The re-examination of the coalbed methane company's production, exploration and staffing is to be completed by the end of August, Sydney Gas said this morning.
The review comes soon after the announcement that company chose not to renew the contract of former chief executive officer Bruce Butcher late last month.
Butcher sought a $500,000 bonus for 2004/5 that the board rejected, Sydney Gas said.
The company also noted investor concerns expressed over the salaries and bonuses paid to Butcher and the former executive chairman Domenic Martino who were awarded $300,000 bonuses in 2003/2004.
Martino did not seek a bonus for 2004/2005, and acting chief executive officer Andrew Purcell can apply for the vacant CEO position which will have a lower salary than that paid to Butcher, the company said.
“Sydney Gas must ensure that all of our expenditures are governed by the twin principles of capacity to pay and value for money,” Knight said.
The review will study company strategy and operational issues – including the Camden gas project and Wyong region developments, to improve the company’s operating position and financial outlook, he said.
“In conducting these reviews, the board’s only concern is to ensure that the company’s corporate strategy and operating plans are achieving the best returns to shareholders.”
Purcell will head the review of production and exploration, including Camden - Sydney Gas’ only facility in production and its only source of revenue.
The review will include the project’s current operating status, growth and drilling program, supply contracts, financial projections and analysis, environmental and regulatory issues, the company said.
Options to maximise efficient production within “realistic” timeframes will also be studied, Sydney Gas said.
In the Hunter region, the Wyong area and other locations, the review will advise on a timetable and prospects for the development projects underway, including status, the program, production costs, supply contracts, financial projections and analysis, environmental and regulatory issues.
Audit Committee chairman Bruce McKay, Purcell and chief finance officer Chris Brown will head the committee examining company costs, revenue options and capital demands for production and development in relation to cash reserves to ensure any strategic or operational changes are optimal within funding arrangements.
Finding a new chief executive, salaries for management, staffing levels and their responsibilities will also be reviewed, the company said.
Sydney Gas said remuneration must be within the appropriate range for a company of its size and stage of development, and a remuneration committee's advice would be based on comparisons with similarly-sized coalbed methane producers and not major energy companies.
There would also be a review, led by Purcell, of staff levels at the company.
“In this regard, Sydney Gas needs to be conscious of three principles: the matching of resources to the overall strategy of the board, the capacity of the company to pay, and the critical importance of value for money,” the company said.