Tuesday, January 27, 2009

Sherritt plunges on Cuba oil fears, CEO's leave

Sherritt plunges on Cuba oil fears, CEO's leave
Tue Jan 27, 12:03 PM

TORONTO (Reuters) - Sherritt International shares plunged to a two-day
loss of 25 percent on Tuesday, as investors fretted that its oil
concessions in Cuba could be revoked and the company's chief executive
took a leave of absence.

Sherritt, which is based in Canada but has key oil and metals assets
around the world, said in a statement that CEO Jowdat Waheed had taken a
leave to deal with a family health matter. He will be replaced by Ian
Delaney, the company's chairman.

However, one analyst said the pressure on the stock was more likely tied
to worries about Sherritt's Cuban oil assets, after Havana revoked a
16-year-old production sharing agreement on Friday involving Sherritt
and small Canadian oil producer Pebercan .

The decision to revoke the agreement -- which accounts for 26 percent of
Sherritt's Cuban oil production -- raises concerns about the company's
other, 100 percent owned concessions there, said John Hughes, an analyst
at Desjardins Securities in Toronto.

"The market is concerned that Sherritt will lose all of their exposure
to oil in Cuba," said Hughes.

"It appears that the Cuban government is not paying for past
receivables, or future receivables."

Pebercan has said the Cuba's national oil company, Cupet, has been late
with payments in recent years.

Fears that Cuba could one day nationalize Sherritt's assets -- which
also include the Moa nickel joint venture -- have at times dogged the
company's stock.

The shares were down 43 Canadian cents, or 12.7 percent, at C$2.96 on
the Toronto Stock Exchange on Tuesday, after falling 14 percent on Monday.

Company officials have played down the significance of the shift in
power in Cuba to President Raoul Castro from his ailing brother Fidel.

($1=$1.23 Canadian)

(Reporting by Cameron French; editing by Rob Wilson)

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