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Proxy fight!

The proposed transaction that would merge Pace Oil & Gas, AvenEx Energy and Charger Energy may not be a done deal just yet

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Feb 14, 2013

by Max Fawcett

A proxy fight is brewing in Calgary, but it doesn’t have anything to do with Agrium, which recently added two members loyal to activist investor Jana Partners LLC to its board of directors in an attempt to avert a showdown of its own. No, the fight is between those in favour of a merger that will see Pace Oil & Gas, AvenEx Energy and Charger Energy combine under a new name, Spyglass Resources, and those opposed. The opposition is led by Vancouver-based Nova Bancorp and recently attracted a powerful ally to their cause in the form of the Canadian Pension Plan Investment Board.

The transaction will be voted on by shareholders of all three companies at a special meeting scheduled for February 19 in Calgary, and while the CPPIB only holds approximately 284,000 shares (out of a total float of 47 million) in Pace Oil & Gas (TSE:PCE), its opposition certainly carries symbolic weight.

For its part, Nova Bancorp and its affiliates and associates control an aggregate of 108,200 shares in Pace Oil & Gas, or approximately 0.23 per cent of the total number of shares issued and outstanding. And as the Calgary Herald’s Dan Healing reported on Monday, shares in the company are so widely held that it’s difficult to imagine enough getting together to block the transaction.

Meanwhile, shareholders of WesternZagros (CVE:WZR) could be in for something of a windfall if recent news about the size of the company’s Kurdish resource is any indication. The most recent results from its Kurdarmir-2 well indicate that there could be as many as two billion barrels of oil and gas equivalent under the ground on its property, a substantial increase on earlier estimates. As a result, FirstEnergy’s Gerry Donnelly bumped up his price target to $3, an equally substantial premium (nearly 200 per cent) on where the stock is trading right now.

And Talisman Energy reported a profit on the quarter ending December 31, 2012, although the underlying numbers weren’t quite as rosy. As the Financial Post reported, the company recorded profits of $376 million on the quarter, an improvement on the $117 million that it lost in the same quarter in 2011. But excluding one-time items (asset sales, mostly) the company actually lost $0.10 a share in the quarter, while its cash flow was down to $675 million from $824 million in Q4 2011.

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Not surprisingly, then, CEO Hal Kvisle has pledged to slim the company downMarket, both by continuing to sell off non-core (in other words, gassy) assets and reduce capital spending. “We will live within our means, reducing investment to live within cash flow,” he said yesterday.

 

 

 

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