{"id":1164,"date":"2015-02-06T21:06:33","date_gmt":"2015-02-06T21:06:33","guid":{"rendered":"https:\/\/crownpointenergy.com\/?p=1164"},"modified":"2015-02-06T21:06:33","modified_gmt":"2015-02-06T21:06:33","slug":"feb-06-2015","status":"publish","type":"post","link":"https:\/\/crownpointenergy.com\/?p=1164","title":{"rendered":"Feb-06-2015"},"content":{"rendered":"

Crown Point Advises Shareholders to Question\u00a0Dissident LAIG\u2019s Claims about Hispania Petroleum in Argentina<\/a>\u00a0<\/strong><\/p>\n

Shareholders Urged To Vote the White Proxy in Support of Second Tranche Financing and Against Dissident Attempt to Take Control of Company<\/strong><\/p>\n

TSX-V: \u00a0CWV: Crown Point Energy Inc. <\/strong>(\u201cCrown Point\u201d or the \u201cCompany\u201d) today advised shareholders to question claims that dissident shareholder LAIG Oil Investments (\u201cLAIG\u201d) has made about a closely held company called Hispania Petroleum S.A. (\u201cHispania\u201d) in Argentina.
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\u201cLAIG has recently argued that shareholders should vote for LAIG\u2019s dissident nominees because they will leverage LAIG\u2019s relationship with Hispania to the benefit of Crown Point,\u201d said Gordon Kettleson, Chairman of Crown Point. \u201cWe believe shareholders should question LAIG about the nature of that relationship and should also question LAIG about Hispania\u2019s current assets and operations in Argentina.\u201d<\/p>\n

What is LAIG\u2019s relationship with Hispania?<\/strong><\/p>\n

Crown Point believes clarification is required about the exact nature of LAIG\u2019s relationship with Hispania, which has not been explained by LAIG. Shareholders need to know details about the history and depth of this LAIG relationship before the vote.<\/p>\n

Although LAIG never mentioned Hispania in its disclosures in the months prior to publishing LAIG\u2019s January 29, 2015 dissident circular, Hispania is now front and center in LAIG\u2019s dissident campaign for control of the Board. LAIG has named Hispania in several documents and mentioned Hispania no less than 13 times in its circular and accompanying letter to shareholders. Despite these frequent references, LAIG fails to explain the nature of LAIG\u2019s relationship with Hispania or why LAIG believes Hispania might be willing to help Crown Point.<\/p>\n

Crown Point notes that LAIG has attempted to reinforce the importance of Hispania in the proxy contest by posting a six-page Hispania \u201cGroup Summary\u201d document to LAIG\u2019s dissident website. The document purports to provide current information about Hispania, including its properties, production and reserves. Despite the prominence LAIG gives to Hispania, there is no mention of LAIG in Hispania\u2019s \u201cGroup Summary\u201d.<\/p>\n

With Hispania now a major factor in LAIG\u2019s campaign, Crown Point believes shareholders need to know more. Shareholders should ask LAIG why Hispania would allow itself to be leveraged for the benefit of Crown Point. Shareholders should also ask what Hispania would do for Crown Point and what Hispania would demand in return.<\/p>\n

Is Hispania really operating a producing property in Argentina?<\/strong><\/p>\n

Crown Point believes shareholders should be aware that questions have arisen about LAIG\u2019s description of Hispania as having oil reserves and production in Argentina from a concession that Hispania owns and operates. LAIG leaves the strong impression that these reserves, production and operatorship relate to a concession called Area Puesto Guardian. LAIG names no other Argentine concession that Hispania owns and operates.<\/p>\n

Crown Point draws the attention of shareholders to this disclosure because Crown Point believes that another company owns and operates Area Puesto Guardian. As a result, the matter is significant for the proxy contest.<\/p>\n

Crown Point bases its conclusion regarding the ownership of Area Puesto Guardian on the following facts:<\/p>\n

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  1. President Energy plc of London (\u201cPresident Energy\u201d), a company listed on the AIM Stock Exchange, issued a news release on July 30, 2014 announcing that it was the sole owner and operator of Area Puesto Guardian, having purchased the remaining 50% interest in the property that it did not already own. For the convenience of Crown Point shareholders, here is a link to the news release on President Energy\u2019s website: http:\/\/www.presidentenergyplc.com\/assets\/downloads\/Puesto_Guardian_Acquisition_2014_07_30.pdf<\/a><\/li>\n<\/ol>\n
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    1. President Energy\u2019s news release identifies one of the two sellers of Area Puesto Guardian as Tripetrol Petroleum S.A., which coincidentally is a company named in one of LAIG\u2019s Hispania documents as a \u201cpredecessor\u201d to Hispania.<\/li>\n<\/ol>\n
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      1. The Argentine Government\u2019s official registry confirms President Energy\u2019s ownership and operatorship of Area Puesto Guardian.<\/li>\n<\/ol>\n

        Crown Point believes the Area Puesto Guardian property described by President Energy is the same as the one described by LAIG since they have the same name and both parties describe the property as having the same location in Argentina\u2019s Noroeste Basin. Other than the apparent ownership contradiction, Crown Point notes only one difference between President Energy\u2019s and LAIG\u2019s description of Area Puesto Guardian: President states that the concession was \u201crelatively dormant under the seller\u2019s tenure\u201d while LAIG states that Hispania\u2019s operations in Argentina, presumably from Area Puesto Guardian, \u201chave continued successfully for over 20 years.\u201d<\/p>\n

        According to LAIG\u2019s proxy fight materials, including the six-page Hispania \u201cGroup Summary\u201d mentioned above, Hispania appears to have only three named producing properties that it owns and operates. The two named properties that are not Area Puesto Guardian are both in Russia. Hispania also discloses that in late 2013 it acquired assets in Texas, USA.<\/p>\n

        The apparent sale of Area Puesto Guardian by a predecessor to Hispania raises critical questions for shareholders, including the following ones:<\/p>\n

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        1. Given that LAIG has not claimed any other properties for Hispania in Argentina, does Hispania still own and operate any producing properties there?<\/li>\n<\/ol>\n
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          1. If Hispania owns and operates no producing properties in Argentina, and is now focused on Russia and the U.S., what value is there in LAIG\u2019s claimed leverage for the benefit of Crown Point in Argentina?<\/li>\n<\/ol>\n
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            1. If LAIG has a relationship with Hispania that is as strong as LAIG suggests, how is it possible that LAIG made no mention of the sale of Area Puesto Guardian?<\/li>\n<\/ol>\n
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              1. Given the prominence that LAIG has given to Hispania\u2019s capability \u201cas an oil operating company in Argentina,\u201d should LAIG correct its circular and other disclosure materials prior to the vote?<\/li>\n<\/ol>\n

                Crown Point cautions shareholders that based on recent experience LAIG may be unwilling to provide further disclosure on Hispania. Crown Point notes, for example, that LAIG failed to disclose to shareholders the unfavourable and coercive terms of a financing proposal that LAIG tried to force on Crown Point last November.<\/p>\n

                Crown Point also cautions shareholders that LAIG may issue a dismissive clarification deep within a lengthy document, such that it may not be widely noticed. That\u2019s exactly what happened when LAIG clarified its status as \u201cnot an Argentine company\u201d shortly after Crown Point disclosed, based on court documents, that LAIG is formed under the laws of the Cayman Islands and that its principal place of business is the Cayman Islands.<\/p>\n

                Crown Point notes that LAIG buried the clarification on page 13 of a dense 15-page open letter. LAIG also downplayed the clarification as being \u201cof no consequence\u201d even though it is actually a significant fact, given that Crown Point only operates in Argentina and given that LAIG had previously created the impression of itself as Argentine by issuing all of its news releases with a Buenos Aires location and by listing Buenos Aires first among its four offices in proxy contest disclosure documents, whereas on LAIG\u2019s website the Buenos Aires office is the last one listed.<\/p>\n

                Shareholders urged to vote the White Proxy<\/strong><\/p>\n

                Crown Point submits that these unanswered questions about the nature of LAIG\u2019s relationship with Hispania and Hispania\u2019s apparent sale of Area Puesto Guardian in July 2014 are further reasons for shareholders to be wary of LAIG and to vote the WHITE<\/strong> proxy at the forthcoming Shareholder Meeting.<\/p>\n