NATHAN VANDERKLIPPE

The Globe And Mail

00:00 EST Wednesday, February 18, 2009

CALGARY -- Chasing what could be a major new gas find in the Caribbean, Canadian Superior Energy Inc. is scrambling to fend off a major shareholder and meet the demands of a key creditor.

"Just weeks from completing a potentially lucrative deep well off the coast of Trinidad and Tobago, the Calgary-based company found itself facing both a $45-million loan call from Canadian Western Bank and a potential revolt led by its largest shareholder, Palo Alto Investors, LLC, which said yesterday that it wants to bring in its own leadership slate.

Adding to its woes, Canadian Superior, which has prospects in North Africa, the United States, the Prairies and Nova Scotia and is run by well-known oil executive Greg Noval, has also been pressed by BG Group PLC.

The British natural gas giant obtained a court order last Thursday appointing Deloitte as a receiver over Canadian Superior's 45-per-cent share in a potentially lucrative offshore exploration block east of Trinidad.

That exploration block, called Intrepid, has focused intense pressure on the company. According to a recent Canadian Superior presentation, Intrepid could contain as much as four trillion cubic feet of natural gas, an amount equal to a 10th of Alberta's gas reserves. Two wells - each more than five kilometres deep - have already found gas, and a third is weeks away from completion.

But Canadian Superior's troubles in paying costs on that well triggered the move by the Canadian Western Bank, which sent a letter yesterday demanding repayment of a $45-million credit facility by Feb. 23.

Canadian Superior, which produces just under 4,000 barrels of oil equivalent per day, said in court last week that it did not have the $7-million needed to fund 10 days of drilling, said Tracey Ball, Canadian Western's chief financial officer. "They made a statement that they didn't have any cash," she said. "So that's when we had to move."

Canadian Superior said last week that it was working to sell a quarter of its interest in the Trinidad partnership, which includes BG with a 30-per-cent piece and fellow Calgary junior Challenger Energy Corp. with the remaining 25 per cent.

Yesterday, Palo Alto Investors, which owns 9 per cent of Canadian Superior, blamed a lack of confidence in the company's leadership for its depressed stock price, and said it wants a vote to bring in a new slate of directors.

"We believe the board's action, and in many cases, their inaction, has left us no choice," David Anderson, Palo Alto's head of energy research, said in a statement.

Neither Canadian Superior nor Mr. Noval responded to requests for comment.

In a statement, Canadian Superior said yesterday that it is attempting to extend the Canadian Western repayment deadline, and is waiting to receive about $18-million in revenues from asset sales and tax refunds.

BG spokesman Neil Burrows declined to comment on whether it might consider buying Canadian Superior. BG is a major Trinidadian player and has interests near Intrepid.

However, the recent sales of Tusk Energy Corp. and Bow Energy Ltd. show that buyers are "willing to pay reasonable prices" if they like what they see, said industry analyst Josef Schachter."

Cheers; Scott