Board / Management / Corporate Governance

The Board of Directors

Dr. Henry Askin BSc Hons, PhD, Non-Executive Independent Chairman: Dr Askin has over 30 years of experience in the oil exploration industry, of which some 25 years were with the Shell Group of Companies, most recently as Consultant. He was exploration manager with Shell Development (Australia) Pty. Ltd. He has worked with Shell in Australia, Oman, Norway, The Netherlands and India in senior management and technical roles and for three years managed the International Seismic Analysis Centre in the Hague. Dr. Askin is also a Non-Executive Director of Bass Strait Oil Company Pty. Ltd.
Mr John Heugh BSc. (Hons), MPESA, Managing Director: Mr Heugh has over 25 years experience in petroleum and mineral exploration and has worked in a consulting or subcontracting role for Esso, Wapet, Pancontinental Petroleum, Santos, Western Mining Corporation, Bridge Oil, Ampol, Kuwaiti Foreign Petroleum Corporation (IEDC subsidiary), Arco and Chevron-Texaco. He has undertaken studies in oilfield drilling technology and development from the University of Texas and was a founding Director of Labrador Petro-Management Pty Ltd.
Richard Faull BCom, CPA, Non-Executive Director: Mr Faull is a director of a firm of Certified Practising Accountants and Registered Tax Agents. He has over 20 years experience as a director, executive and company secretary in mining and petroleum exploration companies. Mr Faull is currently a director and the Company Secretary of Fleurieu Mines NL and Barranco Resources NL, both mining companies.
Mr William Dunmore BSc, MSc, MSPE Non-Executive Director Commercial Development and Production: Mr Dunmore is an experienced reservoir and production engineer with significant transaction, analysis and financial modelling experience gained by consultancies and employment with a number of banks, financial institutions and petroleum companies including HBOS, Rothschilds, Gaffney Cline and Associates, BHP Petroleum, Schlumberger, Hardman, Mobil, Lasmo, Petrobras, CSX, Total, Nippon Oil, Powergen, Mosbacher, Unocal and Svenska Petroleum. He has over 30 years of direct relevant experience internationally.

Senior Management

Mr Randy Frazier, BEng, General Manager Drilling, Operations and Production

Mr Frazier previously managed the development and commissioning of the giant Shah Deniz oil field for BP as well as the BP Alaska joint venture. He has owned and operated a small drilling contracting company rig in remote areas prior to his experience with BP and was a workover engineer in the Hugoton Gas Field (North America's biggest gas and helium field) where he had reservoir oversight of 1000 gas wells.

For BP, Mr Frazier, as Western Onshore US Production Manager had oversight of all of BP's production in Texas, New Mexico, Colorado, Wyoming, Montana, Utah and California as well as extensive exposure to drilling, fracture stimulation, dewatering and production of Coal Bed Methane (CBM) in the San Juan Basin, one of the world's most recognised and longest producing CBM provinces

Mr Mark Di Silvio BBus, CPA, MBA, Chief Financial Officer and Company Secretary

Mr Di Silvio previously managed Woodside's Mauritanian Joint Ventures as Finance Manager and has had significant experience with resource companies including Goldfields Limited where he was a commercial manager and with Coolgardie Gold NL where he was an accountant.

Central Petroleum Limited Corporate Governance Policy

Introduction

The Company is committed to the principles of good corporate governance and high ethical standards in business as articulated by the ASX Corporate Governance Council (“the ASXCGC”). The Company seeks to follow the best practice recommendations for listed companies to the extent that it is practicable. In cases where the Company determines it would be inappropriate to follow the principles because of its circumstances, the Company will provide reasons for not doing so in its Annual Report as contemplated by the ASXCGC.

ASX Listing Rules require listed companies to disclose the extent to which they have complied with the ‘Best Practice Recommendations’ of the ASXCGC. Set out below are the principal corporate governance practices of the Company. Any instances of non-compliance with the recommendations and reasons for such variance are summarised at the end of this document.

Role of the Board of Directors and Management

The Board of Directors guides and monitors the business and affairs of the Company on behalf of its Shareholders, by whom the Directors are elected and to whom they are accountable.

The Board’s primary role is the protection and enhancement of long-term Shareholder value. The Board is responsible for the overall corporate governance of the Company, including engaging with management in the development of strategic and business plans, preparation of annual budgets and establishment of goals for management and monitoring the achievement of those goals on a regular basis. Management will report to the Board and execute the directives of the Board.

The Board is also responsible for:

reviewing the performance of the Managing Director and senior management
planning the development, retention and succession of the management team
reviewing and ratifying systems of risk management and internal compliance, including approving and monitoring the policies and procedures relating to occupational health and safety and the environment
approving and monitoring financial and other reporting, including the progress of major capital expenditure and capital management
approving and monitoring acquisitions and divestitures; and preparing, implementing and monitoring policies to ensure that all major developments affecting the financial position and state of affairs of the Company and any subsidiaries are announced to ASX in strict accordance with the Listing Rules

The Board has also established a framework for the management of the Company, including a system of internal control and business risk management and the establishment of appropriate ethical standards.

The Board will conduct annual reviews of its processes to ensure that it is able to carry out its functions effectively and in an efficient manner.

Structure and composition of the Board

The Board consists of four Directors—two Executive Directors (the Managing Director and the Finance Director) and two non-Executive Independent Directors. The two non-executive directors are assessed as being independent directors. It is the intention of the Company to appoint a third non-executive director as the Company grows after an appropriate level of potential discovery success may be achieved, thereby complying with the recommendation that a majority of the Board should be independent. The Chairman is a non-executive, independent director and there is a clear division of responsibility between the Chairman and the Managing Director. The Directors bring a broad range of relevant expertise, both nationally and internationally, to the Board.

All non-Executive Directors have no business or other relationship, which could compromise their independence. Directors are required to keep the Board advised of any interests that could potentially create conflict with those of the Company.

The non-Executive Directors and any Executive Directors other than the Managing Director under the Constitution of the Company are obliged to present one third of their company for retirement and potential re-election at each annual general meeting of the Company.

In the proper performance of their duties, each Director has the right to seek a reasonable level of independent professional advice on matters concerning the Company at the Company’s expense, after obtaining the Chairman’s approval, which will not be unreasonably withheld. Each Director has the right of access to all relevant Company information and to the Company’s Executives.

Business risk management

The Board acknowledges that it is responsible for the overall internal control and risk management framework. Accordingly, the Board will implement the following control framework:

Financial reporting: A comprehensive budget will be approved by the Directors. Monthly results will be reported against budget and revised forecasts are prepared regularly.
Special functional reporting: The Board has identified a number of key areas which are subject to regular reporting to the Board such as safety, environmental, insurance and legal matters.
Investment appraisal: The Company will set clearly defined guidelines for capital expenditure. These include annual budgets, detailed appraisal and review procedures, levels of authority and due diligence requirements. Capital expenditure and revenue commitments above a certain size will require prior Board approval. Procedures will be established to ensure business transactions are properly authorised and executed.

Ethical standards

The Directors acknowledge the need for, and continued maintenance of, the highest standards of ethical conduct by all Directors and employees of the Company. All Directors, executives and employees are required to abide by laws and regulations, to respect confidentiality and the proper handling of information and act with their highest standards of honesty, integrity, objectivity and ethics in all dealings with each other, the Company, customers, suppliers and the community.

The Board will develop a formal code of conduct reflecting its high standards and expectations. The code of conduct will be regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism.

Continuous disclosure

The Directors are committed to keeping the market fully informed of material developments to ensure compliance with the Listing Rules and the Corporations Act. At each Board meeting, specific consideration will be given as to whether any matters should be disclosed under the Company’s continuous disclosure policy.

The intended practice of Senior Management is to review and authorise any Company announcement to ensure that the information is factual, timely, clearly expressed and contains all material information so that investors can make appropriate assessments of the information for investment decisions.

Share Trading Policy

The Company has adopted a share dealing code for the Directors and employees, which is appropriate for a company whose shares are admitted to trading on the ASX, and the Company will take all reasonable steps to ensure compliance by its Directors and any relevant employees. The share dealing code is summarised as follows:

Consistent with the legal prohibitions on insider trading contained in the Corporations Act, all employees, officers and directors are prohibited from trading in the Company's securities while in possession of unpublished price sensitive information
Unpublished price sensitive information is information, which a reasonable person would expect to have a material affect on the price or value of the Company's securities. Examples may include:
- the financial results of the Company and any of its subsidiaries
- projections of future earnings or losses
- changes in senior management
- information arising as a result of drilling operations in which the Company is participating

It should be noted that either positive or negative information may be material. An employee, officer or director, whilst in possession of unpublished price sensitive information, is subject to three restrictions:

they must not deal in securities affected by information
hey must not cause or procure anyone else to deal in those securities
they must not communicate the information to any person if they know or ought to know that the other person will use the information, directly in directly, for dealings in securities

Employees, officers, and directors are required to advise the Company Secretary of their intentions prior to undertaking any transaction in Company securities. If an employee officer or director is considered to possess unpublished price sensitive information, they must not make a security transaction until after the time of public release of that information.

Conflict of Interest

Directors and Senior Management will be required to advise the Chairman of any existing or potential conflict of interest. When necessary, the Chairman will refer the matter to the Board for determination.

Related party matters

Directors and senior management will be required to advise the Chairman of any related party contract or potential contract. The Chairman will inform the Board and the reporting party will be required to remove himself/herself from all discussions and decisions involving the matter. Prior Board approval will be required for all proposed contracts.

Shareholder relations

The Directors aim to ensure that the Shareholders, on behalf of whom they act, are informed of all information necessary to assess the performance of the Company.

Information on all major developments affecting the Company will be available to Shareholders through:

the Company’s Annual Report
quarterly and half yearly reports
the annual general meeting of the Company and other meetings called to obtain approval for Board actions as appropriate. All Shareholders who are unable to attend these meetings will be encouraged to communicate issues or ask questions by writing or emailing to the Company
mandatory ASX announcements on the Company website

The Company will take advantage of technology, such as the Company website, to provide greater opportunities for effective communication with Shareholders and to encourage participation at meetings. The intended practice of the Company is to place on the website all company announcements and related information, such as financial statements and pubic presentations.

Committees

The Board has not established any committees. The Board considers that the management method used is cost effective and practical and matters are reviewed and approved by the Board as a whole.

On matters of Audit and Remuneration, the Board has policies that were established to protect the integrity of the Company’s financial reporting and to review the remuneration policies and practices of the Company to ensure that it remunerates fairly and responsibly.

The audit policy of the Board includes the requirement to:

oversee the effectiveness of the Company’s accounting and financial policies and controls
oversee the independence of the external auditors
make recommendations to the Board on the appointment of external auditors and reviewing the performance of the external auditors

The independent external auditor reports directly to the Board and is required to attend the annual general meeting of the members of the Company to answer shareholder questions about the audit and the preparation and content of the audit reports.

The remuneration policy of the Board is designed to ensure that the level and composition of remuneration is competitive, reasonable and appropriate for the results delivered and to attract and maintain talented and motivated Directors and employees. The policy is designed for:

decisions in relation to executive and non-executive remuneration policy
decisions in relation to remuneration packages for executive Directors and senior management
decisions in relation to merit recognition arrangements and termination arrangements
ensuring that any equity-based executive remuneration is made in accordance with the thresholds set in plans approved by shareholders

ASX Recommendations with Comment by Company

2.1: A majority of the board should be independent directors.: Two of the four directors are considered to be independent according to the ASX definition. The Board considers that the management method used is cost effective and practical and intends to add further independent directors dependent on appropriately scaled discovery and production success.
2.4: The board should establish a nomination committee.: The Company currently does not have a nomination committee. Because of the Company’s size, the Board believes that such a formal committee would contribute little to its effective management. Nomination matters are reviewed and approved by the Board as a whole.
4.2: The board should establish an audit committee.: The Company currently does not have an audit committee. Because of the Company’s size, the Board believes that an audit committee would contribute little to its effective management. Audit matters are reviewed and approved by the Board as a whole.
5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.: It is the policy of the Board to comply with the disclosure requirements of the ASX Listing Rules and this policy is detailed in the accompanying policy statement.
7.1: The board or appropriate board committee should establish policies on risk oversight and management.: The Company currently does not have a committee for the purpose of recognising and managing risk but it does have a policy in place in this regard. Because of the Company’s size, the Board believes that such a committee would contribute little to its effective management. Such matters are reviewed and approved by the Board as a whole.
8.1: Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives.: Because of the size and structure of the Board a formal performance evaluation process is not conducted.