Leadership change at Madalena Energy gets endorsement

The departure of Kevin Shaw from the chief executive’s office at Calgarybased Madalena Energy Inc. is being endorsed by the New York activist hedge fund that has been calling for change since buying a stake two years ago.

On Thursday, the Argentina focused oil producer announced Shaw was no longer with the company and said chairman Steven Sharpe has been appointed interim CEO. It also noted banker Eric Mark of Batuta Capital Advisors has been appointed to the board.

Steven Azarbad, chief investment officer of Maglan Capital, which has raised its stake in Magalena from nine per cent to 17 per cent over the past year, said he has been calling for leadership changes.

“We voiced our concerns to the board and made some recommendations to the board,” he said, adding he’s “very comfortable” with Sharpe’s ability to get Madalena to the “right place” operationally and strategically.

“We just thought it was time for a change. You know, sometimes, just doing the same thing is not good enough.”

Sharpe did not immediately return a call asking for comment.

On March 14, Madalena announced it would not proceed with the US$ 8- million acquisition of an additional 10 per cent working interest in the Coiron Amargo block in Argentina and a related share offering of C$ 27 million as announced March 1.

Azarbad said it was the right decision as the share issue would have resulted in “severe dilution” of Madalena’s equity.

Madalena’s share price was little changed on news of Shaw’s departure, closing Thursday at 24 cents.

It has ranged between 20.5 and 43 cents in the past year.

The company announced in February it had struck a deal to sell its modest producing assets in Canada, making it a pure Argentina play.

Oil produced by Madalena in Argentina receives a governmentmandated price set at about US$ 67.50 per barrel, a premium to current Brent and WTI pricing. In November, it reported third- quarter production of about 3,500 barrels of oil equivalent per day.

It holds about 400,000 net hectares in four provinces of Argentina where it employs horizontal drilling and multi- stage completions technology.