This request is a continuation of the DNO stock exchange notice of 6 December, 2008, 'Strategic Review of DNO`s 36.9% Shareholding in Det norske oljeselskap ASA (DETNOR)', where DNO expressed concern regarding the significant decline in the market value since the combination into DETNOR in November 2007, as well as the fact that the DETNOR share was trading at a significant discount to the underlying value of the company's assets, hence not reflecting the true potential of the company.
The further background for DNO's call for an EGM to vote over election of new board members is as follows:
- The main objective of the merger in November 2007 was to create the no.2 Norwegian Exploration and Production (E&P) company focused on the Norwegian continental shelf, and a sound platform for further growth and value creation. In DNO's opinion, DETNOR has not followed up on these objectives.
- Instead, DETNOR's predominant management focus has been on redeveloping the marginal Frøy field. This has been costly and it has restricted active development of other growth opportunities with stronger value potential.
- DETNOR holds a cash position of about NOK 2 billion as a result of the sale of license interests in the Goliat and Yme fields in Q4 2008. In DNO's opinion, DETNOR should use its current financial strength on other license investment opportunities, as well as merger and acquisition possibilities within the E&P industry.
- In DNO's view, DETNOR's strategic focus since the merger has contributed to both erosion of shareholder value and to weaker investor confidence in the management and the board of the company.
As the largest shareholder, DNO's main objective is to see DETNOR grow into a strong and sustainable E&P company, creating shareholder value reflected in the share price.
On this basis, DNO believes that the shareholders in DETNOR should elect a new board of directors with a clear strategy that would better serve the shareholders interests.
DNO encourages other DETNOR shareholders to propose board member candidates to the election committee in the company. Alternatively, such candidates may be proposed at the EGM on the 2nd of February. In DNO's view, 2-4 new board members independent from the management of DETNOR, and with a strong support among the shareholders, should be elected to replace some of the current board members.
DNO notes that Mr. Kaare M. Gisvold, Chairman of the Board of DETNOR, has sent a letter dated 6 January, 2009 to DETNOR shareholders. In this letter, Mr. Gisvold presents negative speculations concerning alleged reasons for DNO's EGM call. DNO finds the chairman's letter inappropriate and strongly rejects his speculations concerning the motivations of the largest shareholder in the company. As chairman, Mr. Gisvold is supposed to represent the interests of all shareholders.
Board of DirectorsDNO International ASA
26 January, 2009