The war of words between Empire Oil & Gas and its joint venture partner ERM Power continues, with Empire directors warning shareholders that ERM lacks the experience needed to guide an oil and gas company.
The war of words between Empire Oil & Gas and its joint venture partner ERM Power continues, with Empire directors warning shareholders that ERM lacks the experience needed to guide an oil and gas company.
ERM last month called a meeting of shareholders to consider removing Empire's executive chairman Craig Marshall and fellow directors Neil Joyce and Jeffrey MacDonald, with Bevan Warris the only current Empire director to remain in place under the plan.
Brisbane-based ERM is Empire's joint venture partner in a number of projects, including the Red Gully gas and condensate processing facility near Gingin, as well as Empire's biggest shareholder with a 10 per cent stake in the company.
Under the proposal, ERM representatives Brett Heading and former Western Power managing director Tony Iannello will be appointed as directors and the board will appoint a new chief executive and two independent directors, one of whom will take over as chairman.
Mr Heading will resign as a director once the new chief executive and board are in place, leaving Mr Iannello as the sole ERM representative on the board.
In a letter sent to shareholders today, Mr Marshall said the current board consisted of "hands-on" technical experts with deep experience in the oil and gas industry.
"I respecfully consider that it would be a mistake to change the management of the company at this time and leave the appointment of those managers to ERM who is Empire's minority joint venture partner in seven joint ventures," Mr Marshall said.
"ERM is a power distribution company; not an explorer or an entity experienced in oil and gas operations."
ERM claimed in a seperate letter to shareholders that it had been patient with Empire's board but the directors had failed to deliver sufficient value for shareholders and had done a poor job of managing the company's assets.
Empire recently revealed that it had been hit with a further 10.9 per cent blowout in the cost of building and commissioning the Red Gully plant.
The company said the total cost of the facility would be $38.7 million, up from its previous guidance of $34.9 million, released in April.
Before that, the company had estimated the project would cost $29.1 million.
Mr Marshall claims however that ERM had not put forward any constructive suggestions to reduce costs or delays prior to calling for a board spill.
He also defended his new employment contract, saying it was appropriate he moved from a contracting role to an employee role as the company had gone from being an explorer to a producer.
Mr Marshall's new contract is for three years, not five as the company had previously reported. He said this was a typographical error in the company's annual report.
Empire shareholders will vote on the proposed board changes at a general meeting to be held next month.
Empire shares were unchanged at 1.5 cents at the close of trade today.
