MARKET SAVVY : CEO Resigns From Beleaguered Benton Oil & Gas
Amid continuing heavy losses and near-record lows in its stock price, Benton Oil & Gas Co. of Carpinteria said Wednesday that Chairman, Chief Executive and President Alex E. Benton resigned.
Benton, 56, a Russian emigrant who founded the oil and gas firm in 1988, will stay on as head of the company’s Russian operations, Geoilbent and Arctic Gas, and will remain on the company’s board.
The firm said it has launched a search for a new CEO. In the meantime, it said, directors Bruce M. McIntyre and Michael B. Wray will jointly run the company.
Benton Oil has been a niche player in the oil exploration and production business since its founding, operating in such countries as Russia, China and Venezuela and in California.
The firm’s revenue rose from $7.3 million in 1993 to a peak of $179 million in 1997. Earnings peaked at $28.3 million, or 95 cents a share, in 1996.
But with the collapse of crude oil prices in 1997, Benton, like many energy companies, saw both sales and earnings plunge. Revenue last year fell to $112 million, and the firm recorded a net loss of $183 million, including a one-time write-off of $153 million reflecting lowered valuations of the company’s oil properties.
In the second quarter of this year, Benton’s revenue was $25.8 million, down 9% from the second quarter of 1998. But the company’s operating loss narrowed to $3.5 million from $7.6 million a year earlier.
Benton borrowed $240 million via junk bonds in 1996 and 1997--just before oil prices dove. Its long-term debt load now stands at $290 million, which costs the company annual interest of more than $30 million.
Moreover, the firm has suffered setbacks in exploration efforts this year. Benton said June 1 that its first exploratory well in a northeastern sector of China was unsuccessful. In spring, a new well in eastern Venezuela also proved a dud.
Burdened by the company’s debt and operational problems, Benton’s stock has continued to sink this year despite the rebound in crude oil prices since February.
The stock hit a low of $1.69 on Aug. 11. It has since edged higher, and rose 13 cents to close at $2.69 on the New York Stock Exchange on Wednesday on news of Alex Benton’s resignation.
Alex Benton’s fortunes have crumbled with the drop in the stock. He filed for personal bankruptcy in early August.
That might cost Benton shareholders, whose equity in the business was already negative as of June 30: The firm said it may not be able to collect $5.7 million that Alex Benton borrowed from the business, securing it in part with his Benton shares.
The company has been trying to restructure. In February, it said it hired J.P. Morgan Securities to help it sell assets.
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Running Low
Benton Oil’s shares have crashed from a peak of $28.63 in 1996. Quarterly closes and latest on the New York Stock Exchange:
Wednesday: $2.69
Source: Bridge Information Systems
