Canadian Superior Energy demands public apology from Palo Alto

By Lisa Kerner

Charlotte, N.C., April 3 - Canadian Superior Energy Inc. chairman Greg Noval threatened to sue Palo Alto Investors, LLC if the shareholder fails to apologize to Noval for remarks made in a Wednesday open letter to the company's stockholders and board of directors.

Legal counsel for Canadian Superior is demanding that Palo Alto publish "a full and complete apology" in Marketwatch within 48 hours of counsel's Thursday letter to the shareholder that was made public on Friday.

In the letter, counsel called certain statements made by Palo Alto in its open letter "false and defamatory" and said Palo Alto omitted facts that it was aware of including:

• Noval's position as chairman of Canadian Superior and his position as chairman of Challenger Energy Corp. up to Oct. 23 were fully disclosed in numerous public filings;

• Palo Alto invested aggressively in Canadian Superior in the fall of 2008 in spite of the issues of which it now complains;

• Noval is not the largest shareholder of Challenger; and

• The agreements between Canadian Superior and Challenger, including the credit facility, were properly handled as prescribed by Canadian corporate and securities laws.

As previously reported, in its lengthy open letter, Palo Alto said it wants to reconstitute Canadian Superior's board in order to remove Noval, "who has insurmountable conflicts of interest."

According to Palo Alto, Canadian Superior inappropriately loaned $14 million to Challenger in September 2008.

Challenger is a vehicle formed to secure financing for Canadian Superior's Block 5(C) project.

In February, Palo Alto requisitioned a special meeting of Canadian Superior's shareholders for the purpose of removing the incumbent board and replacing it with Palo Alto's slate of nominees.

Palo Alto owns 15,752,500 shares, or 9.3%, of the company's common shares outstanding, according to a Wednesday filing with the Securities and Exchange Commission.

Based in Calgary, Alta., Canadian Superior is a crude oil and natural gas exploration and production company with an emphasis on exploring for and producing crude oil and natural gas in western Canada, Nova Scotia and Trinidad and Tobago.

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