Bula agm hears Reynolds may get oil stake

Former Taoiseach and Bula Resources chairman Mr Albert Reynolds may receive a 3.75 per cent share in an oil development in the western desert of Iraq. He would receive the stake under a private concession agreement with a Bula consultant, if the exploration company is granted a licence to drill by the Iraqi authorities, it was revealed yesterday.

Mr Reynolds denied a claim that he withheld information from Bula shareholders by not telling an extraordinary general meeting in May of the agreement with consultant Mr Bill Griffin. Mr Reynolds' appointment as chairman was approved by the e.g.m. and he received 87.5 million penny shares under a once-off option scheme granted because of his Libyan and Iraqi contacts.

Challenged by a shareholder, Mr Padraig Kennedy, at yesterday's annual general meeting as to why his agreement with Mr Griffin had not been revealed to the e.g.m., Mr Reynolds said the matter pre-dated his appointment as chairman and was not material to his contract.

It emerged during the a.g.m. that Mr Griffin - a petroleum specialist who described himself as Bula's "main negotiator with the Arab countries" - had given Mr Reynolds a half-stake in his private incentive agreement with Bula.

This had come to shareholders' attention only when a note in Bula's 1998 annual report revealed that "Mr Reynolds would be entitled to receive a 3.75 per cent interest in any exploration or production concessions which may be granted to the group by the Iraqi authorities."

The company revealed that Mr Griffin would be entitled to a 7.5 per cent interest in any exploration or production of oil in an undeveloped desert area of Iraq, known as Block 4, should this be authorised by the Iraqi government in the future. The agreement pre-dates the current board.

Mr Griffin told the a.g.m. that he gave Mr Reynolds a half-stake in this concession because Mr Reynolds had called for UN sanctions to be lifted against Iraq. "I thought he did the most noble and bravest thing I ever saw," he said.

Mr Kennedy expressed surprise that this was not disclosed at the e.g.m. in March.

"I believe that material facts were withheld from shareholders. I am rather surprised that such should be the case."

Mr Reynolds responded: "I have not withheld any information."

Managing director Mr Tony Peart said Mr Reynolds had informed the company of the agreement. "At the time of [Mr Reynolds'] appointment he declared an interest with a third party. We were advised that it was not a requirement under yellow book [stock market listing] rules to disclose this."

However, the company subsequently learned of a new accounting regulation - FRS8 - which required it to reveal the information, which it had done in its annual report. "Mr Reynolds has been very upfront with us on this matter. I believe that the board and Mr Reynolds have disclosed as required," said Mr Peart.

While Mr Reynolds said Block 4 was "much sought after, a very good, highly prospective block", UN sanctions continue to restrict Bula's expansion in Iraq. "Hopefully we'll get an early ratification of the contract," said Mr Reynolds, though he conceded that "Iraqi infrastructure has run down very seriously."

Addressing his first a.g.m. since he was appointed chairman in March, Mr Reynolds said Bula hoped to sign a contract to drill for oil and gas in northern Libya before the end of the year.

"The Libyan government is keen to exploit the large gas potential that exists in Libya, regarded as a sleeping gas giant," he said. "The declared position made it quite clear that the doors are open. Hopefully by the end of the year we will see our contract signed and we'll be on our way."

Asked by a shareholder about the financial position of the company, Mr Reynolds said "everything is fine". Most of the £1.75 million (€2.22 million) secured by the company in a share placement last March had been used for day-to-day expenses and professional fees, said Mr Peart. Once a drilling licence was secured in Libya, "we will be into development money and that has to be raised".

Mr Peart told the a.g.m. that Bula spent £350,000 in legal fees in 1998 and was expecting to pay £150,000 this year. The company's former chairman, Mr Jim Stanley, is being prevented from cancelling or returning his shares in the company and an injunction is preventing him from disposing of his assets, said Mr Reynolds.

Bula's share price on the Stock Exchange was unchanged at 0.015 cents (1p) yesterday.