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Molopo board offers Gorman a timely boost

IAN Gorman, winner of the boardroom battle at Molopo Energy that saw him succeed Stephen Mitchell (pictured) as chief executive in February, appears to be on a short leash.

IAN Gorman, winner of the boardroom battle at Molopo Energy that saw him succeed Stephen Mitchell (pictured) as chief executive in February, appears to be on a short leash.

While Gorman's newly signed contract reveals that his base pay will be $577,500, plus about $50,000 of superannuation, he is only on a 12-month deal and the start is backdated to mid-February when shareholders spilt the board at a meeting in Melbourne.

Incoming Molopo chairman Greg Lewin said at the time that Gorman's deal would be for 12 months, but it has apparently taken nearly seven months to finalise it, possibly to ensure that the new chief executive was focused on his operational and structural review rather than wallet.

Under the terms, the board has to negotiate an extension by mid-November, or Gorman's employment will cease in February when the original 12-month deal runs out. That, though, seems unlikely given Lewin's endorsement of him in yesterday's ASX statements.

"During Ian's first six months as CEO he has conducted a strategic review that has developed a clear and deliverable strategy to drive Molopo's growth over the next several years, including an increased focus on the company's core business assets in North America and a monetisation plan for other non-core assets, such as the company's coal-bed methane (CBM) assets in Queensland," said Lewin (fortunately in a printed announcement that did not require him to draw breath).

"The board has every confidence that the strategy that Ian and his leadership team have already developed has set the stage for a number of value-adding operational initiatives in the medium term."

Gorman's salary is a significant advance on his 2010 wage, when his base pay was $320,000, but also looks as if he has leap-frogged the $346,465 earned by his predecessor Mitchell.

Not so, says Lewin, who told Insider that Gorman's wages were, in fact, similar to the deal that Mitchell was on before he quit in mid-February after the putsch.

Molopo investors only have to wait a week to see if Lewin's claims are correct. The company will produce its full-year accounts on September 14, including the remuneration report that is expected to show how much Mitchell and other departees collected on the way out.

Those more knowledgable than Insider, which probably does not narrow the list of suspects significantly, suggested that former BHP executive Gorman's expertise in "unconventional oil and gas", in this case coal-bed methane, might enable him to demand a much higher price given the "hot" market for oil alternatives.

That same heat is driving Molopo's hopes of its adviser, Lazard, bringing home a good price for its coal-seam gas assets in Queensland where it reportedly has at least one keen buyer.

Unlike many an explorer, Molopo is in the comfortable position of having about $90 million in cash (before tax payments) in the bank, so it does not have to sell the assets at an unrealistic price.

Economy bites News

NO WONDER Rupert Murdoch's national daily tries to avoid letting a week go by without a poke at its rival Fairfax Media.

A memo yesterday outlining fresh cost-cutting and a staff hiring freeze, designed to deliver a 15 per cent to 20 per cent reduction in overheads, sprang from a gathering of local management confronted with circulation and advertising sales apparently well under budget.

Speculation over whether News deliberately allowed the memo from finance man Stephen Rue to leak is irrelevant. The underlying message was in the first couple of lines: "It is clear from the last few months of trading, trends over the last three years, and ongoing economic uncertainty".

Fascinating that News's recognition of the pressure in a rapidly changing market came only a couple of days after its flagship broadsheet, The Australian, trumpeted on its front page a column "Is Fairfax Worthless?"

The piece, written by Mark Day, revolved around a July 5 (two months old) research paper on Fairfax by respected analyst Roger Colman of CCZ Equities in which he postulated "the impending death" of The Age and The Sydney Morning Herald. Colman speculated that one of Fairfax's strategic failures was allowing a leftist editorial line, alienating the wealthy who it needed as buyers and "eyes" for advertising.

In reality, News Corp's papers are facing the same evolutionary issues in a digital world. If you keep running down the competition in public, maybe you can haul in some of their advertisers particularly when your flagship lacks much in the way of paid advertisers.

Among the numbers in Colman's report not published by Day was a table discussing what the analyst called an "own goal" by publishers, because they are charging substantially less for online advertising than in print. On his figures, an online advertiser pays about half the rate of a print client at Fairfax while The Australian slashes its online charges to a seventh of a full-colour page. Fairfax also delivers four times the page impressions.

That might make the News paper cheaper for an advertiser, but on Colman's numbers, the News publication generates fewer unique browsers (118,000) than those buying its papers (130,000). At Fairfax, the number online is about twice the print copies sold.

Global still outdated

GLOBAL Resources corporation company secretary Barry Casson has thrown everything at the ASX in explaining tardy filings on directors' shareholdings.

The regulator wanted to know why changes that happened on August 22 were not out until September 5.

Casson said part of the delay was trying to place a shortfall from a share issue less than 20 per cent of the stock on offer at 1.6? was taken up. Instead, on Monday it placed 200 million shares at 0.8?.

Along the way he suffered a bout of sinusitis, leaving him unable to fill in the forms. The fallback managing director Simon Finnis, could not file because a virus took out Global's computer system.

Icing on the cake: the forms filed on Monday were on outdated formats, so Global had to have another shot on Tuesday.

insider@fairfaxmedia.com.au

Gorman's expertise in "unconventional oil and gas", in this case coal-bed methane, might enable him to demand a much higher price given the "hot" market for oil alternatives.


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