(Bloomberg) -- Kimmeridge Energy Management fell short in its efforts to revamp the board of PDC Energy Inc. with investors in the driller opting to reelect incumbent directors.
The New York-based private equity firm, which owns a 5.1% stake in PDC Energy, had sought three seats on the board in an attempt to improve the performance of the oil and gas driller. PDC Energy confirmed in a statement that investors had re-elected the company’s Chief Executive Officer Barton Brookman, and incumbent directors Mark Ellis and Larry Mazza, according to preliminary tallies.
Shares in PDC Energy fell 5.5 percent in trading in New York to $30.58 a share as of 11:11 a.m. after Bloomberg first reported on the results Wednesday.
A representative for Kimmeridge wasn’t immediately available for comment.
Kimmeridge has been locked in a months-long battle with the Permian Basin driller, arguing that PDC Energy’s investors have suffered poor returns due to the company’s flawed acquisition strategy and operational shortcomings. It wants the company to improve its capital allocation, cut costs, return cash to shareholders, and pursue acquisitions to grow scale.
PDC Energy, which is based in Denver, has pushed back on Kimmeridge’s arguments. It has said cutting costs at the level being proposed would be reckless and that paying a dividend would be financially unsound. It has also argued that Kimmeridge’s nominees lack experience in oil and gas and being on a public company board.
Two prominent shareholder advisory firms were divided in their recommendations for PDC Energy investors. Institutional Shareholder Services Inc. recommended investors vote for two of the three Kimmeridge nominees, concluding that that while the removal of Brookman from the board wasn’t necessary, some changes to the board are warranted.
Glass Lewis & Co., meanwhile, threw its support behind management’s slate, in part because it didn’t find Kimmeridge’s case for change nor its nominees compelling.
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