Activist investor Kimmeridge Energy Management Co. said May 17 shareholder advisory group ISS recommended two of its board nominees for PDC Energy Inc., a day after Glass Lewis backed the company's full slate of directors.
Kimmeridge, which owns 5.1% of PDC and is the seventh largest shareholder in oil and gas producer, had nominated three directors to the PDC board. ISS has recommended Kimmeridge founder Benjamin Dell and James Adelson.
ISS was, however, concerned about the potential impact on PDC if CEO Bart Brookman were to be removed from the board, said Kimmeridge.
Brookman, along with directors Mark Ellis and Larry Mazza, are up for reelection at PDC's annual meeting scheduled for May 29.
The company, which has been under pressure from shareholders as have others in the industry for higher expenses and lower returns, stood by its three director nominees.
It is important to highlight that at no point in its report did ISS endorse Kimmeridge's proposed plans for PDC, the oil producer said in its response.
PDC Energy is an independent E&P company with operations in the Wattenberg Field in Colorado and the Permian within the Delaware Basin in Reeves and Culberson counties, Texas.
The parties must now renegotiate a deal that would transfer Breitburn's Permian reserves to investors including Elliott and WL Ross through their participation in a $775 million rights offering.
As part of creating value, Parsley Energy is also divesting what it called “tail-end inventory” in the Southern Midland Basin for about $170 million.
Sustained lower oil prices may lead to Permian consolidation, the return of tough times to other shale plays and U.S. E&Ps helping rebalance global inventories.