Mr. Cohen expressed the view that two current members of the board should be replaced and discussed desired attributes and possible candidates with management. Mr. Cohen also expressed the view that the company needed to reduce administrative expenses, revise its compensation policies, strengthen financial management and improve investor relations. He also stated that he was not seeking an overall change in leadership of the company, but sought to encourage management to lead the company in making the changes necessary to maximize all stakeholders' value in a timely fashion.
From the Purpose of Transaction section of the filing:
The Reporting Person generally regards himself as a passive investor with respect to the Common Stock. However, in May 2005, the Reporting Person drafted a letter to the Board of Directors of the Company which was also signed by nine other investors in which certain recommendations were made, including a request that the amount of non-cash compensation paid to employees and management be rigorously reviewed in light of the current profitability and financial condition of the Company.
In addition, as a result of the Company’s performance and drilling failures prior to February 2006, in early February 2006 Barton J. Cohen, one of the other investors who had signed the letter which the Reporting Person had drafted and sent to the Company in May 2005, sought a meeting with senior management, of the Company. On February 22, 2006, Mr. Cohen and two other shareholders, including the Reporting Person, met with senior management to discuss recent drilling failures and prospects, the direction of the Company’s business and governance issues. Management was encouraged by those present to place one or more new independent directors on the Board having one or more of the following attributes: exploration and production experience comparable to the issuer’s business, capital market expertise and significant stock ownership. On August 16, Mr. Cohen alone met again with management and had a further discussion, focusing primarily on governance and operational matters. Mr. Cohen expressed the view that two current members of the board should be replaced and discussed desired attributes and possible candidates with management. Mr. Cohen also expressed the view that the Company needed to reduce administrative expenses, revise its compensation policies, strengthen financial management and improve investor relations. He also stated that he was not seeking an overall change in leadership of the Company, but sought to encourage management to lead the Company in making the changes necessary to maximize all stakeholders' value in a timely fashion. Mr. Cohen stated in an Amendment No. 1 to a Statement on Schedule 13D filed with respect to the Company’s Common Stock filed by him and certain other persons with the Securities and Exchange Commission on August 22, 2006 that Mr. Cohen intended to continue encouraging management to take such actions.
Since the Reporting Person’s meeting with management of the Company on February 22, 2006, at the request of management of the Company, the Reporting Person has had several conversations with management, prospective new board members and certain other shareholders regarding new potential members to the Board of Directors and a new performance-based compensation plan. The Reporting Person anticipates that these conversations will continue to be held as management develops a proposed response and solution to the issues raised by Mr. Cohen in his August 16, 2006 meeting with management.
The Reporting Person reserves the right from time to time to acquire or dispose of shares of Common Stock, or to formulate other purposes, plans or proposals regarding the Company or securities of the Company held by the Reporting Person to the extent deemed advisable in light of general investment policies, market conditions and other factors.