NATHAN VANDERKLIPPE

CALGARY — From Wednesday's Globe and Mail Last updated on Wednesday, Aug. 12, 2009 02:50AM EDT

http://www.theglobeandmail.com/report-on-business/canadian-superior-yields-to-big-investor/article1249028/

Dissident shareholder Palo Alto Investors emerged victorious from a long battle with Canadian Superior Energy Inc. after the Calgary oil company yesterday recommended a new board of directors largely hand-picked by the U.S. investment firm.

If shareholders approve the new board, it could mark a new chapter for Canadian Superior, whose troubles in drilling a promising Caribbean natural gas find set off battles with shareholders, joint venture partners and creditors - and launched it into bankruptcy protection earlier this year.

The company is now working to raise capital, either through debt or equity, and intends to release a plan to emerge from Companies' Creditors Arrangement Act protection ahead of a shareholder meeting on Sept. 9.

"We expect to be fully recapitalized and debt-free with some cash when we come out," said Richard Watkins, who is the sole current director nominated to the new board.

The new board and fresh plan could end a long fight between Canadian Superior, which was founded by Calgary oil man Greg Noval, and a number of dissident shareholders, led by Palo Alto, which sparred with Mr. Noval and pushed for a new board of directors.

Palo Alto declined comment on its moves, although its boardroom coup suggests a near-complete victory for the company, which is Canadian Superior's largest shareholder and has been a strong believer in its assets.

Palo Alto proposed four of Canadian Superior's proposed slate of directors - oil and gas lawyer Kerry Brittain, certified public accountant Marvin Chronister, geologist James Funk, and oil and gas executive William Roach. The firm also approved the other two nominees, corporate finance lawyer Gregory Turnbull and Mr. Watkins, an energy consultant.

The new board "is very deep in experience and capability in every facet of our business," Mr. Watkins said. "We're excited about it. It's going to be a very cohesive unit and we're pleased that we've been able to accomplish this in such a short period of time."

However, the company still faces the challenge of securing necessary financing, as well as maintaining its existing business. Its Western Canada, oil production has fallen from 3,200 barrels a day in the spring to 2,900 b/d this summer, and it has lost a number of key employees in recent months.

"This next two-month period will be very interesting, and that will be the tale of the tape," said Brian Parker, president of Calgary-based Acumen Capital Finance Partners Ltd., which worked with Canadian Superior on a financing last year and is pleased with the new slate of directors.

Mr. Noval, however, is not happy with the company's fresh start. He served as executive chairman until he was pushed out in April, but continued as a director and voted against the new slate of directors. He also plans to sell his shares. "I don't think Canadian Superior can afford to be in Trinidad any more," he said.

Mr. Watkins said the company has set aside cash to continue its Caribbean exploration program.