Circumpacific Energy Corporation: Press Release

Circumpacific Energy Corporation (TSX VENTURE:CER) ('Circumpacific') is an
independent oil and natural gas producer engaged in the acquisition,
exploration, production and development of oil and natural gas properties in
North America.


"Former executive chairman of oil and gas explorer Drillsearch Energy Limited
(ASX:DLS), Peter Simpson, may be a difficult man to budge. He is also a
difficult man to shove, and with good reason" says Circumpacific Chairman, Roger
Tidmarsh. 


Since announcing his resignation as a director of Drillsearch at the company's
general meeting on 10 June this year, Simpson has been under relentless pressure
from Drillsearch to stand aside as a director and CEO of Canadian oil and
natural gas producer, Circumpacific Energy Corporation (TSX VENTURE:CER). 


The reason? Drillsearch owns about 79% of Circumpacific and wants absolute
control of the board. Simpson, Paul Johns and myself, have refused to push off.
Our rebuff prompted Drillsearch to requisition a shareholders meeting to be held
on 26 November 2009 to spill the board.


"The Circumpacific board was elected by shareholders to manage and supervise the
affairs of the company" says Simpson. "It is mandatory under Canadian law and
the company's governing rules. The board won't be browbeaten into resigning
early at the whim of one shareholder to suit its own commercial objectives". 


Drillsearch is the largest shareholder, but there are over 220 other
shareholders in total and the board represents all of them, not just one. 


Simpson questions the motives behind Drillsearch's calling of a general meeting
to oust the three directors. "We found it puzzling. Drillsearch is fully aware
that all board positions are automatically vacated and up for re-election at the
AGM in November anyway. I suspect Drillsearch wanted to intimidate the board and
senior management. Circumpacific called its AGM for the same date as the meeting
requisitioned by Drillsearch to avoid unnecessary waste of costs and resources,
and shareholder confusion that would have resulted from calling two separate
shareholder meetings to be held within a few weeks of each other". 


Not content with that, Drillsearch then demanded that Circumpacific's board
enter into a binding set of onerous "protocols" that would have restricted the
company's business activities. "The protocols demanded by Drillsearch were
unbelievable" remarks Simpson. "Drillsearch insisted that we provide them with
all materials relating to the forthcoming general meeting for their pre-approval
before we disclosed that material to other shareholders. They also wanted the
right to pre-approve the script of the chairman, and to bring along 15
representatives to the general meeting. They told us we must agree not to apply
to a court or regulatory authority without giving them a week's prior notice.
There were about a dozen similar demands." 


"It was out of the dark ages and smacked of paranoia. We spoke to our Canadian
lawyers and concluded that the extraordinary demands were contrary to basic
tenets of Canadian company laws. It would have been wholly inappropriate for the
board to agree to them." 


The refusal by Circumpacific to agree to those protocols is one of the issues to
be agitated by Drillsearch in proceedings brought last month in the Canadian
courts. Circumpacific's position is set out in its Statement of Defence which
was filed with the Court and is available on the Circumpacific website:
www.circumpacific.com 


Simpson is not bothered about the media publicity targeted at him in Australia,
but interestingly enough he has not been targeted in Canada, the home of
Circumpacific and its shareholders. "Drillsearch has a clear agenda and a motive
to excite bad press about me", he says. "Drillsearch wants to get its hands on
Circumpacific's assets through the back door, including its cash reserves, and
to control the board for its own commercial objectives. If Drillsearch really
wants absolute control, then why not come in the front door and make a fair
Drillsearch script bid to the shareholders for 100% of Circumpacific?" 


Simpson points out that Drillsearch is "pretty quick to report the positive
results at Circumpacific as if it owns 100% of the company. Even Drillsearch's
June 2009 quarterly report announces the cash position of Circumpacific as if it
is part of Drillsearch's own asset base. It is not. There are several hundred
shareholders in Circumpacific who rightly expect those cash reserves to be
applied for the benefit of Circumpacific, not Drillsearch. I think any honest,
reasonable person would understand why the Circumpacific board could not lie
down on these issues." 


Simpson expresses concern that the three replacement directors put forward in
Drillsearch's requisition happen to be Drillsearch's managing director, its
chief operating officer, and its chairman. "Our own chairman pointed out in
August 2009 that the proposed replacement of the board with Drillsearch's
executive nominees would not be in the best interests of Circumpacific and its
shareholders as a whole, and that Drillsearch's crusade to eliminate
Circumpacific's independent directors is 'regrettable'. Canadian law requires
that there should be at least two independent directors on the Circumpacific
board but Drillsearch's requisition does not appear to recognise that". 


Simpson is still hopeful that sensible heads will prevail. "Circumpacific is not
interested in litigation. We would rather focus on core business and returning
value to all shareholders as we have done since this board was appointed". 


A copy of this press release and other relevant material, is available on SEDAR
at www.sedar.com or the Company's website http://www.circumpacific.com.