investment plan for the Ain Tsila gas project last year.

Algeria is considered a lucrative country in which to discover gas because it is connected to the European gas grid and produces just under a third of the gas imported into the EU.

Ain Tsila has the potential to supply vast quantities of energy to Spain and other European countries and free their dependence on Russian gas, Petroceltic has said.

Irish Independent

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