Shoal Point Energy chairman stepping down from board

There is a shake-up at the top of the company that holds licences to explore for oil on Newfoundland's west coast.

Company holds exploration licences on Newfoundland's west coast

The process known as hydraulic fracturing, or fracking, could be used to look for oil just outside the Gros Morne National Park boundary, not far from Green Point, seen above. (CBC)

Shoal Point Energy is losing the chairman of its board of directors.

Norman Davidson Kelly won’t stand for re-election at a shareholders meeting on Friday.

The move is "a consequence of its transition from operator to the role of a non-operating company," Shoal Point Energy said in a press release.

Shoal Point holds a number of exploration licences on Newfoundland’s west coast.

This year, the company finalized a farm-in agreement with another firm, Black Spruce Exploration, which plans to carry out a drilling program.

That plan — using the technique known as hydraulic fracturing, or fracking — has been controversial.

And a CBC News investigation found that Davidson Kelly has a controversial past of his own, for his role with a different company in the Middle East a decade ago.

According to the findings of a 2006 Australian royal commission, a company controlled by Davidson Kelly or his family received millions that should have been used for humanitarian purposes in Iraq.

"On the evidence before me, Mr. Davidson Kelly is a thoroughly disreputable man with no commercial morality," Commissioner Terence Cole wrote in his report, which was tabled in the Australian parliament.

That scandal has nothing to do with Shoal Point Energy.

Shoal Point says Davidson Kelly will remain a major shareholder, and saluted him for playing "a significant role in identifying and understanding the nature of this oil-in-shale resource" in western Newfoundland.

According to recent regulatory filings, Davidson Kelly holds 3.5 million shares of Shoal Point.

The company expects to replace him on its board of directors with somebody from Newfoundland and Labrador.

Listed to continue as director

Davidson Kelly’s decision to step down appears to be a change in plans from just last month.

In late May, proxy forms issued to company shareholders listed him as a candidate to continue on the board of directors.

While Shoal Point is citing its shift to non-operator status as the reason for his departure, that agreement dates back much further.

Shoal Point announced the farm-in deal with Black Spruce in December, and finalized it in January.

The agreement will see Black Spruce acquire up to a 60-per-cent working interest in Shoal Point’s licences, if it drills a dozen wells over the next two years.

Shoal Point Energy recently attracted the ire of Newfoundland and Labrador regulators when it incorrectly stated that permission had been granted for a drilling program on the west coast.

At last week’s Noia offshore industry conference in St. John’s, Black Spruce officials declined to comment on that incident, or Shoal Point in general.

 "We have no opinion on another company," Black Spruce CEO David Murray said. "They’re our business partner. If they make mistakes, they’re responsible for a response, and answer to their shareholders and to their board, not to us."