Petrolifera Petroleum Limited, its Board of Directors and its Management are committed to a high standard of corporate governance practices. This commitment is believed not only to be in the best interest of shareholders, but it also promotes effective decision making at all levels of the company’s activities.
In its pursuit of effective governance, Petrolifera is mindful of prevailing recommendations with respect to best practices as advanced by Canadian regulatory authorities, non-regulatory organizations and other standards which are advanced from time to time by institutional and other investors.
Petrolifera’s Board of Directors is comprised of seven individuals. Five of these people are non-management and three of the five so characterized are considered completely independent, in that they have no corporate connection to Connacher Oil and Gas Limited, although, by prevailing standards, all five are judged to be independent as they are non-management.
All of the company’s Board Committees are comprised of non-management individuals. All of Petrolifera’s four Committees of the Board are comprised of independent directors and all Chairs of Committees are independent non-aligned directors. Petrolifera’s Executive Chairman is a member of management and is an officer and director of Connacher Oil and Gas Limited, Petrolifera’s largest shareholder. Two of the other Petrolifera directors are also directors of Connacher. The President and Chief Operating Officer, who is also a director of Petrolifera, is independent of Connacher, as is the Chief Financial Officer.
The Chairs of Petrolifera’s Audit and Reserves Committees are considered experts. The Chair of our Audit Committee is a Chartered Accountant, who held senior financial positions with a large integrated oil company for much of his career prior to retirement and subsequent appointment to Petrolifera’s Board of Directors. The Chair of our Reserves Committee is an Engineer and has also had extensive experience in the oil industry. In total, Petrolifera has four Board committees, including Audit, Governance, Human Resources and Reserves.
Petrolifera’s Human Resources Committee, which oversees and makes recommendations with respect to the remuneration of management, is chaired by an independent director and all of the committee’s members are independent directors. As required, the Human Resources Committee seeks advice from an independent advisor with respect to remuneration levels and composition thereof for Petrolifera’s management and key employees.
Peruvian management and staff holding an award given to Petrolifera for excellence
in community relations and environmental issues.
All the members of the company’s Governance Committee are independent directors. The Governance Committee makes recommendations to the Board regarding remuneration of the directors (other than management). At Board level, in their capacity as directors, management participates in voting upon the remuneration to be awarded to non-management directors. The Governance Committee also seeks and receives advice from an independent consultant, with respect to the level and composition of remuneration proposed for non-management members of the Petrolifera Board of Directors.
Petrolifera has developed a mandate for its Board of Directors, each Committee of the Board, the Executive Chairman, the President, individual directors and for the Chair of each committee. These are reviewed at least annually and updated to take into account changes or developments considered beneficial to good governance practices. Additionally, the Governance Committee assesses individual performance of directors and conducts other functions which are detailed in the company’s Information Circular. These have included the development of a Skills Matrix for the Board, to assist the Board in its self-evaluation as a Board and to also assist in determining the skill sets which need to be added when considering either new or replacement directors. The Governance Committee is engaged in the process of nominating new directors, if and as required, in consultation with the Executive Chairman.
The company has also adopted various policies with respect to sound business conduct, especially with respect to Disclosure, Trading in Securities and Conduct of Foreign Operations. Petrolifera also has a Whistle Blower Policy. We anticipate additional policies will be developed as the company grows and matures. Petrolifera also has a Code of Ethics for its employees, officers and directors in conjunction with its engagement in foreign jurisdictions, including dealing with matters of foreign corruption. These policies and procedures are updated and reviewed on a regular basis by management, the Board and its Governance Committee.
Petrolifera has a trading blackout policy which is imposed pursuant to its Disclosure and Insider Trading Policies. This is invoked by the Executive Chairman and applies to all employees, insiders as legally defined and related parties of such individuals, including significant others. It is generally invoked when material information is to be disclosed to the public and remains in full force and effect for at least two business days thereafter, to allow for dissemination of information to the investing public. In some circumstances, the blackout period is extended, especially around the time of release of critical financial and operating results. Individuals so affected also have an outstanding obligation to adhere to all prevailing securities laws in respect of inside information, tipping and the like. There is also a Disclosure Committee, comprised of the Executive Chairman, the President, the Chief Financial Officer and counsel, which keeps a record of disclosure and reports regularly with respect to its activity to the Governance Committee.
Your company is an active supporter, directly and through staff participation and involvement, in various charitable causes in the areas and countries in which it conducts activities. In consultation with local management, our internal donations committee, comprised of the Executive Chairman and the President, evaluates and proceeds with contributions or donations which appropriately place an emphasis on children, older people, the disabled and the unfortunates in the related society who are in need of support, encouragement or care. We have assisted in a hospital restoration program in the region proximate to our field operations in Argentina. Also, various contributions focusing on health programs continue to be made in Peru.
Petrolifera believes it is a fair and sound employer, a good corporate citizen and that it conducts its business in a proper manner. Its constituent parts – the company, the Board of Directors, management and staff – are supporters of good governance practices. An emphasis is placed on strong internal financial and operating controls and this commitment is manifested in the company’s reputation as a good place to work, as a good company with which to do business and as a good company in which to be a shareholder.
Petrolifera is also mindful of its social responsibilities as regards the environment and indigenous peoples in the countries in which it operates. Prior to activity in the field, environmental baseline studies are generally completed and programs are designed to manage environmental impact. Also, in cooperation with local authorities, especially in Peru where activities in the jungle can result in contact with indigenous peoples, workshops and study groups are held prior to activity. For example, on Block 107 in the Ucayali Basin onshore Peru, many information meetings were held before the company’s EIA was approved and before activities were initiated. Once we were underway, local customs were honoured, employment opportunities were developed and respect for traditions and customs were emphasized and upheld. Additionally, local tribes werecompensated for any surface disturbance. An anthropologist was also hired and was available to assess any circumstances which might have reflected the presence of, or possibly disturbed, any isolated peoples. Any policies that were applied in the past will continue to be applied in the future.
During 2008, Petrolifera was recognized by FENACOCA, the agency which represents indigenous people in the areas of our activity, for its stewardship and corporate responsibility.
Field crew operations along a cut seismic line in Peru.
