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National Business Review (NZ): Southern Petroleum investors back in court

Southern Petroleum investors back in court
453 words
5 May 2006
(c) 2006 The National Business Review

May 5, 2006

The country's longest running insider trading case is still alive and more interesting thanks to Greymouth Petroleum's just-announced big find

Nick Bryant

Back before the Securities Commission evolved from mewling puppy to ferocious Rottweiler – and insider trading cases were practically unheard of – a band of grumpy oil and gas investors began suing what was then Fletcher Energy for alleged withholding of valuable inside information.

What started in 1995 and is known to the courts as the c150/99 case is back in court today for a costs hearing before Justice Hugh Williams.

The plaintiffs, whose identities have changed a little over the past decade, are former Southern Petroleum shareholders whose company was taken over by Fletcher Energy. They are still led by the tenacious Tony Gavigan.

The defendant, whose identity has also changed a few times over the case's tortuous lifetime, is global petroleum giant Royal Dutch Shell.

Today's court appearance is one of a number of costs hearings – Shell has already paid the plaintiffs $1 million, with more being sought – but the case is “alive and well and headed for trial,” Mr Gavigan said this week.

The hearing also comes at an interesting time, with Mark Dunphy's Greymouth Petroleum having just last week announced the successful finding of a $1 billion dollar gas and condensate field located at Turangi 1 in the northern part of the old PPL (petroleum prospecting licence) 38705.

Litigation, backstabbing and accusations of underhand dealings have dogged that piece of onshore Taranaki since 1988, when US-controlled New Zealand Petroleum Company was awarded a 10-year licence to explore PPL 38705.

The question being asked on the oil fields of Taranaki this week was, what did Greymouth's team of ex Fletcher Challenge Energy consultants know about the value of the site that neither Royal Dutch Shell nor Todd Energy, who have both at times had dibs on the contentious patch of dirt, appear not to have been aware of?

Both parties are preparing to produce billions of dollars of gas and condensate from the Pohokura field to the immediate north the site.

And Todd purchased interests from Shell just to the south in 2002.

Questions over the value of the land beneath Greymouth's big strike are at the heart of the Gavigan-led case.

Just what did Fletcher Challenge Energy's team of directors, employees and consultants know about PPL 38705 that neither Southern Petroleum's independent directors, nor minority shareholders, appear to have been made aware of during the takeover over Southern Petroleum by Fletcher Challenge Energy in 1995?

Everyone, Mr Gavigan and others hope, will soon know the answer.

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