Glass Lewis report backs Petroceltic but warns over drilling record

A report by the shareholder advisory firm Glass Lewis on the dispute between Petroceltic International and its dissident 28 per cent shareholder, Worldview Capital, found the Irish firm has outperformed its peers in recent years.

Worldview will today try to oust Petroceltic’s chief executive, Brian O’Cathain, at a shareholders’ meeting in Dublin.

Glass Lewis, however, compiled a detailed report, seen by The Irish Times, that rejects many of Worldview's complaints, which include concerns over board composition, shareholder returns and development of its oil and gas assets.

Glass Lewis benchmarked Petroceltic's performance, in terms of total shareholder returns, against peers including Circle Oil, Afren and Cairn Energy.

It concluded that the company had outperformed its peer group over the last three years. But Petroceltic’s performance lagged its peers over the last five years, it said.

The advisory group noted that most of the board had only served for relatively short periods, with the exception of Mr O’Cathain, who joined in 2007.

“As such, we believe only Mr O’Cathain could be held reasonably responsible for the company’s longer-term underperformance,” Glass Lewis said.

It noted, however, that he served on its board “at the time it approved the merger with Melrose in 2012, which represented a transformative transaction”.

Plans to accelerate

Glass Lewis described Worldview’s plans to accelerate production at the company’s prime Algerian asset as “a remarkable improvement over the development plan prepared by the company”.

It said, however, that Worldview’s reduced-cost plan does not take into account how it would overcome numerous technical and practical barriers to developing the asset.

The report says Petroceltic “believes there is a visible terrorism threat” to operating in Algeria, whose government is fighting Islamist militants. It says the company is likely to incur major expenses building safeguards.

The report agrees with some of Worldview’s concerns, and criticises the current board for its “poor track record” in drilling in recent years. It also agrees with Worldview that it should sell its Egyptian assets.

Worldview wants Mr O'Cathain removed and two of its nominees, Angelo Moskov, Worldview's founder, and Maurice Dijols, appointed.

Glass Lewis said a board that contained both Mr Moskov and Mr O’Cathain would probably not “function in an effective manner”.