Burisma Holdings invited an independent director, one of the most reputable U.S. investors, as well as a co-founder and a Managing Director of Rosemont Seneca Partners, Mr. Devon Archer, to join the Board of Directors. Mr. Archer’s joining the company that owns oil and gas assets in Ukraine is symbolic at a time when American authorities call on the State for more active engagement in the diversification of energy supplies in Ukraine, inter alia, through the development of its own production. What makes Mr. Archer’s appointment even more symbolic is the unique perspective he brings in having worked throughout his career in bridging Wall Street, the US’s financial center, with Washington, DC, the US’s Government center. Mr. Devon Archer shared with us his job responsibilities and the results expected of him in the company in his first interview for the Ukrainian media.
What do you see as your task on the Board of Directors? What areas will you be accountable for?
- It mostly comes down to the work with current investors, as well as expanding the potential investor base in the future, primarily through the involvement of American investors. I will be representing the interests of shareholders, bringing their thoughts and expectations to the attention of the Board of Directors and executives. This also applies to the improvement of the corporate governance structure, which should be changed step by step. Also, within the scope of my responsibilities lies the alignment of the holding’s GR policy. In the future, the emphasis will be placed upon creating the Audit and Strategic Planning Committees in the Board of Directors. In fact, these initiatives will contribute to the improvement of corporate standards of Burisma Holdings.
Does this mean that all these initiatives are aimed at increasing the company’s attractiveness and further expansion of investor base, incl. subsequent private placement or IPO?
It is only one of the possibilities. First of all, we need to do some groundwork: the company is already attractive to investors, but it needs to become more understandable in terms of corporate governance and properly structured IR function. The first geological audit of Burisma Holdings was carried out in 2012 by the American company DeGolyer & MacNaughton. At that time, this company conducted an audit of the first part of our licenses and in 2013 – the second. Now we need to renew audit and asses the gas fields the company obtained later. At present, the audit preparations for year-end 2013 are under way. By the way, it played a part in my decision to join the team.
In the American media you are often linked to the immediate circle of the U.S. Secretary of State Mr. John Kerry and the Vice-president of the United States Mr. Joe Biden.
- American journalists really think so (smiles). I do know them.
The presence of independent directors in the company is regarded as one of its transparency factors. What can you say about Burisma Holdings from this perspective?
- The company is becoming more transparent, and we will continue to move in this direction. A lot of efforts will be applied to improve the situation. By the way, the fact that I joined the Board of Directors is largely based on the company’s will to grow. Last year alone witnessed a lot of transformations. I love the team’s willingness to accept new ideas. What I see as very important and interesting from the professional point of view, is the fact that this company has a complex structure that is getting more simple and transparent, but it takes take to fully reform the company.
Who and when offered you to join the Board of Directors of Burisma Holdings. How long did it take you to make a decision?
- A few months ago I spoke to Mr. Alan Apter at a conference in London. I am sure you know that for a long time Alan worked at Morgan Stanley, one of the most prominent investment banks in the world, and also at such renowned structures as Renaissance Capital and Troika Dialog that specialize in emerging markets, including Ukraine. It was Alan who got me interested in Ukraine, as he was one of the very first people to develop the business of Morgan Stanley in your country. We had a fascinating conversation about Ukraine, the changes taking place in your country and its massive potential. That is what gave a start to our mutual idea and the subsequent decision to cooperate. So it didn’t take me long to make a decision. Because in addition to the new experience gained came the investor’s interest. I believe that managers should be on the Board of Directors.
Have you previously worked at similar companies? What are the key differences of Burisma Holdings from other large companies?
- That’s a good question. I am in finance, so I assess the company from its investment prospects, its financial and operational capacity, the investment attractiveness of its assets, corporate governance and other components, including public relations. The company should pay more attention to this area, because it can change the overall image of the business and its perception in society. The key difference is that Burisma Holdings is a large company, which continues to dynamically build business. At the same time, the company has yet to put in a large amount of work in order to fully meet the expectations of investors. Today Burisma Holdings reminds me of Exxon Mobil in its wake. It has all the chances to be one of the biggest privately owned oil companies in the world.
How effective do you find the business Burisma Holdings is doing in Ukraine?
- It all depends on how you determine effectiveness. It can assume that the company shows good production results. In this sphere, last year the company substantially increased its volumes and became the second largest private producer in the country. In the current year we intend to increase daily production rate by at least 35-40 %.
How do you assess the investment climate in Ukraine, is there is a positive trend?
- Despite the huge number of pessimists with regard to the Ukrainian market, investors are closely studying the local companies and foreign holdings with assets in Ukraine. If you look at the cost of Ukrainian companies, the financial performance of some of them is very attractive. At the same time the company can be bought at a very cheap price. But again, if you take the scope of the risks that are of concern (incl. a political component), it is worth considering, whether to invest in such a company. But I believe that the country is moving in the right direction, and it is important that the new government reaffirms its commitment to the inviolability of private property of all investments regardless of their country of origin.
But in spite of the risks you have agreed to work in Ukraine?
- I did it, because I was confident that I can contribute to the activities of this company. Ukraine has huge potential. People I dealt with are intelligent, well educated and have high intellectual potential.
Burisma Holdings is a privately owned oil and gas company with assets in Ukraine which has been operating in the energy market since 2002. To date, the company’s portfolio permits include the Rakytnyanske, Nyklovyzke and Guzulivske fields, which together account for about 98 % of production. In 2013, the daily gas production grew steadily and at year-end was 11.6 thousands BOE (barrels of oil equivalent – incl. gas, condensate and crude oil), inter alia 1.8 million m3 of natural gaz. All given volumes the company sells in the domestic market through traders as well as directly to final consumers.
Devon Archer – co-founder and managing director of Rosemont Seneca Partners (http://rosemontseneca.com/), which specializes in direct investments, investments in debt instruments with fixed income and real estate investments. He started his career at Citicorp. Asia, engaged in direct investment, where he was responsible for developing investment strategies. Subsequently, he was appointed a Vice President of New England Financial, and later on – of MetLife, where he worked as a special analyst of the Strategic Management Group. He was a founder and a President of Sitaro, a marketing company in the field of software and services, which acquired CoActive Marketing Group in 2004 (National Association of Security Dealers, USA). Devon served as a National Finance Co-Chair for John Kerry’s 2004 Presidential Campaign. Mr. Archer currently serves as Chairman of Rosemont Realty, is a Director of Burnham Financial and is Trustee of the Heinz Family Office. Devon received a BA from Yale University.