Oil firm makes U-turn in Ukraine
MOST people would shudder at the prospect of being sent to Siberia. Not David Greer. He spent four years on the bleak Russian plains as director of a vast oil and gas project for Shell and, although life was tough, it was not all about hardship.
‘‘ Sometimes you’d get up in the morning and a metre of snow would have fallen - you couldn’t even open the door,’’ he says. But there was snowmobiling and in summer, shooting, riding motorcycles, even jetskiing. ‘‘ I like to work hard and play hard ... and drive anything fast,’’ grins Greer, a rumbustious Glaswegian.
Perhaps it is this unconventional approach that persuaded him last November to take up the job of chief executive at Regal Petroleum, a company that has received much publicity over the years — not always for the right reasons.
Formed in 1996 by Frank Timis, a colourful Romanian tycoon, and listed in 2002, Regal’s most promising drilling prospects are now in Ukraine, although the company is exploring for oil in Timis’s home country and in Egypt.
Regal is best known for a 2005 share scandal that erupted after claims that Timis, then the company’s chairman, had overhyped the prospects of an oilfield at Kavala in Greece. In the run-up to the debacle, Regal’s shares had soared to highs of 509p after investors were led to believe that the field contained up to one billion barrels of oil, making it one of the biggest finds in Europe. At the time, the pressure inside the well was said to be so high that the drilling platform above it was at risk of being destroyed.
The company had raised 40 million pounds of new money from investors in the weeks leading up to the announcement but in fact the well was virtually dry. That prompted the Financial Services Authority and the stock exchange to begin separate investigations as the shares plunged to less than 50p.
Timis, who in the 1990s was convicted on two charges of heroin possession, was forced to resign later. He remains on the sidelines as Regal’s biggest single shareholder with a 20 per cent stake.
Although the company remains the subject of a disciplinary hearing by the Alternative Investment Market, Greer says that he prefers to focus on the future and bats off questions about the episode. ‘‘ It’s wrong to continue to tarnish the company for something that happened in 2005,’’ he says. ‘‘ Too many people are stuck in the past.’’
He points out that there are no senior executives left at the company from that time and that the Greek field has since been sold, along with other assets in Liberia. The ongoing disciplinary hearing has no bearing on the running of the business today, Greer insists.
Instead, he prefers to talk about Regal’s three fields in Ukraine, which independent consultants believe contain nearly 170 million barrels of proven and probable reserves. If handled correctly, he believes that they have the potential to transform the company and deliver a substantial boost to its $A540 million valuation.
‘‘ The best legacy for me would be to transform this ragdoll of the London city press into a respectable, mid-tier oil and gas company on the main market,’’ he says.
With this in mind, Greer — who says that he left Shell last June because he was turning 50 and, fed up with constant travelling, wanted to spend more time with his family — has been busy assembling a strategy to accelerate Regal’s drilling program. Last month, he completed a $179.3 million fundraising round that was oversubscribed — not bad going for a roadshow undertaken in the depths of the credit crunch. A marked increase in gas output is expected this summer, with full-scale production due to begin next year.
‘‘ There is no excuse for us not going forward and making a success of it,’’ Greer says. ‘‘ Regal has every right to be differentiated for all the right — not the wrong — reasons.’’
Nevertheless, he finds it harder to fend off questions about a more recent spate of headlines — this time regarding the circumstances of his own appointment.
Regal’s prospect in Ukraine was so enticing that last autumn, just before Greer joined the company, it had attracted the interest of his old employer, Shell.
Neil Ritson, Greer’s predecessor as chief executive, who joined Regal in the aftermath of the 2005 shares scandal, had signed the company up to a $437 million joint venture with Shell to co-develop the fields.
When the deal was announced to the market on November 21, it was welcomed by many as a sign that Regal was regaining credibility. Nevertheless, it proved to be an unpopular decision with key shareholders, including Timis, who wanted Regal to go it alone in Ukraine. They believed that Shell was picking up quality assets on the cheap.
In typical Regal style, a remarkable turn of events ensued. The following day, November 22, Ritson was ousted in a shareholder coup and replaced by Greer. On November 23, Shell pulled out of the partnership.
Greer bristles at the mention of all this. At the time, he says, he was working as a consultant and had been granted access to data regarding Regal’s fields in Ukraine.
‘‘ Our view was that you could deliver as much value by delivering it yourself than by selling it to Shell or anyone else. We obtained the support of 70 per cent of shareholders — including Timis. Then on November 22 we were approached and asked if we could take on the role of chairman and CEO. We came over the same day.’’
Despite his apparent admission that Timis did, indeed, play a role in the process, he fiercely denies the notion that the former chairman retains any undue influence over the company: ‘‘ Frank Timis is not a director. He has no influence over the company. It’s a nonissue and a figment of the imagination of a bitter and twisted few.’’
Some may find this hard to believe, but Greer is insistent. He adds that he has learnt much since his appointment. A 28-year career at Shell took him all over the world, including stints as an engineer in the deserts of Oman, offshore Norway, Argentina, northern Canada and the Philippines. But he never felt at home in the marbled halls of the city.
‘‘ I came from quite a poor background,’’ he reflects, ‘‘ but over the past three months I have learnt a hell of a lot. There is a lot of mystique about the city.’’ But Greer, every inch the grizzled oilman, is not the sort to be put off by this lack of experience. ‘‘ I have always relished a challenge,’’ he says. The Times