Wednesday, October 28, 2020

Horizon Oil fires CEO Sheridan following suspension amid bribery probe

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Horizon Oil says its board has fired chief executive Michael Sheridan as an investigation continues into an alleged $15 million bribery scandal in Papua New Guinea.

Mr Sheridan had been suspended since February 12 and the Sydney-based company on Friday announced that his “employment had been terminated with notice today.”

The board recognised that it was “untenable” for Mr Sheridan to continue in his role while an independent committee is investigating the alleged 2011 payment to secure a petroleum license.

International law firm Herbert Smith Freehills and Deloitte are leading the investigation, Horizon said.

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Non-executive director Chris Hodge, who has been serving as acting chief executive, will continue in the role for at least six months at an annual salary of $621,500.

The PNG allegations were first reported earlier this month by the Australian Financial Review, which said it had obtained a cache of documents related to the transaction.

Horizon ignored corruption warnings and paid $US10.3 million (A$15.7 million) to an unknown shell company in 2011 just 10 weeks before it was awarded a development licence, the AFR reported.

Mr Sheridan will be renumerated in accordance with his contractual entitlements, the company said.

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In 2019 he earned a total package of $816,506 in fixed compensation, superannuation and non-monetary benefits, according to the company’s annual report.

Mr Sheridan had been with Horizon for almost 17 years, having served as chief financial officer and company secretary since 2003 before being promoted to chief executive in mid-2018.

Horizon also said the publicity surrounding the allegations had exacerbated its challenges in PNG and lack of progress in commercialising the resource, and so it would take an $US63.7 million ($A97 million) impairment of the company’s PNG assets, to a carrying value of $US5.7 million ($A8.7 million).

Horizon Oil owns stakes in oil fields off the coast of China and New Zealand and said in the 2019 calendar year its share was 1.62 million barrels of oil .

It reported earnings of $US31.3 million ($A47.7 million) on half-year sales revenue of $US52.7 million, but the impairment led to a statutory loss of $US62.7 million ($A95.5 million).

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