0001415408-12-000171.txt : 20121214 0001415408-12-000171.hdr.sgml : 20121214 20121213180700 ACCESSION NUMBER: 0001415408-12-000171 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20121214 DATE AS OF CHANGE: 20121213 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Alsaadi Nawar CENTRAL INDEX KEY: 0001563520 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: 2203-733 RICHARDS STREET CITY: VANCOUVER STATE: A1 ZIP: V6BOC7 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EQUAL ENERGY LTD. CENTRAL INDEX KEY: 0001492832 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 000000000 STATE OF INCORPORATION: A0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-85588 FILM NUMBER: 121263118 BUSINESS ADDRESS: STREET 1: 2700, 500-4TH AVENUE S.W. CITY: CALGARY STATE: A0 ZIP: T2P 2V6 BUSINESS PHONE: 403-263-0262 MAIL ADDRESS: STREET 1: 2700, 500-4TH AVENUE S.W. CITY: CALGARY STATE: A0 ZIP: T2P 2V6 SC 13D 1 sch13d.htm SCHEDULE 13D sch13d.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
EQUAL ENERGY LTD.
(Name of Issuer)

Common Shares
(Title of Class of Securities)

29390Q109
(CUSIP Number)

Nawar Alsaadi
2203 – 788 Richards Street
Vancouver, British Columbia, Canada V6B 0C7
(604) 564-2406
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 3, 2012
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box.  o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. (However, see the Notes).
 
 
 
 
 
CUSIP No. 29390Q109

(1)
Name of Reporting Persons: Nawar Alsaadi

(2)
Check the Appropriate Box if a Member of a Group:

 
(a) þ
 
(b) o

(3)
SEC Use Only

(4)
Source of Funds: PF

(5)
Check box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): o

(6)
Citizenship or Place of Organization: France

Number of Shares Beneficially Owned by Each Reporting Person with:

 
(7)        Sole Voting Power: 1,650,000

 
(8)        Shared Voting Power: 0

 
(9)        Sole Dispositive Power: 1,650,000

 
(10)      Shared Dispositive Power: 0

(11) 
Aggregate Amount Beneficially Owned by Each Reporting Person: 1,650,000
 
(12) 
Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: o

(13) 
Percent of Class Represented by Amount in Row (11): 4.7%

(14) 
Type of Reporting Person: IN

 
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CUSIP No. 29390Q109

(1)
Name of Reporting Persons: Adam Arthur Goldstein

(2)
Check the Appropriate Box if a Member of a Group:

 
(a) þ
 
(b) o

(3)
SEC Use Only

(4)
Source of Funds: PF

(5)
Check box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e): o

(6)
Citizenship or Place of Organization: United States

Number of Shares Beneficially Owned by Each Reporting Person with:
 
 
(7)        Sole Voting Power: 105,000

 
(8)        Shared Voting Power: 0

 
(9)        Sole Dispositive Power: 105,000

 
(10)      Shared Dispositive Power: 0
 
(11) 
Aggregate Amount Beneficially Owned by Each Reporting Person: 105,000
 
(12) 
Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares: o

(13) 
Percent of Class Represented by Amount in Row (11): 0.3%

(14) 
Type of Reporting Person: IN
 
 
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Item 1. Security and Issuer

This statement on Schedule 13D relates to the common shares of Equal Energy Ltd., an Alberta, Canada corporation (the “Issuer”). The principal executive offices of the Issuer are located at 500 – 4th Avenue S.W., Suite 2700, Calgary, Alberta, Canada T2P 2V6.

Item 2. Identity and Background

This statement is being filed on behalf of Nawar Alsaadi and Adam Arthur Goldstein (collectively, the “Investors”).  Each of the Investors is a businessman.  The respective addresses of the Investors are 2203 – 788 Richards Street, Vancouver, British Columbia, Canada V6B 0C7 and 550 Warren Street, Apt. 16C, Fayetteville, NY 13066.  Mr. Alsaadi is a citizen of France and Dr. Goldstein is a citizen of the United States.
 
During the past five years, neither of the Investors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activity subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration

Mr. Alsaadi acquired 1,650,000 common shares of the Issuer in the open market between November 1, 2011 and June 18, 2012 for the aggregate purchase price of $5,430,000.  Of this amount, approximately $63,750 was borrowed as a margin loan for the purpose of acquiring, holding, trading or voting such shares.

Dr. Goldstein acquired 105,000 common shares of the Issuer in the open market between March 11, 2011 and December 3, 2012 for the aggregate purchase price of $326,550.  Of this amount, approximately $98,700 was borrowed as a margin loan for the purpose of acquiring, holding, trading or voting such shares, among other securities.

Item 4. Purpose of Transaction

Each of the Investors acquired their common shares of the Issuer for investment purposes.  The Investors have no plans or proposals which relate to or would result in any of the matters listed in Items 4(a) to 4(j) of Schedule 13D, except that the Investors are committed to enhancing and preserving the Issuer’s shareholder value through (a) an accretive buyback of the Issuer’s common shares, (b) reducing the Issuer’s 2013 capital spending budget and (c) increasing the amount of the Issuer’s announced annual dividend.  The Investors reserve the right to support this commitment by initiating changes to the Issuer’s present board of directors or management, and in addition, the Investors reserve the right to acquire additional securities of the Issuer, to dispose of such securities at any time or to formulate other purposes, plans or proposals regarding the Issuer or any of its securities.
 
 
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Item 5. Interest in Securities of the Issuer

(a)
The Investors are the beneficial owners of 1,755,000 shares or approximately 5% of the Issuer’s common shares.

(b)
Mr. Alsaadi has the sole power to vote and sole power to dispose of 1,650,000 common shares of the Issuer.  Dr. Goldstein has the sole power to vote and sole power to dispose of 105,000 common shares of the Issuer.

(c)
During the past 60 days, Mr. Alsaadi has effected the following transactions in the Issuer’s common shares:

●  
on October 29, 2012, he sold 7,034 shares at a price of $3.34 per share in exchange for gross proceeds of $23,493.56; and

●  
on November 5, 2012, he sold 74,966 shares at a price of $3.03 per share in exchange for gross proceeds of $227,146.98.

During the past 60 days, Dr. Goldstein has effected the following transactions in the Issuer’s common shares:

●  
on October 18, 2012, he sold 11,400 shares at a price of approximately $3.53 per share in exchange for gross proceeds of $40,241;

●  
on October 19, 2012, he sold 1,500 shares at a price of approximately $3.53 per share in exchange for gross proceeds of $5,298;

●  
on October 23, 2012, he sold 9,700 shares at a price of approximately $3.52 per share in exchange for gross proceeds of $34,128;

●  
on October 29, 2012, he purchased 4,650 shares at a price of approximately $3.19 per share in exchange for $14,840 in cash;

●  
on October 31, 2012, he purchased 3,300 shares at a price of $3.05 per share in exchange for $10,065 in cash;

●  
on November 14, 2012, he purchased 12,000 shares at a price of approximately $3.36 per share in exchange for $40,290 in cash;

●  
on November 15, 2012, he purchased 3,000 shares at a price of $3.33 per share in exchange for $9,990 in cash;

●  
on November 16, 2012, he purchased 9,300 shares at a price of approximately $3.23 per share in exchange for $30,068 in cash;

●  
on November 30, 2012, he purchased 6,400 shares at a price of approximately $3.23 per share in exchange for $20,680 in cash; and

●  
on December 3, 2012, he purchased 22,000 shares at a price of approximately $3.16 per share in exchange for $69,487 in cash.

(d)
Not applicable.

(e)
Not applicable.
 
 
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Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Pursuant to a verbal understanding regarding the acquisition and voting of the Issue’s common shares between Mr. Alsaadi and Dr. Goldstein, the Investors are acting as a group within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

Item 7. Materials to be Filed as Exhibits
 
 
 
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SIGNATURES
 
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
 
Date:
December 13, 2012
   
Signature:
/s/ Nawar Alsaadi
   
Name/Title:
Nawar Alsaadi
   
Date:
December 13, 2012
   
Signature:
/s/ Adam Arthur Goldstein
   
Name/Title:
Adam Arthur Goldstein

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 EX-99.1 2 ex99-1.htm LETTER FROM THE INVESTORS TO THE ISSUER DATED DECEMBER 13, 2012 ex99-1.htm
Nawar Alsaadi
2203 – 788 Richards Street
Vancouver, BC V6B 0C7
Tel: (604) 564-2406
www.saveequalenergy.com

 
To: 
Equal Energy Ltd.
 
Attn: 
Mr. Dan Botterill, Chairman
 
Board of Directors

December 13, 2012

“Many are stubborn in pursuit of the path they have chosen, few in pursuit of the goal.” 
Friedrich Wilhelm Nietzsche
 
Dear Sirs,
 
In the last 10 months, Equal Energy Ltd. (“Equal”) shareholders have worked hard to strengthen their company, unlock its intrinsic value and harness its resources to the benefit of its owners. Sadly, Equal shareholders have failed in their attempts to do so. This failure, however, is not due to shareholders’ plans or motivations to safeguard their company; this failure is due to the extreme incompetence demonstrated by Equal’s board of directors and its chosen management team over the last 5 years.
 
Members of this board of directors, notably Mr. Peter Carpenter (Chairman from 2007 to April 2012), have presided over a 93%* destruction in shareholder value since joining Equal’s board of directors on May 18, 2006; likewise for Mr. Roger Giovanetto. As Equal shareholders, we fail to see why those individuals continue to serve on the board of directors after such a dismal and shameful performance. The remaining board members (Mr. Michael Doyle, Mr. Victor Dusik, Mr. Dan Botterill, Mr. Robert Wilkinson and Mr. Don Klapko) have not fared much better with Equal’s share price declining by between 8%* and 76%* since each joined the board of directors. No director on this board has ever created or enhanced shareholder value throughout their tenure.
 
Most importantly, this ineffective and misaligned board of directors has permitted a Chief Executive Officer (Mr. Don Klapko) to follow a disastrous business strategy that lead to a decline in the value of Equal’s shares in excess of 76%* since joining the company on June 27, 2008, while collecting total compensation in excess of $10.3M* during this period (excluding 2012). This board has failed in its basic and primary fiduciary responsibility, which is preserving and enhancing shareholder value by holding the executive team accountable for its underperformance.
 
 
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It is worth noting that since Equal opted to convert into a growth oriented E&P company on June 1, 2010 under the leadership of Mr. Don Klapko, its has lost over 55% of its value vs. a 9.6% decline in the S&P/TSX Capped Energy index through December 1, 2012. This significant relative underperformance speaks clearly to the inability of the board of directors and the current management team to create or enhance shareholder value under a growth-focused structure.  Equal’s peers have also had to contend with the same volatility in energy prices that management has often blamed for its inability to deliver.
 
Haunted by years of underachievement, the collapsing stock price and rising shareholder discontent, Equal opted to declare a strategic review on May 3, 2012. The primary objective of the strategic review was, in the company’s words:
 
The board and management are responding to a perceived significant gap between the value of the Company's underlying assets, and the value being recognized in the Company's stock price.  The objective of the strategic review is to explore ways to potentially close this gap and improve the valuation of the Company.
 
Yet on November 27, 2012, the board of directors concluded the strategic review without closing that valuation gap. As a matter of fact, that gap has widened due to an approximate 82.1% reduction in liabilities against a 20% reduction in the company’s reserves. Equal has raised approximately $129.5M as a result of the divestures undertaken during the strategic review, yet the board of directors has failed to return any of those proceeds to the company’s shareholders in the form of an accretive buyback or a one-time dividend.
 
The markets, unimpressed with the company’s failure to return cash to its shareholders and its decision to pursue an incomprehensible strategy of “accretive” acquisitions under the same failed leadership, have punished the share price, resulting in a decline of over 12% since the conclusion of the strategic review. This has brought the shares back to the price at which they traded prior to the initiation of the review, albeit with a much stronger balance sheet.
 
Equal’s shareholders deserve better. Over the last many months, we have been approached by a large and growing number of shareholders who have expressed their extreme frustration with the path the company is pursuing and continues to pursue. We are here to put an end to this flagrant abuse of shareholders’ rights and the squandering of shareholders’ wealth.
 
Through this letter, we hope to send a clear signal to Equal’s board of directors and management team that chronic underperformance, misalignment and destruction of shareholder wealth will not be tolerated anymore.
 
 
2
 
In our opinion, saving Equal requires the urgent implementation of the following shareholder-sponsored 5 Point Plan:
 
●  
The immediate halt of the company's pursuit of so-called accretive acquisitions and excessive capital spending, and a focus instead on returning cash to shareholders.
 
This company’s board of directors and management have not demonstrated competency in their quest for acquisitions and growth. We believe that investing $36M in annual drilling in such a low-priced commodity environment is senseless, and especially so in light of management’s commodity price outlook. We believe a $28.8M capital budget to drill 8 wells would suffice to hold production flat while increasing reserves. Only when commodity prices rebound to healthier levels should a more aggressive drilling plan be contemplated. The focus of Equal at this stage must be on returning cash to shareholders and not on the quest for growth and grandiose empire building.
 
●  
The initiation of a substantial Dutch auction tender offer at a price range of $3.50 to $4.50.
 
With the company stock price trading at under 50% of its net asset value, the best investment the company can make is an investment in itself. Such a tender would significantly enhance the net asset value per share for current shareholders, while providing a liquidity event for selling shareholders. We estimate that the company can comfortably proceed with a tender offer in the range of $20M to $40M without putting undue stress on its balance sheet.
 
●  
A material increase in the amount of the announced annual dividend.
 
The tender offer described above has the potential to reduce the total number of issued and outstanding shares by 15% to 30%. This could immediately translate into the potential for a materially higher dividend due to the reduced share count. In addition, the proposed reduction in Capex to maintain production flat (while growing reserves) will further facilitate the payment of a higher dividend. We believe the application of these steps will allow Equal to immediately increase its declared annual dividend from $0.20 to approximately $0.48 per share.
 
●  
The introduction of shareholder representatives on the board of directors.

Equal is owned by its shareholders and it is natural for shareholders to have the opportunity to be on the board of directors to defend the owners’ interests. The current board of directors is composed of individuals with a token ownership in the company. To put it more bluntly: Equal’s board members “have no skin in the game”. It is this lack of ownership and alignment that has been at the core of the company’s dismal performance over the last many years, and it will continue to be if shareholders are prevented from joining the board of directors.

●  
The resumption of the strategic review process to further explore alternatives to enhance shareholder value, which includes the possibility of restructuring into a Canadian FAIT.

We believe Equal stands to benefit by further reviewing its strategic options. Several options continue to be available to the company, such as the conversion into a tax efficient income entity, or the combination with another such entity to further lower costs, increase efficiency and unlock immediate value for Equal shareholders while still giving them the chance to profit from an eventual rebound in natural gas and NGL prices.
 
 
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We demand that Equal’s board of directors and management team take immediate steps to implement the above plan. Its failure to do so will result in further action on our part to preserve and enhance value for the company’s shareholders.
 
Sincerely,
 
Mr. Nawar Alsaadi
Dr. Adam Goldstein
Shareholder Group

*Board and CEO compensation history (extracted from public filings available at www.sedar.com):

Name
Date of Election / Appointment
  
Share
Performance
Since Date of Election /
Appointment (1)
    
Number of
Shares
Held
    
Total
Compensation Since Date of Election / Appointment
($)
    
2006 Compen-
sation
($)
    
2007 Compen-
sation
($)
    
2008 Compen-
sation
($)
    
2009 Compen-
sation
($)
    
2010 Compen-
sation
($)
    
2011 Compen-
sation
($)
  
Peter Carpenter
5/18/2006
     -93.30 %     3,209       620,850       86,000       165,334       145,496       80,750       64,750       78,520  
Roger Giovanetto
5/18/2006
     -93.30 %     11,270       488,246       82,000       110,000       107,246       70,250       52,500       66,250  
Michael Doyle
12/31/2007
     -8.20 %     29,388       309,791       -       -       123,291       69,500       52,500       64,500  
Victor Dusik
2/15/2008
     -31.00 %     2,821       334,938       -       -       116,438       77,500       64,000       77,000  
Don Klapko
6/27/2008
     -76.30 %     242,856       10,345,434       -       -      
6,585,222 (2)
       854,000       554,000       2,352,212  
Dan Botterill
5/12/2011
     -55.50 %     6,500       19,654       -       -       -       -       -       19,654  
Robert Wilkinson
5/12/2011
     -55.50 %     80,200       21,654       -       -       -       -       -       21,654  
Totals
               376,244       12,140,567       168,000       275,334       7,077,693       1,152,000       787,750       2,679,790  
 
Notes:
(1) Through December 1, 2012.
(2) Does not include $840,000 earned as consulting fees in addition to the $6,585,222 earned in Mr. Klapko’s capacity as Equal’s Chief Executive Officer.
 
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