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PetroKazakhstan boss cashes in shares After years of taking little or no salary, CEO unloads one-third of stake in company facing mounting pressures in ex-Soviet republic Gary Park Petroleum News Calgary Correspondent
He took a company that was teetering on the edge of bankruptcy, fighting to stave off creditors as its shares plunged in value to under 30 cents.
He steered it through turbulent seas that would have seen others head for sheltered waters.
In 2000, gunmen briefly seized control of a refinery the company had just acquired.
Over the past year it has faced accusations of selling petroleum products at inflated prices and been hit with fines building from $6.3 million to $31 million and finally $91 million in February.
The first fine was later trimmed to $1 million and the others are being contested in court.
Through all this, Bernard Isautier, during five years as chief executive officer of PetroKazakhstan (formerly Hurricane Hydrocarbons), deployed all of the diplomatic skills he learned as a French civil servant and the reputation he built as a turnaround artist in several Canadian companies, to help raise the company’s output in the ex-Soviet republic of Kazakhstan to about 150,000 barrels per day from 80,000 bpd, push profits in the latest quarter to $122 million and boost share prices above $30 on the New York Stock Exchange. Could be greater uncertainty ahead But PetroKaz, at the mercy of the mercurial and repressive leadership of President Nursultan Nazarbayev, could be headed for greater uncertainty.
Apparently still seething over the $120 million Hurricane paid for 650 million barrels of proven oil reserves in 1996, Nazarbayev recently signaled his approval of the Russian government’s campaign against Yukos, the country’s second largest oil producer.
The government is now immersed in a bitter fight to prevent the sale by BG Gas of its one-sixth interest in the giant Kashagan offshore Caspian oilfield to its consortium partners. Under pressure from Nazarbayev, BG agreed last year to sell its interest equally to Chinese majors Sinopec and CNOOC for $1.23 billion, but five of the six remaining partners exercised pre-emptive rights to keep the Chinese out.
Talks to resolve the matter by year’s end have since taken place.
But these events have given rise to worries that the Kazakhstan government might be on the verge of seizing some PetroKaz assets. One-third of shares and options sold Amid the turmoil, Isautier disclosed in a U.S. securities filing that he has sold about one-third of his 7.1 million shares and options in PetroKaz for a pre-tax return estimated at more than $50 million. His remaining 5.07 million shares, which make him PetroKaz’s second largest shareholder at 6.6 percent, are worth about $150 million.
The options were granted at a market price of less than $1 when he became CEO in 1999.
Isautier has vigorously defended PetroKaz against accusations that it took advantage of Kazakhstan’s vulnerable economic and political state when it made the 1996 acquisition.
In a recent letter to the Globe and Mail, Isautier argued that PetroKaz’s role in Kazakhstan should be “looked upon as a success for all.”
His own profit-taking has been defended by analysts who credit Isautier with showing great patience in not tendering any of his shares earlier this year when PetroKaz bought back 4 million shares at C$40 (US$31) each.
As well, he took none of his authorized salary of $400,000 a year in 2000 and 2001 and only a portion of the $543,000 he was entitled to in 2002 and 2003.
Isautier, 61, insists he has no immediate plans to retire. But if things start to crumble in Kazakhstan he has a ready-made retreat — a 10-acre resort island he owns near Tahiti in the South Pacific.
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