Press Releases

A statement by Selena Oil & Gas Holding AB:s (publ) (SOGH) Chairman, Mr Oleg Popov addressing the present status, and the new strategy of the company

05.03.2013

 

A statement by Selena Oil & Gas Holding AB:s (publ) (SOGH) Chairman, Mr Oleg Popov addressing the present status of the company, and the new strategy of the company
 
Dear shareholder, and stakeholders,
I would like to take the opportunity to inform of recent developments in SOGH on the present status of the company, as well as describing our future plans;
 
On January 14, 2013, the Extraordinary Shareholders' Meeting of SOGH carried out a complete replacement of members of the Board of Directors. The previous board and CEO were replaced, in connection with a voted non-confidence to the Board of Directors. The reason for this was the fact that from August 2012, the Board of Directors ignored the requests from a majority of shareholders (more than 82% of shares) to convene an extraordinary shareholders' meeting.
 
The company’s majority shareholders had during mid 2012 come to the conclusion that the previous Board of directors and the CEO were unable to manage the company and its subsidiaries towards the critical objective of attracting necessary investments to finance the company’ s Business Plan and further to finance the critical expansion of the company’s production.
 
Now, it is clear to the new Board of Directors that the previous Board of Directors were not interested in pursuing the development of SOGH through executing the Business Plan worked out in 2011 by the corporate team headed by N.A. Popova.
 
The careful implementation of Selena’s Business Plan would have released a potential to increase the company’s oil production from present level of 121 000 bbl a year up to 1,2 Mmbbl a year, i.e. more than 10 times. The project would have generated profits from 2014, and in 2013-2022, and the accumulated amount of profits less taxes has a potential to rise above USD 300 million.  The profitability of the company will, after the successful implementation of the Business Plan, increases the gross margin from 34.6% to 66.9%. The project is highly profitable and the risk level is attractively low with proven and possible reserves (2P) of more than 40 Mmbbl.
 
It is very difficult to interpret the motives behind the previous Board of Director decision on November 23 2012, to pledge 100% of shares in the subsidiary Selena Oil & Gas AB (SOG) and a group of companies included in it, to secure the loan granted by an external creditor in an amount of USD 2.05 million and approved by the previous management with an interest rate of 35% p.a. A remarkable fact is that the assets pledged, have a book value of USD 40 million. A culpable aspect of this transaction is the close relationship and common business affiliation between the previous Chairman of SOGH and the Chairman and majority owner of the external creditor. 
 
It is the new Board of Directors opinion that this decision and the execution of it in January 2013 were unlawful and in violation with the practice of Swedish Law. A Board of Directors must always seek to act in the interest of all shareholders and in particular to seek to protect the company from any external party seeking to acquire the company’s assets at an deflated valuation. Today, the new Board of directors of SOGH cannot rule out that the agenda of the previous board was not in the best interest of a majority of the company’s shareholders.
 
The activities of the previous Board of Directors and its management will be subject to careful investigations. At this point of time, it is too early to rule out any future legal action from the company’s shareholders to challenge the previous Board of Directors and its management’s actions.
 
The new Board of Directors has adopted a new strategy. The first part is to bring in a new management seeking to normalize the situation in SOGH. The next part is to begin the implementation of the company’s Business Plan. This requires a new financing strategy. Since February, the company is in the process of establishing plans to reduce the company’s dependency on its creditors.
 
Best regards,
 
Chairman of the Board of Directors
Selena Oil & Gas Holding АВ,
Honored Oil Worker of Russia
O.I. Popov
 
 
For further information, please contact:
Magnus Stuart, CEO
phone: +46 70 621 13 50, 
e-mail: magnus.stuart@selenaoil.com
 
Selena Oil & Gas Holding AB (publ) (former Emitor Holding AB) is engaged in the production of oil and in the Volga-Ural region in the Russian Federation, including Perm and Udmurtia. The company is listed on NASDAQ OMX First North Premier in Stockholm under the ticker SOGH. Mangold Fondkommission is the company´s Certified Adviser and liquidity provider, telephone +46 8-503 015 50.
 

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