SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
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PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
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Magellan Petroleum Corporation
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[MPC LOGO]
[MAGELLAN PETROLEUM CORPORATION LOGO]
OCTOBER 28, 2004
2004 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 7, 2004
Dear Stockholder:
It's a pleasure for us to extend to you a cordial invitation to attend the
2004 Annual Meeting of Magellan Petroleum Corporation to be held at The Goodwin
Hotel, One Haynes Street, Hartford, CT 06103 on Tuesday, December 7, 2004 at
1:00 P.M. local time (telephone 860-246-7500).
While we are aware that most of our stockholders are unable personally to
attend the Annual Meeting, proxies are solicited so that each stockholder has an
opportunity to vote on all matters to come before the meeting. Whether or not
you plan to attend, please take a few minutes now to sign, date and return your
proxy in the enclosed postage-paid envelope. Regardless of the number of shares
you own, your vote is important.
Besides helping us conduct business at the annual meeting, there is another
reason for you to return your proxy vote card. Under the abandoned property law
of some jurisdictions, a stockholder may be considered "missing" if that
stockholder has failed to communicate with us in writing. The return of your
proxy vote card qualifies as written communication with us.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be acted on at the meeting.
As in the past, members of management will review with you the Company's
results and will be available to respond to questions during the meeting.
We look forward to seeing you at the meeting.
Sincerely,
-S- DANIEL J. SAMELA
DANIEL J. SAMELA
President
MAGELLAN PETROLEUM CORPORATION
10 COLUMBUS BOULEVARD
HARTFORD, CT 06106
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 7, 2004
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of Stockholders of
MAGELLAN PETROLEUM CORPORATION, a Delaware Corporation (the "Company"), will be
held on December 7, 2004 at 1:00 P.M., local time at The Goodwin Hotel, One
Haynes Street, Hartford, CT 06103 for the following purposes:
1. To elect two directors of the Company;
2. To ratify the appointment of independent auditors of the Company for the
fiscal year ending June 30, 2005; and
3. To act upon such other matters as may properly come before the meeting
or any adjournments or postponements thereof.
This notice and proxy statement and the enclosed form of proxy are being
sent to stockholders of record at the close of business on October 27, 2004 to
enable such stockholders to state their instructions with respect to the voting
of the shares. Proxies should be returned to American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, NY 10038, in the reply envelope enclosed.
By Order of the Board of Directors,
TIMOTHY L. LARGAY
Secretary
Dated: October 28, 2004
RETURN OF PROXIES
WE URGE EACH STOCKHOLDER WHO IS UNABLE TO ATTEND THE MEETING TO VOTE BY PROMPTLY
SIGNING, DATING AND RETURNING THE ACCOMPANYING PROXY IN THE REPLY ENVELOPE
ENCLOSED.
MAGELLAN PETROLEUM CORPORATION
10 COLUMBUS BOULEVARD
HARTFORD, CT 06106
2004 PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished to stockholders of Magellan Petroleum
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Stockholders to be held on December 7, 2004 at 1:00 P.M., local time, at The
Goodwin Hotel, One Haynes Street, Hartford, CT 06103 and at any adjournments or
postponements thereof. The notice of meeting, proxy statement, and proxy are
first being mailed to stockholders on or about October 28, 2004. The proxy may
be revoked at any time before it is voted by (i) so notifying the Company in
writing; (ii) signing and dating a new and different proxy card of a later date;
or (iii) voting your shares in person or by your duly appointed agent at the
meeting.
The persons named in the enclosed form of proxy will vote the shares of
Common Stock represented by said proxy in accordance with the specifications
made by means of a ballot provided in the proxy, and will vote the shares in
their discretion on any other matters properly coming before the meeting or any
adjournment or postponement thereof. The Board of Directors knows of no matters
which will be presented for consideration at the meeting other than those
matters referred to in this proxy statement.
The record date for the determination of stockholders entitled to notice of
and to vote at the meeting has been fixed by the Board of Directors as the close
of business on October 27, 2004. On that date, there were 25,784,983 outstanding
shares of Common Stock of the Company, par value $.01 per share ("Common
Stock"). Each outstanding share of Common Stock is entitled to one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Company's By-Laws, two directors are to be elected
to hold office for a term of three years, expiring with the 2007 Annual Meeting
of Stockholders. The Company's By-Laws provide for three classes of directors
who are to be elected for terms of three years each and until their successors
shall have been elected and shall have been duly qualified. The nominees,
Messrs. Walter McCann and Ronald Pettirossi, are currently directors of the
Company. If no one candidate for a directorship receives the affirmative vote of
a majority of both the shares voted and of the stockholders present in person or
by proxy and voting thereon, then the candidate who receives the majority in
number of the stockholders present in person or by proxy and voting thereon
shall be elected. The persons named in the accompanying proxy will vote properly
executed proxies for the election of the persons named above, unless authority
to vote for either or both nominees is withheld.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES.
The following table sets forth certain information about each nominee for
director and each director whose term of office continues beyond the 2004 Annual
Meeting. The information presented includes, with respect to each such person,
his business history for at least the past five years; his age as of the date of
this
1
proxy statement; his other directorships, if any; his other positions with the
Company, if any; and the year during which he first became a director of the
Company.
NOMINEES FOR THREE YEAR TERMS EXPIRING AT THE 2007 ANNUAL MEETING:
DIRECTOR
NAME SINCE COMMITTEES BUSINESS HISTORY
---- -------- ---------- ----------------
Walter McCann 1983 Chairman of the Mr. Walter McCann was the President
Board (effective of Richmond College, The American
July 1, 2004) International University, located in
London, England from January 1993
Audit Committee until his retirement in July 2002.
Mr. McCann was also formerly a
Compensation business school dean. Mr. McCann has
Committee Chairman been a director of MPAL since 1997.
From 1985 to 1992, he was President
Nominating of Athens College in Athens, Greece.
Committee Age 67.
Ronald P. 1997 Audit Committee Mr. Ronald P. Pettirossi has been
Pettirossi........ Chairman President of ER Ltd., a consulting
company since 1995. Mr. Pettirossi is
Compensation also a director and audit committee
Committee chairman of Farmstead telephone
Group, a supplier and installer of
Nominating business communications products and
Committee systems. Mr. Pettirossi is a former
audit partner of Ernst & Young LLP,
who worked with public and privately
held companies for 31 years. Age 61.
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING AT THE 2005 ANNUAL MEETING:
DIRECTOR OTHER OFFICES HELD
NAME SINCE WITH COMPANY AGE AND BUSINESS EXPERIENCE
---- -------- ------------------ ---------------------------
Timothy L. Largay... 1996 Secretary Mr. Timothy L. Largay has been a
partner in the law firm of Murtha
Nominating Cullina LLP, Hartford, Connecticut
Committee Chairman since 1974. Mr. Largay has been a
director of MPAL since August 2001.
Compensation Murtha Cullina has been retained by
Committee the Company for more than five years
and is being retained during the
current year. Age 61.
DIRECTOR CONTINUING IN OFFICE WITH TERM EXPIRING AT THE 2006 ANNUAL MEETING
DIRECTOR OTHER OFFICES HELD
NAME SINCE WITH COMPANY AGE AND BUSINESS EXPERIENCE
---- -------- ------------------ ---------------------------
Donald V. Basso 2000 Audit Committee Mr. Donald V. Basso was elected a
director of the Company in 2000. Mr.
Basso served as a consultant and
Exploration Manager for Canada
Southern Petroleum Ltd. from October
1997 to May 2000. He also served as a
consultant to Ranger Oil & Gas Ltd.
during 1997. From 1987 to 1997, Mr.
Basso served as Exploration Manager
for Guard Resources Ltd. Mr. Basso
has over 40 years experience in the
oil and gas business in the United
States, Canada and the Middle East.
Age 66.
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---------------
* All of the named companies are engaged in oil, gas or mineral exploration
and/or development, except where noted.
Officers are elected annually and serve at the pleasure of the Board of
Directors. No family relationships exist between any of the directors or
officers.
CORPORATE GOVERNANCE
DIRECTOR INDEPENDENCE
The Board has determined that Messrs. Basso, Largay, Pettirossi and McCann
are independent directors under the listing standards of the Nasdaq Stock
Market, Inc. and rules adopted by the Securities and Exchange Commission
("SEC").
STANDARDS OF CONDUCT AND BUSINESS ETHICS
The Company has previously adopted Standards of Conduct for the Company
(the "Standards"). The Board amended the Standards in August 2004. Under the
Standards, all directors, officers and employees ("Employees") must demonstrate
a commitment to ethical business practices and behavior in all business
relationships, both within and outside of the Company. All Employees who have
access to confidential information are not permitted to use or share that
information for stock trading purposes or for any other purpose except the
conduct of the Company's business. Any waivers of or changes to the Standards
must be approved by the Board and appropriately disclosed under applicable law
and regulation.
The Company's Standards are available on the Company's website at
www.magpet.com and it is our intention to provide disclosure regarding waivers
of or amendments to the policy by posting such waivers or amendments to the
website in the manner provided by applicable law.
COMMITTEES
The standing committees of the Board are the Audit Committee, which is
comprised of Messrs. Basso, McCann and Pettirossi, (Chairman), the Compensation
Committee, which is comprised of Mr. McCann (Chairman), Mr. Pettirossi and Mr.
Largay and the Nominating Committee, which is comprised of Mr. Largay
(Chairman), Mr. Pettirossi, and Mr. McCann. During the fiscal year ended June
30, 2004, the full Board acted as the nominating committee until its formation
on June 17, 2004. Nine meetings of the Board, five meetings of the Audit
Committee and two meetings of the Compensation Committee were held during the
year ended June 30, 2004. No director attended less than 75% of the aggregate
number of meetings held by the Board and the committees on which he served.
The functions of the Audit Committee are set forth in its charter, which
was amended in July 2004 and which is attached to this Proxy Statement as
Appendix A. The Charter is also posted on the Company's web site,
www.magpet.com. The Audit Committee has the authority to institute special
investigations and to retain outside advisors as it deems necessary in order to
carry out its responsibilities.
The Board of Directors has determined that all of the members of the Audit
Committee are "independent," as defined by the rules of the SEC and the Nasdaq
Stock Market, Inc. The Board of Directors has further determined that each of
the members of the Audit Committee is financially literate and that Mr.
Pettirossi is an audit committee financial expert, as such term is defined under
SEC regulations, by virtue of having the following attributes through relevant
education and/or experience:
(1) an understanding of generally accepted accounting principles and
financial statements;
(2) the ability to assess the general application of such principles in
connection with the accounting for estimates, accruals and reserves;
(3) experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of accounting
issues that are generally comparable to the breadth and
3
complexity of issues that can reasonably be expected to be raised by
the Company's financial statements, or experience actively supervising
one or more persons engaged in such activities;
(4) an understanding of internal controls and procedures for financial
reporting; and
(5) an understanding of audit committee functions.
REPORT OF THE AUDIT COMMITTEE ADDRESSING SPECIFIC MATTERS
On October 29, 1999, the Board of Directors adopted a formal, written
charter for the Audit Committee of the Company. The Charter was recently
amended, as detailed above. Each member of the Audit Committee is an
"independent director" for purposes of applicable SEC rules and Nasdaq listing
standards.
In connection with the preparation and filing of the Company's audited
financial statements for the fiscal year ended June 30, 2004 (the "audited
financial statements"), the Audit Committee performed the following functions:
- The Audit Committee reviewed and discussed the audited financial
statements with senior management and Deloitte & Touche LLP, the
Company's independent auditors. The review included a discussion of the
quality, not just the acceptability, of the Company's accounting
principles, the reasonableness of significant judgments, and the clarity
of disclosures in the forward looking statements.
- The Audit Committee also discussed with Deloitte & Touche LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
("Communications With Audit Committees").
- The Audit Committee received the written disclosures and the letter from
Deloitte & Touche LLP required by Independence Standards Board Standard
No. 1 ("Independence Discussions With Audit Committees"), and discussed
with Deloitte & Touche LLP its independence from the Company and
considered the compatibility of the auditors' nonaudit services to the
Company, if any, with the auditors' independence.
Based upon the functions performed, the Audit Committee recommended to the
Board of Directors, and the Board approved, that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2004, for filing with the SEC. The Audit Committee
has also approved, subject to stockholder ratification, the selection of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal year
ending June 30, 2005.
Audit Committee
Donald V. Basso
Walter McCann
Ronald P. Pettirossi (Chairman)
COMMUNICATIONS WITH DIRECTORS
Any stockholder wishing to communicate with the Board generally, Mr. Walter
McCann, Chairman of the Board, or another Board member, may do so by contacting
the Company's Corporate Secretary at the address, telephone number, facsimile or
e-mail address listed below:
Magellan Petroleum Corporation
10 Columbus Boulevard
Hartford, CT 06106
Attention: Corporate Secretary
telephone: (860) 293-2006
facsimile: (860) 293-2349
electronic mail: info@magpet.com
4
All communications will be forwarded to the Board, Mr. McCann, or another
Board member, as applicable. The Corporate Secretary has been authorized by the
Board of Directors to screen frivolous or unlawful communications or commercial
advertisements.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
All directors attended the 2003 Annual Meeting of Shareholders. Directors
are expected, but not required, to attend the 2004 Annual Meeting of
Shareholders.
THE BOARD NOMINATION PROCESS
The Board of Directors identifies director nominees based primarily on
recommendations from management, Board members, stockholders, and other sources.
The Board identifies nominees who possess qualities such as personal and
professional integrity, sound business judgment, and graphic arts industry or
financial expertise. The Board also considers age and diversity (broadly
construed to mean a variety of opinions, perspectives, personal and professional
experiences and backgrounds, such as gender, race and ethnicity differences, as
well as other differentiating characteristics) in making their selections for
nominees to the Board.
The Company requires that a majority of the directors meet the criteria for
independence required under applicable laws and regulations. Accordingly, the
Board considers the independence standards as part of its process in evaluating
director nominees. In accordance with these standards, a director must be
determined by the Board to be free of any relationship that would interfere with
the exercise of independent judgment in carrying out the responsibilities of a
director. Finally, the Board also evaluates other factors that they may deem are
in the best interests of the Company and its shareholders. The Board does not
currently employ an executive search firm, or pay a fee to any other third
party, to locate qualified candidates for director positions.
The Board has not adopted a formal policy with regard to the consideration
of any director candidates recommended to the Board by stockholders.
Stockholders who wish to recommend a prospective director nominee for
consideration by the Board must notify the Corporate Secretary in writing at the
Company's offices at 10 Columbus Boulevard, Hartford, CT 06106 no later than
September 8, 2005. The Corporate Secretary will pass all such shareholder
recommendations on to the Board for consideration by the Board. Any such
recommendation should provide whatever supporting material the stockholder
considers appropriate, but should at a minimum include such background and
biographical material as will enable the Board to make an initial determination
as to whether the nominee satisfies the Board membership criteria set forth
above. All candidates submitted by a stockholder or stockholder group are
reviewed and considered in the same manner as all other candidates. The
stockholder will be informed of the status of his/her recommendation after it is
considered by the Board. No stockholder nominations were received by the Board
of Directors during the Company's fiscal year ended June 30, 2004.
If a stockholder wishes to nominate a candidate for election to the Board
at the 2005 annual meeting of shareholders, he or she must follow the rules
contained in Article II, Section 2.2 of the Company's Bylaws, described below
under the heading "Stockholder Proposals."
ADDITIONAL INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation of Mr. Daniel J. Samela, who is President and Chief Executive
Officer of the Company, the Company's former President and
5
Chief Executive Officer and each of the most highly compensated executive
officers of the Company who earned in excess of $100,000 during fiscal year 2004
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
FISCAL OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) (#) ($)
--------------------------- ------ ---------- ------------ ------------
James R. Joyce............................ 2004 175,000 -- 26,250(1)
President, Chief Financial Officer 2003 167,500 50,000 25,125(1)
and a director of the Company 2002 157,500 -- 23,625(1)
(resigned effective June 30, 2004)
Daniel J. Samela.......................... 2004 41,667 30,000 6,250(1)
President, Chief Executive Officer, 2003 -- --
Chief Financial and Accounting Officer 2002 -- --
(effective July 1, 2004)
T. Gwynn Davies........................... 2004 177,144 -- 65,436(2)
General Manager -- MPAL 2003 138,000 -- 51,000(2)
(Effective Oct. 30, 2001) 2002 106,000 -- 39,300(2)
---------------
(1) Payment to a SEP-IRA pension plan.
(2) Payment to pension plan similar to an individual retirement plan.
Messrs. Donald V. Basso, Timothy L. Largay, Walter McCann and Ronald P.
Pettirossi were each paid director's fees of $40,000 during fiscal year 2004. In
addition, Mr. Pettirossi was paid $5,000 as Chairman of the Audit Committee.
Effective July 1, 2004, Mr. McCann was elected Chairman of the Board and his
annual fee increased from $40,000 to $65,000.
Under the Company's medical reimbursement plan for all outside directors,
the Company reimburses certain directors the cost of their medical premiums, up
to $500 per month. During fiscal 2004, the cost of this plan was approximately
$17,000.
STOCK OPTIONS
The following tables provide information about stock options exercised
during fiscal 2004 and held by the Named Executive Officers at the end of fiscal
year 2004.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 2004 AND JUNE 30, 2004
OPTION/SAR VALUES TABLE
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT 2004 YEAR-END (#) AT 2004 YEAR-END ($)
SHARES AQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- ------------ ----------- ------------- ----------- -------------
James R. Joyce....... 55,867 100,002 -- -- -- --
Daniel J. Samela..... -- -- -- -- -- --
T. Gwynn Davies...... 0 -- 30,000 -- 900 --
EMPLOYMENT AGREEMENT
Effective March 1, 2004, the Company entered into a thirty-six month
employment agreement with Mr. Daniel J. Samela. The thirty-six month term
automatically renews each 30-day period during
6
Mr. Samela's term of employment, unless he elects to retire or the agreement is
terminated according to its terms. The agreement provides for him to be employed
as the President and Chief Executive Officer of the Company, effective as of
July 1, 2004, at a salary of $175,000 per annum, and an annual contribution of
15% of the salary to a SEP/IRA pension plan for Mr. Samela's benefit. The
employment agreement may be terminated for cause (as defined in the agreement),
on written notice by the Company without cause, by Mr. Samela's resignation or
upon a change in control of the Company (as defined in the agreement). Upon a
termination without cause, Mr. Samela will be entitled to payment of the balance
of salary and average bonus payments due for the term of the agreement. If,
during the two-year period following a change in control, Mr. Samela terminates
his employment for good reason (as defined in the agreement) or the Company
terminates his employment other than for cause of disability (as defined in the
agreement), then Mr. Samela will be paid an amount equal to three times his
annual base salary and three-year average bonus payment, plus any previously
deferred compensation, accrued vacation pay, and three years of reimbursements
for medical coverage and insurance benefits. In addition, any then-unvested
options will be accelerated so as to become fully exercisable. If, at any time
after the two-year period following a change in control, Mr. Samela terminates
his employment for good reason or the Company terminates his employment other
than for cause of disability, then he will be paid an amount equal to his then
current annual salary and a three-year average bonus payment. In addition, any
then-unvested options will be accelerated so as to become fully exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The only officers or employees of the Company or any of its subsidiaries,
or former officers or employees of the Company or any of its subsidiaries, who
participated in the deliberations of the Board concerning executive officer
compensation during the fiscal year ended June 30, 2004 were Messrs. James R.
Joyce and Timothy L. Largay. At the time of such deliberations, Messrs. Joyce
and Largay were directors of the Company. Because he does not serve on the
Board, Mr. Samela did not participate in any discussions or deliberations
regarding his own compensation. Mr. Largay does not receive any compensation for
his services as Secretary.
COMPENSATION COMMITTEE REPORT
The Company maintains a compensation committee. The compensation of each of
the Company's executive officers over the past several years has been determined
as discussed below. In establishing compensation, the Committee has considered
the value of the services rendered, the skills and experience of each executive
officer, the Company's circumstances and other factors. The Committee
established specific guidelines governing last year's compensation for Mr.
Samela, and there was a specific relationship between corporate performance and
the compensation of Mr. Samela in the fiscal year ended June 30, 2004.
The independent directors of MPAL determined Mr. Davies' compensation.
Consistent with its usual practice on compensation of MPAL employees, the Board
of Directors of the Company did not intervene in that determination.
Donald V. Basso Timothy L. Largay
Walter McCann Ronald P. Pettirossi
TAX DEDUCTIBILITY OF COMPENSATION
At this time, the Company does not expect that the Revenue Reconciliation
Act of 1993 will have any effect on the Company's executive compensation because
it is not likely that the compensation paid to any executive will exceed $1
million.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of beneficial ownership and
reports of changes in beneficial ownership with the Securities and Exchange
Commission. Such persons are required by the SEC regulations to furnish the
Company with copies
7
of all Section 16(a) forms filed by such persons. Based solely on copies of
forms received by it, or written representations from certain reporting persons
that no Form 5's were required for those persons, the Company believes that
during the just completed fiscal year, its executive officers, directors, and
greater than 10% beneficial owners complied with all applicable filing
requirements.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
G&O'D INC
During the year ended June 30, 2004, the Company paid G&O'D $24,000 for
providing accounting and administrative services, office facilities and support
staff, a firm owned by Mr. James R. Joyce, who served as the Company's President
and Chief Financial Officer until June 30, 2004.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as to the number of shares of
the Company's Common Stock owned beneficially as of October 1, 2004 (except as
otherwise indicated) by each director (or nominee director) and each Named
Executive Officer listed in the Summary Compensation Table and by all directors
and executive officers of the Company as a group:
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP*
------------------
NAME OF INDIVIDUAL OR GROUP SHARES OPTIONS PERCENT OF CLASS
--------------------------- ------- -------- ----------------
Donald Basso........................................ 11,000 -- **
T. Gwynn Davies..................................... -- 30,000 **
Timothy L. Largay................................... 6,000 75,000 **
Walter McCann....................................... 59,368 75,000 **
Ronald P. Pettirossi................................ 6,500 75,000 **
Directors and Executive Officers as a Group (a total
of 6)............................................. 82,868 255,000 1.3%
---------------
* Unless otherwise indicated, each person listed has the sole power to vote and
dispose of the shares listed.
** The percent of class owned is less than 1%.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
NAME OF INDIVIDUAL OR GROUP PERCENT OF CLASS
--------------------------- ----------------
Sagasco Amadeus Pty. Limited 1,300,000...................... 5.05%*
---------------
* As reported in Schedule 13G filed with the SEC on July 22, 2003. On July 10,
2003, a subsidiary of Origin Energy Limited Sagasco Amadeus Pty. Limited,
agreed to exchange 1,200,000 shares of MPAL for 1,300,000 shares of the
company's common stock, which is 5.05% of the Company's outstanding shares.
The exchange was completed on September 2, 2003. The Company believes that as
of April 21, 2004, Origin Energy has resold all shares of the Company held by
it.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors has engaged Deloitte & Touche
LLP to serve as the Company's registered independent public accounting firm to
audit the Company's accounts and records for the fiscal year ending June 30,
2005, and to perform other appropriate services. Stockholders are hereby asked
to ratify the Board's appointment of Deloitte & Touche LLP as the Company
independent auditors for the fiscal year ending June 30, 2005.
8
We expect that a representative from Deloitte & Touche LLP will be present
at the 2004 Annual Meeting of Stockholders. Such representative will have the
opportunity to make a statement if he so desires and is expected to be available
to respond to appropriate questions.
PREVIOUS INDEPENDENT ACCOUNTANTS
On August 15, 2003, the Audit Committee of the Board of Directors of the
Company determined to dismiss Ernst & Young LLP as the Company's independent
auditors, effective upon completion of the annual audit for the fiscal year
ended June 30, 2003. This decision was subject to the condition that MPAL, the
Company's majority owned subsidiary, make a similar determination to dismiss
Ernst & Young as its independent auditors. Ernst & Young LLP had served as the
Company's independent auditors for many years. On September 4, 2003, the audit
committee of the Board of Directors of MPAL made a similar determination to
dismiss Ernst & Young LLP as its independent accountants, effective upon the
completion of the annual audit for the fiscal year ended June 30, 2003.
The reports of Ernst & Young LLP on the Company's financial statements for
the two fiscal years ended June 30, 2003 did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to audit scope or
accounting principles.
Ernst & Young LLP was dismissed on September 26, 2003, upon filing of the
Company's annual report on Form 10-K for the fiscal year ended June 30, 2003.
The report of Ernst & Young LLP was dated September 19, 2003.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended June 30, 2003 and through September 19, 2003,
there were no disagreements with Ernst & Young LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to Ernst & Young LLP's satisfaction, would
have caused Ernst & Young LLP to make reference to the matter in their report.
In addition, there were no "reportable events" as that term is described in Item
304(a)(1)(v) of Regulation S-K.
NEW INDEPENDENT ACCOUNTANTS
Effective October 30, 2003, the Audit Committee of the Company's Board of
Directors retained Deloitte & Touche LLP as the Company's new independent
auditors for the fiscal year ended June 30, 2004.
During the Company's two most recent fiscal years and the subsequent
interim period(s) prior to engaging Deloitte & Touche LLP, neither the Company
nor anyone acting on behalf of the Company consulted Deloitte & Touche LLP
regarding (i) either (a) the application of accounting principles to a specified
transaction, either completed or proposed, or (b) the type of audit opinion that
might be rendered on the Company's financial statements; or (ii) any matter that
was either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv)
of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or
a reportable event (as described in paragraph 304(A)(1)(v) of Regulation S-K).
In addition, during the Company's two most recent fiscal years and the
subsequent interim period(s) prior to engaging Deloitte & Touche LLP, no written
report was provided by Deloitte & Touche LLP to the Company and no oral advice
was provided that Deloitte & Touche LLP concluded was an important factor
considered by the Company in reaching a decision as to any accounting, auditing,
or financial reporting issue.
2004 PRINCIPAL ACCOUNTANT'S FEES AND SERVICES
During the fiscal year ended June 30, 2004, the Company retained its
current principal auditor, Deloitte & Touche LLP, to provide services in the
following categories and amounts.
AUDIT FEES
The aggregate fees paid or to be paid to Deloitte & Touche LLP for the
fiscal year ended June 30, 2004, for the review of the financial statements
included in the Company's Quarterly Reports on Form 10-Q and the
9
audit of financial statements included in the Annual Report on Form 10-K for the
fiscal year ended June 30, 2004 were $208,432.
2003 PRINCIPAL ACCOUNTANT'S FEES AND SERVICES
During the fiscal year ended June 30, 2003, the Company retained its
previous principal auditor, Ernst & Young LLP, to provide services in the
following categories and amounts.
AUDIT FEES
The aggregate fees paid to Ernst & Young LLP for the fiscal year ended June
30, 2003, for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q and the audit of financial statements included in
the Annual Report on Form 10-K for the fiscal year ended June 30, 2003 were
$256,700.
TAX FEES
The aggregate fees paid to Ernst & Young LLP for tax advice and related
services rendered during the fiscal year ended June 30, 2003 were $34,700.
PRE-APPROVAL POLICIES
Under the terms of its Charter, the Audit Committee is required to
pre-approve all the services provided by, and fees and compensation paid to, the
independent auditors for both audit and permitted non-audit services. When it is
proposed that the independent auditors provide additional services for which
advance approval is required, the Audit Committee may form and delegate
authority to a subcommittee consisting of one or more members, when appropriate,
with the authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such subcommittee to grant pre-approvals
are to be presented to the Committee at its next scheduled meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" PROPOSAL 2.
OTHER MATTERS
If any other matters are properly presented to stockholders for a vote at
the meeting, the persons named as proxies on the proxy card will have
discretionary authority, to the extent permitted by law, to vote on such matters
in accordance with their best judgment. The Board of Directors knows of no other
matters which will be presented to stockholders for consideration at the meeting
other than the matters referred to in Proposals 1 and 2.
VOTE REQUIRED FOR APPROVAL
Each outstanding share of Common Stock is entitled to one vote. Article
Twelfth of the Company's Certificate of Incorporation provides that:
"Any matter to be voted upon at any meeting of stockholders must be
approved, not only by a majority of the shares voted at such meeting (or
such greater number of shares as would otherwise be required by law or this
Certificate of Incorporation), but also by a majority of the stockholders
present in person or by proxy and entitled to vote thereon; provided,
however, except and only in the case of the election of directors, if no
candidate for one or more directorships receives both such majorities, and
any
10
vacancies remain to be filled, each person who receives the majority in
number of the stockholders present in person or by proxy and voting thereon
shall be elected to fill such vacancies by virtue of having received such
majority. When shares are held by members or stockholders of another
company, association or similar entity and such persons act in concert, or
when shares are held by or for a group of stockholders whose members act in
concert by virtue of any contract, agreement or understanding, such persons
shall be deemed to be one stockholder for the purposes of this Article."
The Company may require brokers, banks and other nominees holding shares
for beneficial owners to furnish information with respect to such beneficial
owners for the purpose of applying the last sentence of Article Twelfth.
Only stockholders of record are entitled to vote; beneficial owners of
Common Stock of the Company whose shares are held by brokers, banks and other
nominees (such as persons who own shares in "street name") are not entitled to a
vote for purposes of applying the provision relating to the vote of a majority
of stockholders. Each stockholder of record is considered to be one stockholder,
regardless of the number of persons who might have a beneficial interest in the
shares held by such stockholder. For example, assume XYZ broker is the
stockholder of record for ten persons who each beneficially own 100 shares of
the Company, eight of these beneficial owners direct XYZ to vote in favor of a
proposal and two direct XYZ to vote against the proposal. For purposes of
determining the vote of the majority of shares, 800 shares would be counted in
favor of the proposal and 200 shares against the proposal. For purposes of
determining the vote of a majority of stockholders, one stockholder would be
counted as voting in favor of the proposal.
The holders of thirty-three and one third percent (33 1/3%) of the total
number of shares entitled to be voted at the meeting, present in person or by
proxy, shall constitute a quorum for the transaction of business. In counting
the number of shares voted, broker nonvotes and abstentions will not be counted
and will have no effect. In counting the number of stockholders voting, (i)
broker nonvotes will have no effect and (ii) abstentions will have the same
effect as a negative vote or, in the case of the election of directors, as a
vote not cast in favor of the nominee.
11
PERFORMANCE GRAPH
The graph below compares the cumulative total returns, including
reinvestment of dividends, if applicable, on the Company's Common Stock with the
returns on companies in the NASDAQ Index and an Industry Group Index (Media
General's Independent Oil and Gas Industry Group).
The chart displayed below is presented in accordance with SEC requirements.
The graph assumes a $100 investment made on July 1, 1999 and the reinvestment of
all dividends. Stockholders are cautioned against drawing any conclusions from
the data contained therein, as past results are not necessarily indicative of
future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MAGELLAN PETROLEUM CORP.,
NASDAQ MARKET INDEX AND COREDATA GROUP INDEX
[LINE GRAPH]
ASSUMES $100 INVESTED ON JULY 1, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 2004
--------------------------------------------------------------------------------
COMPANY/INDEX/MARKET 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------
Magellan Petroleum 100.00 53.25 44.47 36.57 49.87 54.44
Independent Oil &
Gas 100.00 125.00 133.60 128.81 152.92 216.97
NASDAQ Market Index 100.00 150.47 83.33 56.52 62.85 79.93
SOLICITATION OF PROXIES
The entire expense of preparing and mailing this proxy statement and any
other soliciting material (including, without limitation, costs, if any, related
to advertising, printing, fees of attorneys, financial advisors and solicitors,
public relations, transportation and litigation) will be borne by the Company.
In addition to the use of the mails, the Company or certain of its employees may
solicit proxies by telephone, telegram and
12
personal solicitation; however, no additional compensation will be paid to those
employees in connection with such solicitation. In addition, the Company has
retained the Corporate Governance Group of Strategic Stock Surveillance, LLC to
assist in the distribution of proxy solicitation materials for an estimated fee
of $4,000 plus out-of-pocket expenses. The cost of the proxy solicitation will
be borne by the Company.
Banks, brokerage houses and other custodians, nominees and fiduciaries will
be requested to forward solicitation material to the beneficial owners of the
Common Stock that such institutions hold of record, and the Company will
reimburse such institutions for their reasonable out-of-pocket disbursements and
expenses.
STOCKHOLDER PROPOSALS
Stockholders who intend to have a proposal included in the notice of
meeting and related proxy statement relating to the Company's 2005 Annual
Meeting of Stockholders must submit the proposal on or before June 30, 2005.
NOTICE OF BUSINESS TO BE BROUGHT BEFORE A STOCKHOLDERS' MEETING
If a stockholder wishes to present a proposal at the Company's 2005 Annual
General Meeting of Stockholders and the proposal is not intended to be included
in the Company's proxy statement and form of proxy relating to that meeting, the
stockholder must give advance notice to the Company prior to one of two
deadlines set forth in the Company's By-Laws.
If a stockholder's proposal relates to business other than the nomination
of persons for election to the board of directors, Article II, Section 2.1
applies.
ARTICLE II, SECTION 2.1, OF THE COMPANY'S BY-LAWS PROVIDES IN PART THAT,
"At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before
the meeting by or at the direction of the board of directors, or (c)
otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of
the corporation, not less than sixty (60) days nor more than ninety (90)
days prior to the meeting; provided, however, that in the event that less
than seventy days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders. Notice by the stockholder to be
timely must be so received not later than the close of business on the
tenth day following the date on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. For purposes of this
Section 2.1, public disclosure shall be deemed to have been made to
stockholders when disclosure of the date of the meeting is first made in a
press release reported by the Dow Jones News Services, Associated Press,
Reuters Information Services, Inc. or comparable national news service or
in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended.
A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting
(a) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the
annual meeting;
(b) the name and address, as they appear on the corporation's books,
of the stockholder intending to propose such business;
(c) the class and number of shares of the corporation which are
beneficially owned by the stockholder;
13
(d) a representation that the stockholder is a holder of record of
capital stock of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to present such
business;
(e) any material interest of the stockholder in such business."
To be timely under this By-Law, a stockholder proposal must be received no
earlier than September 8, 2005, but no later than October 8, 2005, which is the
time period not less than 60 days nor more than 90 days prior to the first
anniversary of this year's Annual General Meeting of Stockholders.
NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS
If a stockholder's proposal relates to the nomination of persons for
election to the board of directors, Article II, Section 2.2 applies.
ARTICLE II, SECTION 2.2 NOTICE OF STOCKHOLDER NOMINEES OF THE COMPANY'S
BY-LAWS PROVIDES THAT,
Only persons who are nominated in accordance with the procedures set
forth in these By-Laws shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of stockholders (a) by or at the
direction of the board of directors or (b) by any stockholder of the
corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 2.2.
Nominations by stockholders shall be made pursuant to timely notice in
writing to the Secretary of the corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal
executive offices of the corporation not less than sixty (60) days nor more
than ninety (90) days prior to the meeting; provided, however, that in the
event that less than seventy days' (70) notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. For purposes
of this Section 2.2, public disclosure shall be deemed to have been made to
stockholders when disclosure of the date of the meeting is first made in a
press release reported by the Dow Jones News Services, Associated Press,
Reuters Information Services, Inc. or comparable national news service or
in a document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended.
Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice;
(c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder; and
(d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had
the nominee been nominated, or intended to be nominated, by the board of
directors.
To be effective, each notice of intent to make a nomination given
hereunder shall be accompanied by the written consent of each nominee to
being named in a proxy statement and to serve as a director of the
corporation if elected.
14
No person shall be eligible for election as a director of the
corporation unless nominated in accordance with the procedures set forth in
these By-Laws. The presiding officer of the meeting shall, if the facts
warrant, determine and declare to the meeting that nomination was not made
in accordance with the procedures prescribed by these By-Laws, and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
To be timely under this By-Law, a stockholder notice must be received no
earlier than September 8, 2005, but no later than October 8, 2005, which is the
time period not less than 60 days nor more than 90 days prior to the first
anniversary of this year's Annual Meeting of Stockholders.
All stockholder proposals should be submitted to the Secretary of Magellan
Petroleum Corporation at 10 Columbus Boulevard, Hartford, CT 06106. The fact
that a stockholder proposal is received in a timely manner does not insure its
inclusion in the proxy material, since there are other requirements in the
Company's By-Laws and the proxy rules relating to such inclusion.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 2004
FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE COMPANY, 10 COLUMBUS BOULEVARD, HARTFORD, CT 06106,
ATTENTION: MR. DANIEL J. SAMELA.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
Timothy L. Largay
Secretary
Dated: October 28, 2004
15
APPENDIX A
MAGELLAN PETROLEUM CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(ORIGINALLY ADOPTED OCTOBER 29, 1999, REVISED JULY 22, 2004)
This charter (the "Charter") governs the operations of the audit committee
(the "Committee") of the board of directors (the "Board") of Magellan Petroleum
Corporation, a Delaware corporation (the "Company").
PURPOSE OF THE AUDIT COMMITTEE
The Committee shall provide assistance to the Board in fulfilling its
oversight responsibility relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, and the annual independent audit of the Company's financial
statements. In performing its duties, it is the responsibility of the Committee
to maintain free and open communication between the directors, the Company's
independent registered public accounting firm (the "Outside Auditor") and the
members of management of the Company.
COMPOSITION OF THE COMMITTEE
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall: (a) satisfy the independence and experience
requirements of the Nasdaq Stock Market, Inc., the listing standards of any
other securities exchange or association on which the Company's securities are
traded, the Securities Exchange Act of 1934 (the "Exchange Act"), and the rules
and regulations of the SEC adopted thereunder, and (b) be free from any
relationship which, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee.
All members of the Committee must be able to read and understand
fundamental financial statements at the time of their appointment to the
Committee, and at least one member will have accounting or related financial
management expertise which results in the member's financial sophistication. To
the extent reasonably feasible, at least one member of the Committee shall
qualify as an "audit committee financial expert" as defined by the SEC, as
determined annually by the Board.
Appointment to the Committee, the determination of the "independence" of
each Committee member, and the designation of one or more Committee members as
"audit committee financial experts", shall be made on an annual basis by the
Board. The Board shall also fill any vacancies as they occur, and may remove any
member of the Committee at any time. Unless a Chair is elected by the Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
MEETINGS; ORGANIZATION
The Committee shall meet at least four times annually, or more frequently
as the Chairman or Committee deems appropriate, or at the request of the
Company's Outside Auditor. As part of its responsibilities to foster open
communication, the Committee should meet at least annually with management and
with the Outside Auditor in separate executive sessions to discuss any matters
that the Committee or each of these groups believe should be discussed
privately. The Committee may ask members of Company management, legal counsel,
representatives of the Outside Auditor or others to attend its meetings and
provide information to the Committee.
The operations of the Committee shall be subject to the provisions of the
Company's Certificate of Incorporation and Bylaws, as each shall be in effect
from time to time. The Committee is authorized and empowered to adopt its own
rules of procedure not inconsistent with (a) any provision of this Charter; (b)
any provision of the Certificate of Incorporation or Bylaws or (c) the laws of
the state of Delaware or any other applicable law.
A-1
The Committee shall keep minutes of each meeting, which shall be approved
by the Committee members and shall be given to the corporate Secretary for
filing with the corporate records. The Committee shall also submit the minutes
of all meetings of the Committee to, or discuss the matters discussed at each
Committee meeting with, the full Board. The Chairman shall report to the Board
from time to time and as requested by the Board.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
In assisting the Board in its oversight role, the Committee shall have full
access to all books, records, facilities, and personnel of the Company and shall
have the authority, to the extent it deems necessary or appropriate, to retain
special legal, accounting or other consultants and approve their retention
terms. The Company shall provide appropriate funding, as determined by the
Committee, for payment of compensation to the Outside Auditor for the purpose of
rendering or issuing an audit report or related work and to any outside advisors
employed by the Committee.
In carrying out its responsibilities, the Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the accounting
and reporting practices of the Company are in accordance with all requirements
and are of the highest quality. In carrying out these responsibilities, the
Committee shall, to the extent it deems necessary and appropriate, perform the
following functions:
- The Committee shall have a clear understanding with management and the
Outside Auditor that the Outside Auditor is accountable to the Committee
and to the Board, as representatives of the Company's shareholders. The
Committee shall have the sole authority and responsibility to select,
evaluate and, where appropriate, replace the Outside Auditor. The
Committee shall be directly responsible for approving the level of
compensation of the Outside Auditor and the oversight of the work of the
Outside Auditor (including resolution of disagreements between management
and the Outside Auditor regarding financial reporting) for the purpose of
preparing or issuing an audit report or related work. The Outside Auditor
shall report directly to the Committee.
- The Committee shall annually review and evaluate the qualifications,
performance and independence of the lead partner of the Outside Auditor
and assure regular rotation of the lead audit partner and reviewing
partner as required by law.
- The Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed
for the Company (or its subsidiaries) by the Outside Auditor, subject to
the de minimis exceptions for non-audit services described in the
Exchange Act which are approved by the Committee prior to the completion
of the audit. The Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate,
including the authority to grant preapprovals of audit and permitted
non-audit services, provided that decisions of such subcommittee to grant
preapprovals shall be presented to the Committee at its next scheduled
meeting.
- On an annual basis, the Committee shall obtain from the Outside Auditor a
written communication delineating all their relationships and
professional services as required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committee. In
addition, the Committee shall review with the Outside Auditor the nature
and scope of any disclosed relationships or professional services and
take any appropriate action to ensure the continuing independence of the
Outside Auditor.
- The Committee shall meet with the Outside Auditor and management of the
Company to review the scope of the proposed audit and timely quarterly
reviews for the current year and the procedures to be utilized, the
adequacy of the Outside Auditor's compensation, and at the conclusion
thereof review such audit or review, including any comments or
recommendations of the Outside Auditor.
- The Committee shall provide sufficient opportunity for the Outside
Auditor to meet with the members of the Committee without members of
management present. Among the items to be discussed in these
A-2
meetings are the Outside Auditor' evaluation of the Company's financial,
accounting, and auditing personnel, and the cooperation that the Outside
Auditor received during the course of audit.
- The Committee shall review with the Outside Auditor and management the
adequacy and effectiveness of the accounting and internal controls over
financial reporting of the Company, and elicit any recommendations for
the improvement of such internal controls or particular areas where new
or more detailed controls or procedures are desirable. Particular
emphasis should be given to the adequacy of internal controls to expose
any payments, transactions, or procedures that might be deemed illegal or
otherwise improper. The Committee shall also review and discuss with
management and the Outside Auditors (i) the annual report prepared by
management with respect to the Company's internal control over financial
reporting and (ii) the attestation report pertaining thereto to be
delivered by the Outside Auditor. The Committee shall also obtain from
the Outside Auditor periodic assurances that the Outside Auditor is
complying with all provisions of applicable law which require the Outside
Auditor, if it detects or becomes aware of any illegal act, to assure
that the Committee is adequately informed and to provide a report if the
Outside Auditor has reached specified conclusions with respect to such
illegal acts.
- The Committee shall discuss in advance with management the Company's
practices with respect to the types of information to be disclosed and
the types of presentations to be made in earnings press releases,
including the use of "pro forma" or "adjusted" non-GAAP information (if
any), and financial information and earnings guidance; and shall also
discuss with management and the Outside Auditors the effect of
off-balance sheet structures, if any, and aggregate contractual
obligations on the Company's financial statements.
- The Committee shall review and discuss the quarterly financial statements
with management and the Outside Auditor prior to the filing of the Form
10-Q (and prior to the press release of results, if possible) to
determine that the Outside Auditor does not take exception to the
disclosure and content of the financial statements, and shall also
discuss any other matters required to be communicated to the Committee by
the Outside Auditor under the standards of the Public Company Accounting
Oversight Board (United States). The chairman of the Committee may
represent the entire Committee for purposes of this review.
- The Committee shall review and discuss with management and the Outside
Auditor the financial statements to be included in the Company's annual
report on Form 10-K, to determine that the Outside Auditor is satisfied
with the disclosure and content of the financial statements to be
presented to the shareholders. The Committee shall also review and
discuss with financial management and the Outside Auditor: (a) the
results of their timely analysis of significant financial reporting
issues and practices including changes in, or adoptions of, accounting
principles and disclosure practices; (b) the Outside Auditor's judgment
about the quality, not just the acceptability, of accounting principles
and the clarity of the financial disclosure practices used or proposed to
be used, and particularly, the degree of aggressiveness or conservatism
of the Company's accounting principles and underlying estimates, and
other significant decisions made in preparing the financial statements;
and (c) any matters required to be communicated to the Committee by the
Outside Auditor under Statement of Auditing Standards 61 or under the
standards of the Public Company Accounting Oversight Board (United
States), or any other reports of the Outside Auditor required by law or
professional auditing standards, including reports on: critical
accounting policies and practices used in preparing the financial
statements; alternative treatments of financial information discussed
with management, ramifications of such alternative disclosures and
treatments, and the treatment preferred by the Outside Auditors; and
other significant written communications between the Outside Auditors and
the management of the Company, such as any management letter issued or
proposed to be issued, and a schedule of unadjusted differences, if any.
- The Committee shall report the results of the annual audit to the full
Board, and if requested by the Board, invite the Outside Auditor to
attend the full Board meeting to assist in reporting the results of the
annual audit or to answer other directors' questions (alternatively, the
other directors, particularly
A-3
the other independent directors, may be invited to attend the Committee
meeting during which the results of the annual audit are reviewed).
- The Committee shall review disclosures, if any, made by the Company's
Chief Executive Officer and Chief Financial Officer during their
certification process for the Company's periodic reports regarding: (a)
all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial information; and (b) any fraud,
whether or not material, that involves management or other employees who
have a significant role in the Company's internal controls over financial
reporting.
- The Committee shall prepare and publish a Committee report for inclusion
in the Company's annual proxy statement and provide any additional
disclosures in the proxy statement or the Company's annual report on Form
10-K required to be made under SEC rules and regulations.
- The Committee shall review reports received from regulators and other
legal and regulatory matters that may have a material effect on the
financial statements or related Company compliance policies.
- The Committee shall inquire of management and the Outside Auditor about
significant risks or exposures and assess the steps management has taken
to minimize such risks to the Company.
- The Committee shall review accounting and financial human resources and
succession planning within the Company.
- The Committee shall review and approve any "related-party" transactions
(as defined in SEC regulations) involving the Company and officers,
directors or shareholders beneficially owning more than 10% of any class
of equity security of the Company.
- The Committee shall investigate any matter brought to its attention
within the scope of its duties, with the power to retain outside counsel
for this purpose if, in its judgment, that is appropriate.
- The Committee shall perform any other duties consistent with this
charter, the Company's Certificate of Incorporation, Bylaws, and
governing laws as the Committee or the Board deems necessary.
- The Committee shall obtain the Board's approval of this Charter, shall
annually review and reassess the adequacy of this Charter as conditions
dictate, and shall publish the Charter as an appendix to the Company's
proxy statement as required by applicable law.
- The Committee shall annually review the Committee's own performance and
present a report to the Board of the performance evaluation of the
Committee.
RECEIPT AND TREATMENT OF COMPLAINTS
The Committee shall establish and oversee procedures for: the receipt,
retention, and treatment of complaints received by the Company regarding
accounting, internal accounting controls, auditing, or other matters; and the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting, auditing, or other matters.
LIMITATION OF COMMITTEE'S ROLE
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete,
and accurate and are in accordance with generally accepted accounting principles
and applicable rules and regulations. Management is responsible for the
financial reporting process, including the system of internal controls, and for
the preparation of consolidated financial statements in accordance with
generally accepted accounting principles. The Company's Outside Auditor is
responsible for auditing those financial statements and expressing an opinion as
to their conformity with generally accepted accounting principles. The
Committee's responsibility is to oversee and review these processes. The members
of the Committee are not, however, professionally engaged in the practice of
accounting or auditing and do not provide any expert or
A-4
other special assurance as to such financial statements concerning compliance
with laws, regulations or generally accepted accounting principles or as to
auditor independence. Each member of the Committee shall be entitled to rely on
information, opinions, reports or statements, including financial statement and
other financial data prepared or presented by officers and employees of the
Company, legal counsel, the Outside Auditor or other persons with professional
or expert competence.
A-5
MAGELLAN PETROLEUM CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 7, 2004
KNOW ALL MEN BY THESE PRESENTS, that the undersigned holder of shares of
common stock of MAGELLAN PETROLEUM CORPORATION, a Delaware corporation
(hereinafter referred to as the Company) does hereby constitute and appoint
Daniel J. Samela and Timothy L. Largay or either of them, as proxies, with full
power to act without the other and with full power of substitution, to vote the
said shares of stock at the Annual Meeting of Stockholders of the Company to be
held on Tuesday, December 7, 2004 at 1:00 P.M., local time, at The Goodwin
Hotel, One Haynes St., Hartford, CT, 06103, at any adjourned or postponed
meeting or meetings thereof, held for the same purposes, in the following
manner:
UNLESS DIRECTED TO THE CONTRARY BY SPECIFICATION IN THE SPACES PROVIDED, THE
SAID INDIVIDUALS ARE HEREBY AUTHORIZED AND EMPOWERED BY THE UNDERSIGNED TO VOTE
FOR PROPOSALS 1 AND 2 AND ARE GIVEN DISCRETIONARY AUTHORITY TO VOTE ON ANY
OTHER MATTERS UPON WHICH THE UNDERSIGNED IS ENTITLED TO VOTE, AND WHICH MAY
PROPERLY COME BEFORE SAID MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
This proxy must be signed exactly as the name appears herein. Executors,
administrators, trustees, etc. should give full title as such. If the signer is
a corporation please sign full corporate name by duly authorized officer.
Unless otherwise indicated on this proxy card or by accompanying letter, the
undersigned represents that in executing and delivering this proxy he is not
acting in concert with any other person for the purposes of Article Twelfth of
the Certificate of Incorporation as described in the Company's proxy statement.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on the other side)
Please mark your
votes as in this
[X] example
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Nominees: Walter McCann 2.Ratification of
Directors [ ] [ ] Ronald P. Pettinossi Auditors (page 12) [ ] [ ] [ ]
(Proxy Statement page 2)
For all except the following nominee(s)
_______________________________________
SIGNATURE____________________DATE______SIGNATURE____________________DATE_______.
IF HELD JOINTLY
NOTE: Please sign this proxy as name(s) appears above and return promptly to
American Stock Transfer & Trust Company, 59 Maiden Lane, New York, NY
10038, whether or not you plan to attend the meeting.