Activist fund Livermore calls for change at Canada's Zargon Oil

Fri Jun 19, 2015 4:21pm EDT
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By John Tilak

TORONTO (Reuters) - U.S. hedge fund Livermore Partners is pushing for change at Canadian energy producer Zargon Oil and Gas Ltd ZAR.TO, calling for cost reductions, a dividend cut and an improvement in production.

Northbrook, Illinois-based Livermore could also potentially seek one or two board seats to get better oversight of the company and eventually explore strategic alternatives, including a partnership or the sale of the company, the fund's top executive said on Friday.

The recent oil price slump has hit energy companies hard, and many smaller producers are struggling to keep production going.

Zargon's shares have underperformed the broader market in recent months. They jumped 3 percent on the news before pulling back to end the day little changed.

"The value is trapped here. We want to unlock that," David Neuhauser, Livermore's managing director, said in an interview.

"We want change," he added. "We see this as a deep-value investment with long-term potential. We want to make sure that it's preserved in the current state of energy prices."

He said he expects the board to engage with Livermore.

Zargon officials could not immediately be reached for comment on the fund's move.   Continued...

A worker holds a cup of heavy oil before it is shipped to the market at a facility south of Fort McMurray, Alberta, August 15, 2013. REUTERS/Todd Korol