SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant[ ]
Filed by a Party other than the Registrant[X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
KESTREL ENERGY, INC.
(Name of Registrant as Specified in Its Charter)
Gorsuch Kirgis L.L.C.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
Aggregate number of securities to which transaction applies:
2) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
A. Proposed maximum aggregate value of transaction:
B. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
KESTREL ENERGY, INC.
999 18th Street, Suite 1100
Denver, Colorado 80202
(303) 295-0344
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 3, 1996
10:00 a.m.
To Our Shareholders:
We strongly encourage your attendance and participation at the Annual
Meeting of Shareholders of Kestrel Energy, Inc., which will be held at
10:00 a.m. on Tuesday, December 3, 1996 in the Management Briefing Center
at First Interstate Bank of Denver, N.A., North Tower, 4th Floor, 633 17th
Street, Denver, Colorado 80270 for the following purposes:
1. To elect five directors to the Board;
2. To approve and ratify the selection of KPMG Peat Marwick LLP as
the Company's independent certified public accountants and auditors for
the fiscal year ending June 30, 1997;
3. To transact such other business as may properly come before the
meeting.
A Proxy Statement explaining the matters to be acted upon at the
meeting is enclosed.
The Board of Directors has designated October 25, 1996 as the record
date for determining shareholders entitled to notice of and to vote at the
Annual Meeting.
THE BOARD OF DIRECTORS WOULD LIKE TO EMPHASIZE THE IMPORTANCE OF
EXERCISING YOUR RIGHTS AS SHAREHOLDERS TO VOTE ON THE ISSUES DESCRIBED IN
THE ENCLOSED PROXY STATEMENT. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF DIRECTORS AND APPROVE THE
SELECTION OF KPMG PEAT MARWICK LLP.
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE.
October 28, 1996 Timothy L. Hoops
President
Mark A. Boatright
Secretary
<PAGE>
KESTREL ENERGY, INC.
999 18th Street, Suite 1100
Denver, Colorado 80202
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held December 3, 1996
10:00 a.m.
The enclosed Proxy is solicited by the Board of Directors of Kestrel
Energy, Inc., a Colorado corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held in the Management Briefing
Center at First Interstate Bank of Denver, N.A., North Tower, 4th Floor,
633 17th Street, Denver, Colorado on Tuesday, December 3, 1996 at 10:00
a.m., Mountain Standard Time, and at any adjournment thereof. It is
anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or about October 28, 1996.
The expense of the Board of Directors' Proxy solicitation will be
borne by the Company. In addition to solicitation of Proxies by use of
the mails, some of the Company's officers and directors may solicit
Proxies by telephone, telegraph or personal interview without any
additional compensation to them. The Company will reimburse brokers,
nominees, custodians and other fiduciaries for expenses in forwarding
Proxy materials to their principals.
Any shareholder giving a Proxy on the enclosed form may revoke it at
any time prior to the exercise thereof by advising the Secretary of the
Company in writing at the above address, by properly executing a later
dated Proxy or by appearing in person and voting at the Annual Meeting.
VOTING OF SHARES
Only holders of the Company's outstanding shares of common stock, no
par value ("Common Stock"), of record at the close of business on October
25, 1996, will be entitled to notice of, and to vote at, the Annual
Meeting and at any adjournment thereof. On that date, there were
1,907,604 shares of Common Stock outstanding.
Cumulative voting in the election of directors is allowed. Under
cumulative voting, each shareholder is entitled to cast a number of votes
in the election of directors equal to the number of directors to be
elected multiplied by the number of shares being voted. The shareholder
may cast his vote for one nominee or may distribute the votes among
nominees in any manner. Unless directed otherwise, the enclosed Proxy
gives discretionary authority to cumulate votes in the election of
directors. On all matters other than the election of directors, each
shareholder will be entitle to one vote per share. The election of
directors requires that the five candidates having the highest number of
votes cast in favor of their election are elected to the Board of
Directors. The approval of KPMG Peat Marwick LLP requires an affirmative
vote of a majority of the shares of Common Stock represented in person or
by Proxy at the Annual Meeting. The Board of Directors urges each
shareholder to mark, sign and mail the enclosed Proxy card in the return
envelope as promptly as possible.
STOCK OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth, as far as is known to the Board of
Directors or the management of the Company, the only persons owning on
September 30, 1996 more than five percent of the outstanding shares of the
Company's Common Stock. For purposes of this disclosure, the amount of
the Company's Common Stock beneficially owned is the aggregate number of
shares of the Common Stock outstanding on such date plus an amount equal
to the aggregate amount of Common Stock which could be issued upon the
exercise of stock options within 60 days of such date.
<TABLE>
<CAPTION>
Number of Shares of Common Stock
Beneficially Owned
Voting and Investment Power
Name and Address Direct Indirect
<S> <C> <C>
Victoria International 1,166,221 --
Petroleum N.L.
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Victoria Petroleum N.L. -- 1,166,221<FN2>
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Timothy L. Hoops 195,544<FN3> 1,166,221<FN4>
P.O. Box 1079
Denver, CO 80201-1079
Robert J. Pett 102,500<FN5> 1,166,221<FN6>
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
John T. Kopcheff 164,000<FN7> 1,166,221<FN8>
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
<CAPTION>
Number of Shares of Common Stock
Beneficially Owned
Name and Address Total Shares Percent Owned
Owned
<S> <C> <C>
Victoria International 1,166,221<FN1> 61.1%
Petroleum N.L.
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Victoria Petroleum N.L. 1,166,221 61.1%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
Timothy L. Hoops 1,361,765 65.1%
P.O. Box 1079
Denver, CO 80201-1079
Robert J. Pett 1,268,721 63.4%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
John T. Kopcheff 1,330,221 64.3%
4th Flr., Griffin Centre
28 The Esplanade
Perth 6000
Western Australia
<FN>
<FN1> Does not include unvested options to purchase 1,285,353 shares
if certain undeveloped properties are successfully developed
into proved producing properties. See CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
<FN2> Victoria International Petroleum N.L. ("VIP"), the record holder
of the shares, is a wholly owned subsidiary of Victoria
Petroleum N.L. ("VP"), which is therefore deemed to be another
beneficial owner of the shares. Resolute Samantha Limited, a
publicly held Australian mining and natural resources company
("Resolute"), owns 28.45% of VP. Resolute disclaims beneficial
ownership of the shares.
<FN3> Includes 10,544 shares owned jointly by Mr. Hoops and his wife,
Linda Sue Hoops. Includes vested options to purchase up to
185,000 shares granted to Mr. Hoops by the Compensation
Committee of the Board of Directors pursuant to the Company's
Nonqualified Stock Option Plan. See EXECUTIVE COMPENSATION.
<FN4> Mr. Hoops is a director of VIP and of VP. As a result, all
shares held by VIP directly and VP indirectly are listed as
indirectly held by Mr. Hoops.
<FN5> Includes vested options to purchase up to 92,500 shares granted
to Mr. Pett by the Compensation Committee of the Board of
Directors pursuant to the Company's Nonqualified Stock Option
Plan. See EXECUTIVE COMPENSATION.
<FN6> Mr. Pett is the Chairman and a director of VIP and a director of
VP. As a result, all shares held by VIP directly and VP
indirectly are listed as indirectly held by Mr. Pett.
<FN7> Includes vested options to purchase up to 160,000 shares granted
to Mr. Kopcheff by the Compensation Committee of the Board of
Directors pursuant to the Company's Nonqualified Stock Option
Plan. See EXECUTIVE COMPENSATION.
<FN8> Mr. Kopcheff is a director of VIP and VP. As a result, all
shares held by VIP directly and VP indirectly are listed as
indirectly held by Mr. Kopcheff.
</FN>
</TABLE>
The following table sets forth the number of shares beneficially
owned on September 30, 1996 by the Company's executive officers and
directors, and by all of the executive officers and directors as a group.
For purposes of this disclosure, the amount of the Company's Common Stock
beneficially owned is the aggregate number of shares of the Common Stock
outstanding on such date plus an amount equal to the aggregate amount of
Common Stock which could be issued upon the exercise of stock options
within 60 days of such date.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Name and Address Position(s) Owned and
With the Options Percent
Company Granted Owned
<S> <C> <C> <C>
Timothy L. Hoops President, Chief 1,361,765 65.1%
P.O. Box 1079 Executive Officer <FN1><FN2>
Denver, CO 80201-1079 and Director
Robert J. Pett Chairman of 1,268,721 63.4%
4th Floor the Board and <FN3><FN4>
Griffin Centre Director
28 The Esplanade
Perth 6000
Western Australia
Mark A. Boatright Vice President 16,500 *
1475 Lawrence St. -Finance, Chief <FN5>
Suite 310 Financial Officer
Denver, CO 80202 and Director
John T. Kopcheff Vice President 1,330,221 64.3%
4th Floor -International <FN5><FN6>
Griffin Centre and Director
28 The Esplanade
Perth 6000
Australia
Kenneth W. Nickerson Director 18,000 *
10780 Hanson St. <FN5>
Johannesburg, MI 49751
All Directors and
Executive Officers
as a Group (5 persons) 1,662,765 69.9%
* Less than one percent (1.0%)
<FN>
<FN1> Mr. Hoops is a director of Victoria International Petroleum N.L.
("VIP") and of Victoria Petroleum N.L. ("VP"). As a result, all
shares held by VIP directly and by VP indirectly are listed as
indirectly held by Mr. Hoops.
<FN2> Includes 10,544 shares owned jointly by Mr. Hoops and his wife,
Linda Sue Hoops. Includes vested options to purchase up to
185,000 shares granted to Mr. Hoops by the Compensation
Committee of the Board of Directors pursuant to the Company's
Nonqualified Stock Option Plan. See EXECUTIVE COMPENSATION.
<FN3> Mr. Pett is the Chairman and a director of VIP and a director of
VP. As a result, all shares held by VIP directly and VP
indirectly are listed as indirectly held by Mr. Pett.
<FN4> Includes vested options to purchase up to 92,500 shares granted
to Mr. Pett by the Compensation Committee of the Board of
Directors pursuant to the Company's Nonqualified Stock Option
Plan. See EXECUTIVE COMPENSATION.
<FN5> Includes vested options to purchase up to 16,500 shares, 160,000
shares and 18,000 shares granted to Messrs. Boatright, Kopcheff
and Nickerson, respectively, pursuant to the Company's
Nonqualified Stock Option Plan. See EXECUTIVE COMPENSATION.
<FN6> Mr. Kopcheff is a director of VIP and VP. As a result, all
shares held by VIP directly and VP indirectly are listed as
indirectly held by Mr. Kopcheff.
</FN>
</TABLE>
EFFECT OF PRINCIPAL SHAREHOLDERS' VOTE
The beneficial owners of five percent or more of the Company's Common
Stock, together with the Company's executive officers and directors, have
effective voting control over 1,662,765 shares, or 66.8%, of the
outstanding Common Stock on a fully diluted basis. Accordingly, these
principal shareholders and management could exercise voting control of the
election of directors (subject to the effects of cumulative voting) and
the ratification of the selection of auditors.
ELECTION OF DIRECTORS
Five directors are to be elected to serve until the 1997 annual
meeting of shareholders and until each of their successors shall have been
elected and qualified. IT IS INTENDED THAT THE ENCLOSED PROXIES, UNLESS
DIRECTED OTHERWISE, WILL BE VOTED FOR THE FOLLOWING NOMINEES, ALL OF WHOM
ARE PRESENTLY DIRECTORS OF THE COMPANY AND HAVE BEEN NOMINATED FOR RE-
ELECTION BY THE BOARD OF DIRECTORS.
There is no arrangement or understanding between any of the nominees
and any other person or persons pursuant to which he was or is to be
selected as a director or nominee. The names of and certain information
with respect to the persons nominated for election as directors are as
follows:
TIMOTHY L. HOOPS, age 40, was appointed President, Chief Executive
Officer and Director on June 1, 1992. Mr. Hoops is a petroleum geologist
with 14 years experience in the continental USA and Australia. Mr. Hoops
has been Vice President and a Director of the Company's wholly owned
subsidiary, Victoria Exploration, Inc., an independent oil and gas
producer, since 1987. He has also been a Director of Victoria
International Petroleum N.L. and of Victoria Petroleum N.L. since 1987.
Mr. Hoops was Exploration Manager for Royal Resources Corporation, a
publicly held Denver based company engaged in the exploration and
development of oil and gas, from 1984 to 1987. Prior to 1984, Mr. Hoops
was employed by Amoco Production, Cities Service and Santa Fe Energy. Mr.
Hoops is a 1979 graduate of the Colorado School of Mines, with a degree in
geology. Mr. Hoops is the brother-in-law of Mr. Boatright.
ROBERT J. PETT, age 49, was appointed as a Director on June 1, 1992
and Chairman of the Board on January 16, 1995. Mr. Pett served as
Secretary from June 1, 1992 until December 16, 1992, as Vice President
from November 1, 1992 until January 16, 1995, and as Treasurer from
January 4, 1993 to January 16, 1995. Mr. Pett has been a director of
Victoria International Petroleum N.L. since 1986. Mr. Pett has been
Chairman of Victoria Petroleum N.L. for 12 years. He is currently
Chairman of Resolute Samantha Limited, an Australian mining and natural
resources company, which provides office facilities and administrative
services to Victoria Petroleum N.L. on a pro-rata reimbursement of
expenses basis. He is a Director of Sapphire Mines N.L., an Australian
precious gem mining company, and President and a Director of Victoria
Exploration, Inc., an independent oil and gas producer which is a wholly
owned subsidiary of the Company. Mr. Pett holds a Masters Degree in
Economics (Queens University, Canada).
MARK A. BOATRIGHT, age 39, was appointed a Director on October 18,
1993, and as Vice President - Finance, Chief Financial Officer, Treasurer
and Secretary on January 16, 1995. Mr. Boatright is President of
Boatright and Associates, P.C., Certified Public Accountants. Mr.
Boatright has over 17 years experience in financial accounting and
specializes in oil and gas accounting and international taxation. Mr.
Boatright currently acts as a consultant in international taxation and
accounting for various oil and gas companies. He also is a certified
financial planner for Regatta Financial Services, a registered investment
advisory firm, and serves as a director of Irons Brewing Company. Prior
to establishing his own accounting practice, Mr. Boatright was the tax
manager for Bradley, Allen & Associates, P.C., Certified Public
Accountants. Mr. Boatright is a 1979 cum laude graduate of the University
of Colorado with a degree in finance. He has been providing accounting
and financial services to the Company since June, 1992. Mr. Boatright is
the brother-in-law of Mr. Hoops.
JOHN T. KOPCHEFF, age 48, was appointed as Vice President -
International and a Director of the Company on January 16, 1995. Mr.
Kopcheff is a geologist with 26 years experience in petroleum in
Australia, Southeast Asia, United States, South America and the North Sea,
both in field geological operations and management. Mr. Kopcheff has been
a Director and Secretary of Victoria Exploration, Inc. since 1986, a
Director of Victoria International Petroleum N.L. since 1986, and a
Director of Victoria Petroleum N.L. since 1984. Prior to his appointment,
he provided various services to the Company relating to the Company's
international exploration activities on a consulting basis. He received a
Bachelor of Science degree with honors from the University of Adelaide in
1970.
KENNETH W. NICKERSON, age 76, is an independent petroleum and mineral
geologist with over 48 years experience. He was appointed as a director
of the Company on December 16, 1992. From 1981 until 1988, Mr. Nickerson
served as President, Director and Chief Operating Officer of Royal
Resources Corporation, a publicly held Denver based company engaged in the
exploration and development of oil and gas. Since then Mr. Nickerson has
worked as a consulting geologist for various energy companies. Mr.
Nickerson is a 1948 graduate of the Colorado School of Mines with a degree
in geological engineering.
In the event any one or more of the nominees shall be unable to serve
as a director, votes will be cast, pursuant to the authority granted in
the enclosed Proxy, for such person or persons as may be designated by the
Board of Directors. The Board of Directors at this time is not aware of
any nominee who is or will be unable to serve as director, if elected.
None of the nominees are directors of any other company having a
class of equity securities registered under the Securities Exchange Act of
1934, or any company registered under the Investment Company Act of 1940.
The Board of Directors acted five times by unanimous written consent
during the fiscal year ended June 30, 1996. The Company has an Audit
Committee comprised of Messrs. Hoops, Nickerson and Boatright, which
oversees the accounting controls for the Company. In fiscal 1996, the
Committee acted one time by unanimous written consent. The Company also
has a Compensation Committee, which committee makes recommendations on
executive compensation and selects those persons eligible to receive
grants of options under the Company's Nonqualified Stock Option Plan and
the Amended and Restated Incentive Stock Option Plan. Members of the
Committee are Messrs. Nickerson and Boatright. The Committee acted three
times in fiscal 1996 by unanimous written consent. The Company does not
have a nominating committee.
EXECUTIVE OFFICERS
Timothy L. Hoops is the President and Chief Executive Officer of the
Company. Robert J. Pett is the Chairman of the Board, Mark A. Boatright
is Vice President-Finance, Chief Financial and Accounting Officer,
Treasurer and Secretary and John T. Kopcheff is Vice President-
International. See ELECTION OF DIRECTORS. Denis I. Rakich and Lynnette
M. Carpenter are Assistant Secretaries of the Company, but they are not
executive officers of the Company.
There is no arrangement or understanding between any of the executive
officers and any other persons pursuant to which he was or is to be
selected as an officer, nor is there any family relationship between or
among any executive officers, except that Mr. Boatright is the brother-in-
law of Mr. Hoops.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1993, the Board of Directors authorized the exchange
of 207,263 restricted shares of the Company's Common Stock for $466,343 in
indebtedness owed to Victoria Exploration, Inc. ("VicX") effective January
1, 1994. Because the shares received were issued in a private,
unregistered transaction, more than two (2) years ago, they can be
publicly resold by VicX or its successors in interest only in accordance
with the provisions of Securities Act Rule 144, including the limitation
on the amount of shares which may be sold in any ninety (90) day period.
The exchange rate for the transaction was approximately $2.25 per share.
As a result of the transaction, VicX owned 380,913 shares, or 59% of the
outstanding Common Stock at that time. The remaining debt owed to VicX
after the transaction amounted to approximately $600,000.
On June 10, 1994, the Company transferred 709,108 shares of its
Common Stock and unvested options to acquire up to an additional 1,285,353
shares of that stock to Victoria International Petroleum N.L. ("VIP") in
exchange for all of the outstanding shares of VicX. The shares of VicX
were valued at $1,595,493, the aggregate value of the assets of VicX less
certain undeveloped properties. The value of the Company's Common Stock
in the exchange was an agreed upon value of $2.25 per share. At the time
of the exchange the Company's Common Stock was being traded at prices
between $1.75 and $2.00 per share. The options were given in
consideration for certain undeveloped properties owned by VicX which the
Company agreed to develop. These options will only vest to VIP if the
undeveloped properties are successfully developed into proved producing
properties by June 30, 1997. The options were granted on the formula of
cash received by the Company from the undeveloped properties less the cash
used to develop those properties plus 60% of the reclassified present
value discounted at 10%, divided by $3.00 per share. The properties will
be evaluated annually by a qualified independent evaluator to determine
the number of options to be vested to VIP. Because certain of the
officers and directors of the Company have similar positions with VicX and
VIP, the Company's Board required as a condition to the transaction, and
obtained, a written opinion from an independent firm experienced in oil
and gas mergers and acquisitions that the transaction was fair from a
financial point of view to the shareholders of the Company. All shares
issued in this transaction were unregistered. Prior to the transaction,
VicX transferred all of its holdings in the Company, 380,913 shares (59%)
and its note receivable from the Company, to VIP.
In conjunction with the foregoing acquisition of undeveloped oil and
gas properties from VicX, the Company issued a $1,000,000 note payable to
VicX, which bore interest at the Norwest Bank Denver, N.A. prime rate with
quarterly interest payments. In December 1992, the terms of a $58,500
unsecured short term note to VicX were conformed to the terms of the
$1,000,000 note payable and the notes were combined. The note was secured
by the oil and gas properties acquired from VicX. As noted above, the
note was reduced to approximately $600,000 by the exchange of 207,263
shares of Common Stock for $466,343 in indebtedness owed to VicX on
December 31, 1993. Also, as indicated above, VicX transferred the note to
VIP on June 10, 1994. On December 27, 1994, prior to the December 31,
1994 maturity date of the note, the Company agreed to assign an unproved
waterflood project (Rocky Butte) acquired in the foregoing June 1992
transaction to VIP in exchange for the surrender of indebtedness to VIP in
the amount of approximately $600,000, thereby eliminating the note
receivable from the Company to VIP.
On November 8, 1994, VIP purchased 75,000 additional shares of Common
Stock for $2.50 per share as part of a private placement of 550,000 shares
by the Company, most of which was sold overseas. On June 26, 1995, VIP
purchased 50,000 additional shares in the open market. In August 1995,
VIP sold 48,800 shares. VIP's current shareholding interest in the
Company is 61.1% (46.8% diluted for currently vested options).
Mark A. Boatright has been providing accounting and financial
services to the Company since June, 1992. On November 15, 1994, the
Company entered into an agreement with Mr. Boatright whereby he would
provide services to the Company and VicX through his company, Boatright &
Associates, P.C. for $1,500 per month. The Board of Directors believes
these fees are in line with industry standards.
As a result of the Company's close relationship with its majority
shareholder VIP, it has been afforded the opportunity to participate in
various international oil and gas drilling opportunities located by VIP.
In most cases, VIP has its own interest in the same drilling projects in
which the Company agrees to participate and in some cases the Company has
acquired its interest from VIP rather than directly from the operator or
lead promoter of the prospects.
To date, the Company has agreed to farm-in on four such international
drilling permits, including one in Papua New Guinea and three in Western
Australia. The Company earns a right to participate by sharing in the
costs of data review, seismic and drilling. In addition to the benefit,
if any, to VIP's interest in these permits resulting from the Company's
agreement to share these costs, the Company has agreed to pay a 5% royalty
to VIP on the Company's interest in any international permits referred to
the Company by VIP which produce net revenues for the Company. The
Company believes that this arrangement is fair and reasonable and that the
potential compensation to VIP is no greater than the Company would have
paid in an arms length transaction with an unrelated party who provided
comparable services.
EXECUTIVE COMPENSATION
The following sets forth in summary form the compensation received
during each of the Company's last three complete fiscal years by the Chief
Executive Officer of the Company. No other officers of the Company
received salary, bonus or other annual compensation in total from the
Company, in excess of $100,000.
Summary Compensation Table
Annual Compensation
<TABLE>
<CAPTION>
NAME AND Fiscal Salary<FN1> Bonus Options
PRINCIPAL POSITION Year ($) ($) (#)
<S> <C> <C> <C> <C>
Timothy L. Hoops 1996 $75,000 $0 80,000
President, Chief 1995 $88,950<FN2> $0 40,000
Executive Officer, 1994 $48,000<FN2> $0 40,000
and Director
_______________________________
<FN>
<FN1> Until January of 1995, Mr. Hoops provided consulting services to
the Company via a retainer agreement between the Company and his
employer, Peak Resource Management, Inc. ("Peak) which fees are
set forth under the salary column above. Beginning January 1,
1995, Mr. Hoops became an employee of the Company and, in that
capacity, provides services to the Company and the Company's
wholly owned subsidiary, Victoria Exploration, Inc. ("VicX").
<FN2> Peak also received $54,900 in consulting fees from VicX on
account of services provided to VicX by Mr. Hoops for the year
ended June 30, 1994, which is not included in the salary column
above.
</FN>
</TABLE>
The named executive officer received no additional compensation other
than noted above the aggregate amount of which was the lesser of either
$50,000 or 10% of the total of annual salary, bonus and consulting fees
reported for the executive officer.
The Company reimburses its officers and directors for ordinary and
necessary business expenses incurred by them on behalf of the Company.
It is anticipated that, in fiscal 1997, Mr. Hoops will be paid a
salary of $75,000 for services rendered to the Company and VicX plus
retirement and health benefits. Payment for his services from July 1,
1994 through December 31, 1994 was made through his employer, Peak
Resource Management, Inc. Since January 1, 1995, Mr. Hoops has been paid
as an employee of the Company. Mr. Hoops also expects to receive
approximately $18,000 in consulting fees from Victoria Petroleum N.L.
("VP") and companies owned by VP for services provided to those companies
in fiscal 1997. In fiscal 1996, those consulting fees amounted to
$18,000. In addition, Mr. Hoops received fees as a director of VP in the
amount of Australian $5,000 for fiscal 1996 and he expects to receive the
same in 1997. Resolute Samantha Limited, a publicly held Australian
mining and natural resources company, owns 28.45% of VP, which indirectly
owns 61.1% of the Company.
Option Grants for Fiscal Year Ended June 30, 1996
<TABLE>
<CAPTION>
Number
of
Securities % of Total
Underlying Options Granted Exercise or
Options to Employees Base Price
Name Granted In Fiscal Year ($/share)
<S> <C> <C> <C>
Timothy L. Hoops 30,000 31% $3.875
President, Chief 50,000 $2.375
Executive Officer
and Director
Robert J. Pett 15,000 15% $3.875
Chairman of 25,000 $2.375
the Board
and Director
Mark A. Boatright 5,000 2% $3.875
Vice President -
Finance, Chief
Financial Officer
and Director
John T. Kopcheff 30,000 31% $3.875
Vice President - 50,000 $2.475
International
and Director
Kenneth W. Nickerson 5,000 0% $3.875
Director
Denis I. Rakich 15,000 15% $3.875
Assistant Secretary 25,000 $2.375
Lynnette M. Carpenter 5,000 6% $3.875
Assistant Secretary 10,000 $2.375
</TABLE>
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Expiration for Option Term
Name Date 5%($)<FN1> 10%($)<FN2>
<S> <C> <C> <C>
Timothy L. Hoops 11/2/05 $73,239 $184,839
President, Chief 3/28/06 $74,815 $188,815
Executive Officer
and Director
Robert J. Pett 11/2/05 $36,620 $92,420
Chairman of 3/28/06 $37,408 $94,408
the Board
and Director
Mark A. Boatright 9/30/06 $12,207 $30,807
Vice President -
Finance, Chief
Financial Officer
and Director
John T. Kopcheff 11/2/05 $73,239 $184,839
Vice President - 3/28/06 $74,815 $188,815
International
and Director
Kenneth W. Nickerson 9/30/06 $12,207 $30,807
Director
Denis I. Rakich 11/2/05 $36,620 $92,420
Assistant Secretary 3/28/06 $37,408 $94,408
Lynnette M. Carpenter 11/2/05 $12,207 $30,807
Assistant Secretary 3/28/06 $14,963 $37,763
<FN>
<FN1> This column represents the potential realizable value of each
grant of options, based on the assumption that the market price
of shares of Common Stock underlying the options will appreciate
in value from the date of the grant to the end of the option
term at the annual rate of five percent.
<FN2> This column represents the potential realizable value of each
grant of options, based on the assumption that the market price
of shares of Common Stock underlying the options will appreciate
in value from the date of the grant to the end of the option
term at the annual rate of ten percent.
</FN>
</TABLE>
Aggregated Option Exercises For Fiscal Year Ended June 30, 1996
and Year End Option Values
<TABLE>
<CAPTION>
Shares
Exercised Value
during fiscal Realized
Name year to date(#) ($)
<S> <C> <C>
Timothy L. Hoops 0 0
President, Chief
Executive Officer,
and Director
Robert J. Pett 0 0
Chairman of the
Board and Director
Mark A. Boatright 0 0
Vice President -
Finance, Chief
Financial and
Accounting Officer
and Director
John T. Kopcheff 0 0
Vice President -
International and
Director
Kenneth W. Nickerson 0 0
Director
Denis I. Rakich 0 0
Assistant Secretary
Lynnette M. Carpenter 1,250 $3,168
Assistant Secretary
<CAPTION>
Number of Value of
Securities Unexercized
Underlying In-the-Money-
Options at Options at
June 30, 1996 June 30, 1996
Name (#)<FN1> ($)<FN2>
<S> <C> <C>
Timothy L. Hoops 155,000/30,000 $215,477/0
President, Chief
Executive Officer,
and Director
Robert J. Pett 77,500/15,000 $107,738/0
Chairman of the
Board and Director
Mark A. Boatright 0/11,500 $0
Vice President -
Finance, Chief
Financial and
Accounting Officer
and Director
John T. Kopcheff 130,000/30,000 $158,444/0
Vice President -
International and
Director
Kenneth W. Nickerson 1,500/11,500 $3,422/0
Director
Denis I. Rakich 65,000/15,000 $86,253/0
Assistant Secretary
Lynnette M. Carpenter 20,000/5,000 $24,376/0
Assistant Secretary
<FN>
<FN1> All unexercised options are exercisable and are nonqualified
options.
<FN2> For all unexercised options held as of June 30, 1996, the
aggregate dollar value of the excess of the market value of the
stock underlying those options over the exercise price of those
unexercised options. The price used to calculate these figures
is the average of the High and Low prices as of June 28, 1996,
which was $3.5938 per share. However, since the underlying
shares are restricted stock, the actual value cannot be
determined.
</FN>
</TABLE>
KESTREL ENERGY, INC.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Toward Executive Officers
The Compensation Committee's executive compensation polices are
designed to provide competitive levels of compensation through a
combination of base level compensation, incentive stock options and cash
bonus awards.
President's Compensation: Mr. Hoops, the President of the Company
received base level compensation of $75,000 in 1996. This was a slight
reduction from the $88,950 in base compensation paid to Mr. Hoops in 1995.
The reduction in base level cash compensation came in connection with a
restructuring of Mr. Hoops' benefits package with the intent that the
total compensation (cash and benefits) in 1996 would be substantially
equivalent to that in 1995.
The Committee reviews the President's performance periodically and
reports to the Board of Directors on its evaluation of that performance.
The Committee does not believe that it is reasonable, necessary or
appropriate for such a small company to require or establish a direct or
fixed relationship between the Company's financial performance and the
Chief Executive Officer's compensation. The Committee instead considers a
number of factors in making a subjective determination as to the
compensation of the Chief Executive Officer, including determinations as
to the level of salary, options and benefits: quality of service
provided, amount of time devoted to the Company's business, level of
expertise, dedication to the Company and its best interests, general
management abilities and the Company's operational and financial
performance.
In fixing Mr. Hoops' 1996 salary, the Committee noted that, in fiscal
1995, Mr. Hoops' efforts on behalf of the Company increased even more than
had previously been anticipated from the acquisition of Victoria
Exploration, Inc. In particular, Mr. Hoops, aided by John Kopcheff and
others, raised $1,365,336 for the Company in U.S. and overseas offerings
of its common stock. Mr. Hoops also was heavily involved in connection
with the Company's acquisition of international drilling permits and its
heightened investor relations program in 1995, both of which required
considerable efforts on his part in addition to his duties managing the
Company's and Victoria's day to day business. In their review of Mr.
Hoops performance, the Committee noted that most of the Company's
operating losses in fiscal 1995 were the result of dry hole drilling costs
and a one time non-cash charge to earnings.
Notwithstanding the substantial increase in Mr. Hoops' efforts on
behalf of the Company, the Committee left his compensation unchanged.
While his fiscal 1996 salary was set at $75,000, as part of a
restructuring of his benefit package, the total compensation is
substantially equivalent to the $88,950 he received in fiscal 1995. The
Committee continues to believe that performance related compensation, such
as stock options and cash bonuses, should be the primary source of
motivation for Mr. Hoops and the Company's other officers instead of
annual adjustments to base level cash compensation based on recent
operating results. Although Mr. Hoops received no cash bonuses in 1996,
options were granted to Mr. Hoops to reward his efforts on behalf of the
Company and to encourage his continued superior performance.
Mr. Hoops 1997 base compensation has been tentatively set at $75,000,
consistent with the Committee's beliefs regarding annual adjustments.
Stock Options: Stock options are granted to key personnel of the
Company by the Compensation Committee as a means of providing an equitable
long term incentive to the Company's personnel. The Compensation
Committee believes that stock options can be used in the best interest of
the Company to reward past efforts of the Company's executive officers, to
encourage the present and future performance by the Company's executive
officers and to align the interests of the Company's personnel with the
interests of the Company's shareholders.
During the 1996 fiscal year, each Compensation Committee member
received an automatic grant of options to purchase 5,000 shares pursuant
to the 1993 Nonqualified Stock Option Plan. On November 2, 1995, the
Compensation Committee granted 30,000 options to the Company's President,
15,000 options to the Company's Chairman of the Board, 30,000 options to
the Company's Vice President-International, and 15,000 options and 5,000
options to each of the Company's First and Second Assistant Secretaries,
respectively. All options were granted at the fair market value on the
date of grant. In addition, on March 28, 1996, the Compensation Committee
granted 50,000 options to the Company's President, 25,000 options to the
Company's Chairman of the Board, 50,000 options to the Company's Vice
President-International, and 25,000 options and 10,000 options to each of
the Company's First and Second Assistant Secretaries, respectively. All
options were granted at the fair market value on the date of grant. The
award of these options was in accordance with the above stated policy of
the Compensation Committee and the terms of the 1993 Nonqualified Stock
Option Plan. The large awards to Messrs. Hoops and Kopcheff were made in
recognition of their substantial efforts during the year working on the
Company's international drilling program.
Cash Bonus Awards: No cash bonus awards were paid to any executive
officer during fiscal 1996, although cash bonuses remain a possible way to
reward the Company's officers for any positive results in fiscal 1997
resulting from their exceptional efforts in fiscal 1996 and 1997.
June 30, 1996 Compensation Committee Of
The Board of Directors
Kenneth W. Nickerson
Mark A. Boatright
DIRECTORS' REMUNERATION
Directors are not paid any remuneration for attendance at meetings of
the Board. Any director who serves on the Compensation Committee
automatically receives 5,000 options each September 30 pursuant to the
1993 Nonqualified Stock Option Plan. On September 30, 1995, both Messrs.
Boatright and Nickerson, as members of the Compensation Committee,
received fully vested options to purchase 5,000 shares of Common Stock at
an exercise price of $3.875 per share, the fair market value on the date
of grant. The options are exercisable for ten years from the date of
grant. No other options were awarded to members of the Compensation
Committee during fiscal 1996.
On November 2, 1995, Mr. Hoops received 30,000 options, Mr. Pett
received 15,000 options, and Mr. Kopcheff received 30,000 options to
purchase Common Stock. The options are fully vested and are exercisable
for ten years from the date of grant at an exercise price of $3.875, the
fair market value on the date of grant. In addition, on March 28, 1996,
Mr. Hoops received 50,000 options, Mr. Pett received 25,000 options, and
Mr. Kopcheff received 50,000 options to purchase Common Stock. These
options are also fully vested and are exercisable for ten years from the
date of grant at an exercise price of $2.375, the fair market value on the
date of grant.
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return for (i) the Company, (ii) the MG
Industry Group 353 - Oil and Natural Gas Exploration and (iii) the NASDAQ
Market Index. The MG Industry Group 353 consists of approximately 136
companies involved in the oil and gas industry, including the Company.
5 Year Cumulative Total Return
<TABLE>
<CAPTION>
Fiscal Year Ending
<S> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1996
Kestrel Energy 100.00 79.87 351.44 191.69 87.86 231.63
MG Industry Group 100.00 95.29 108.50 112.79 124.54 151.47
NASDAQ Index 100.00 107.75 132.27 145.04 170.11 214.14
</TABLE>
The information contained in this graph was compiled by Media General
Financial Services of Richmond, Virginia. The Company will provide a list
of the companies included in the various indices upon the written request
of any shareholder.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS AND AUDITORS
KPMG Peat Marwick LLP was appointed by the Board of Directors as the
Company's independent certified public accountants and auditors on
December 4, 1987. The decision was based upon a comparison of the
services and fee arrangements offered by various accounting firms and an
evaluation by the Board of Directors.
Although ratification by shareholders of the selection of KPMG Peat
Marwick LLP is not required by the Colorado Business Corporation Act, or
by the Company's Articles of Incorporation, as amended, or Bylaws, the
Board of Directors believes that a decision of this nature should be
confirmed by the Company's shareholders. Accordingly, shareholders are
being asked to consider ratification of the selection of KPMG Peat Marwick
LLP for the fiscal year ending June 30, 1997. If a significant number of
shares are voted against the ratification of this selection, or if the
Board of Directors determines that the fees proposed to be charged by KPMG
Peat Marwick LLP are unreasonable for the Company under the circumstances,
the Board of Directors will reconsider the selection for the fiscal year
ending June 30, 1997.
It is expected that KPMG Peat Marwick LLP will have a representative
at the Annual Meeting who will be given the opportunity to make any
statement deemed necessary and will be available to answer questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THE SELECTION OF
KPMG PEAT MARWICK LLP AS THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS AND AUDITORS FOR THE
FISCAL YEAR ENDING JUNE 30, 1997
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Company's annual report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended June 30, 1996, which contains
audited financial statements of the Company, and which is being utilized
as the annual report to shareholders for the fiscal year ended June 30,
1996, accompanies this Proxy Statement. Copies of the exhibits to that
Form 10-K are available from the Company upon written request of a
shareholder to Timothy L. Hoops, President, 999 18th Street, Suite 1100,
Denver, Colorado 80202 and payment of the Company's out-of-pocket expenses
therefor.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
Any proposal by a shareholder intended to be presented at the
Company's 1997 annual meeting of shareholders must be received at the
offices of the Company, 999 18th Street, Suite 1100, Denver, Colorado
80202, not later than June 30, 1997.
OTHER MATTERS
The Board of Directors knows of no other matter to be brought before
the shareholders' meeting. If other matters properly come before the
meeting, holders of Proxies solicited and received hereunder will vote in
their best judgment.
Under Colorado law, unless otherwise provided in the Company's
Articles of Incorporation, for the election of directors, of the shares
represented in person or by proxy at the meeting and entitled to vote,
that number of candidates equalling the number of directors to be elected
having the highest number of votes cast in favor of their election, are
elected to the board of directors. For the ratification of the
independent public accountants, of the shares represented in person or by
proxy at the meeting and entitled to vote, the votes cast favoring the
ratification must exceed the votes opposing it. Abstentions and broker
non-votes will be counted for purposes of establishing a quorum only.
Only those votes cast for the election of directors and the ratification
will be counted as votes in favor or affirmative votes.
<PAGE>
APPENDIX
PROXY CARD
PROXY
Kestrel Energy, Inc.
999 18th Street, Suite 1100
Denver, Colorado 80202
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Timothy L. Hoops and Lynnette M. Carpenter
as Proxies, each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated below, all
shares of common stock of Kestrel Energy, Inc. held of record by the
undersigned on October 25, 1996 at the annual meeting of shareholders to
be held on December 3, 1996 or any adjournment thereof.
1. TO ELECT FIVE DIRECTORS
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
[ ] FOR all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below. To cumulate
votes for any individual nominee, write in the number of cumulative votes
to be cast opposite such nominee's name. For an explanation of cumulative
voting, see "VOTING OF SHARES" IN THE ENCLOSED PROXY STATEMENT.)
Cumulative Cumulative
Nominee Votes Nominee Votes
Timothy L. Hoops ---------- Robert J. Pett ----------
Cumulative Cumulative
Nominee Votes Nominee Votes
Kenneth W. Nickerson ---------- Mark A. Boatright ----------
Cumulative
Nominee Votes
John T. Kopcheff ----------
2. TO APPROVE AND RATIFY THE SELECTION OF KPMG PEAT MARWICK AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AND AUDITORS FOR
THE YEAR ENDING JUNE 30, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made,
this proxy will be voted FOR proposals 1 and 2 above.
Please sign exactly as your name appears below. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated ------------, 1996 -------------------------------
Signature
------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
