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Oil finds fuel shareholders’ bid against Shell

Stuff.co.nz: Oil finds fuel shareholders’ bid against Shell

“to press their long-running $23 million insider trading case against Shell.”: “The High Court has already ruled the small shareholders had a case to take against Shell. That decision was upheld by the Appeal Court.”

29 August 2004

By GARRY SHEERAN

Spiralling oil share prices are spurring on shareholders in the former oil explorer Southern Petroleum to press their long-running $23 million insider trading case against Shell.

Shareholder spokesperson Tony Gavigan said he was confident they now had information to prove price-sensitive information was withheld from them during Fletcher Energy’s takeover of Southern Petroleum in 1995.

He said the new information emerged during a search of relevant documents as part of the legal “discovery” process in recent months.

That process began in November last year when Shell withdrew an attempt to take the matter to the Privy Council, and agreed the full case be heard in the High Court first.

Shell, which bought Fletcher Energy’s assets in 2000, has assumed liabilities, including legal challenges by small shareholders.

Southern Petroleum shareholders were paid 75c a share in the takeover, but say they should have got $1.25 a share more because price-sensitive information on Southern’s oil and gas prospects were withheld from them.

Gavigan said the recent NZ Oil & Gas (NZOG) finds west of Maui were in the same Kapuni sands and at similar depths (between 3500m and 4500m) as the Mangahewa and Pohokura prospects sold to Fletcher Energy before their potential was widely known.

He said NZOG shares had risen from 39c to highs of more than 80c on the strength of finds at the Pateke, Amokura and Tui wells.

“NZOG’s share play is a timely reminder of what Southern Petroleum shareholders missed out on,” he said.

Gavigan said some estimates suggest Southern Petroleum shares would have traded as high as $3 in similar circumstances.

The country’s longest-running insider trading case is due to be heard in the High Court in Auckland on November 8.

The High Court has already ruled the small shareholders had a case to take against Shell. That decision was upheld by the Appeal Court.

However, the High Court has made no judgement yet on the insider trading case itself.

Shell has strongly denied the allegations, and still has the right to take certain legal issues to the Privy Council.

A victory by the 700 small shareholders would open the way for all Southern Petroleum shareholders to seek compensation.

That could escalate the claims against Shell from $23m to $100m-plus, or about half the $190m profit Shell NZ made last year.

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