CODE OF BUSINESS CONDUCT AND
ETHICS
Effective as of January 1, 2005
Introduction
Southern Pacific Exploration Company and its subsidiaries
(collectively, the "Company") are committed
to high standards of ethical conduct. Directors, officers
and employees of the Company are expected to comply with
all applicable laws and to act with honesty and integrity
when conducting the Company's business. This Code of
Business Conduct and Ethics (the "Code") is
intended to be a guide for applying legal and ethical
practices to your everyday work and to explain the types
of behavior that will help our Company meets its commitment
to operate on the highest standards of ethical conduct.
This Code cannot and is not intended to cover every
applicable law or provide answers to all questions that
might arise in the performance of your duties. We must
rely on your good sense of what is right, including a
recognition of when it is appropriate to seek guidance
from others as to the proper conduct for a given situation.
Because our business depends upon the reputation of the
Company and its directors, officers and employees for
integrity and honest business conduct, in many instances
this Code goes beyond the requirements of the law.
This Code is not intended to and does not in any way
constitute an employment contract or assurance of continued
employment, and does not create any rights for any director,
officer, employee, consultant, vendor, business partner,
shareholder or any other person or entity.
The Company expects you to acquire and maintain a working
knowledge of the laws and the Company's ethical standards
that are applicable to your responsibilities with the
Company. In addition, every supervisor and manager is
responsible for helping employees understand and comply
with this Code. If you have any questions about the application
of this Code or about what is required by the law in
a particular situation, you should consult with the Executive
Vice President or President.
Policy Statement
Every director, officer and employee of
the Company is required to comply with all applicable
laws, regulations and rules of the United States
of America and those of each individual state or
legally formed entity in which our company operates
and to adhere to high ethical standards in the conduct
of the Company's business.
The standards set forth in this Code are
designed to deter wrongdoing by the Company's directors,
officers and employees and to promote the following:
• Honest and ethical conduct;
• Avoidance of conflicts of interest;
• Full, fair, accurate, timely and understandable
disclosure in reports and documents that the Company
files with, or submits to, our business partners
and to governmental regulatory entities and in other
public communications made by the Company;
• Compliance with applicable governmental
laws, rules and regulations;
• Prompt reporting to a person identified
in this Code of possible violations of the Code;
and
• Accountability for adherence to the Code.
RELATIONSHIPS WITH BUSINESS PARTNERS AND COMPETITORS
Conflicts of Interest
All directors, officers and employees of the Company
must avoid situations that create a conflict of interest
or the appearance or potential for a conflict of interest.
A conflict of interest exists when your personal interests
are either in conflict with the Company's interests or
interfere with your ability to perform your duties to
the Company or responsibilities at work. While conducting
the Company's business, you should always act in the
Company's best interest.
Specific situations that could be considered conflicts
of interest include:
• Accepting valuable gifts and services from vendors
(see “Transactions with Vendors” below);
• Employment by a vendor or competitor;
• Holding a financial interest in a competitor or a
company that does business with the Company and you could
personally affect that business;
• Serving as an officer or director of an outside business;
• Conducting Company business with a relative (for example,
hiring a relative or using a vendor owned by a relative
or a vendor that employs a relative);
• Receiving personal discounts or other benefits from
vendors not available to the general public or other
Company employees;
• Borrowing money from the Company or a vendor;
• Other employment, in addition to your employment with
the Company, which might interfere with your ability
to properly perform your job duties with the Company;
• Family or intimate relationships between employees
in the same department or division.
It is the Company's policy to identify and acknowledge
in writing (in an employment agreement in the case of
officers) certain relationships or ownership interests,
and the terms thereof, that are acceptable to the Company
but that might otherwise appear to represent a conflict
of interest. Such relationships or ownership interests
so acknowledged will not be prohibited by this Code.
Any changes to such terms must be promptly reported to
and approved by the Executive Vice President or President; provided that changes to terms set out
in an officer's employment agreement may require the
approval or waiver by the Board of Directors or the Board
of Directors, depending on the materiality and nature
of the changes.
You are expected to recognize situations where a conflict
of interest has occurred, or has the potential to occur,
and take the necessary actions to eliminate or mitigate
such conflict, including, if necessary, enlisting the
assistance of management.
If you believe a conflict of interest has occurred or
cannot be avoided, you are required to disclose such
conflict in writing to the Executive Vice President or
President.
Corporate Opportunities
You may not (a) take for yourself personally opportunities
that are developed through the use of Company resources,
information or position; (b) use Company property, information
or position for personal gain, or (c) compete with the
Company.
You owe a duty to the Company to advance its legitimate
interests when the opportunity to do so arises.
Transactions with Vendors
Strong relationships with our vendors are key to the
success of our business operations. We expect you to
conduct the Company's business with vendors in a respectful,
hospitable, fair and honest manner. You are prohibited
from engaging in activities with vendors that promote
your personal interests ahead of the interests of the
Company or otherwise create a conflict of interest.
You are prohibited from engaging in the following activities
with our vendors:
• Accepting gifts or services that obligate you (or
appear to obligate you) to the vendor. The Company prohibits
employees from accepting a gift, including meals and
other entertainment, valued at more than $250.00 from
a vendor without the express consent of the employee's
department head (or the superintendent in the case of
field office employees). Gifts valued at less than $250.00,
but more than $100.00, must be disclosed to your department
head within five business days of receipt, however, an
employee is never permitted to accept cash in any amount.
Department heads and superintendents are required to
keep written records of gifts or services received in
accordance with this policy for up to one year from the
date of such gift or service;
• Soliciting or accepting kickbacks, bribes, payments
or loans from a vendor;
• Holding or acquiring a financial interest in a vendor
(other than a financial interest in a publicly traded
corporation whose securities are quoted and traded in
the public securities market);
• Divulging the Company's confidential or proprietary
information that is not integral to the product or services
provided by the vendor;
• Accepting discounts (other than those available to
the general public) on personal purchases from a vendor;
• Any activity that takes unfair advantage of a vendor
through concealment, abuse of privileged or confidential
information, misrepresentation or fraudulent behavior
or cooperation with a vendor to take unfair advantage
of another party.
Violations of this policy will subject the vendor to
removal from the Company's approved vendor list, and
you could be subject to termination and/or possible legal
sanctions. If you have any questions about your dealings
with the Company's vendors, you should consult with the
Executive Vice President or President or President.
Fair Dealing
You shall deal fairly and in good faith with the Company's
customers, shareholders, employees, suppliers, regulators,
business partners, competitors, investors, drilling partners, and others. You shall
not take unfair advantage of any of them through manipulation,
concealment, abuse of privileged or confidential information,
misrepresentation, fraudulent behavior or any other unfair
dealing practice.
Fraudulent behavior includes, but is not limited to:
• dishonest conduct;
• forgery or alteration of negotiable instruments or
Company documents;
• misappropriation of any Company, employee, customer,
partner or supplier assets;
• conversion to personal use of cash, securities, supplies
or any other Company assets;
• unauthorized handling or reporting of Company transactions;
and
• falsification of Company records or financial statements.
If you suspect that any fraudulent activity may have
occurred, you should report your concern to the Executive
Vice President or President or President.
PROTECTING CORPORATE ASSETS
Insider Trading
You are prohibited from using or profiting from material
nonpublic information about the Company. Material information
is any information that a reasonable investor would consider
important in a decision to buy, hold or sell securities.
Examples of material inside information include information
about a change in the dividend policy, potential acquisitions
or other business opportunities, financial and operating
results and major litigation developments. In short,
material information includes any nonpublic information
which could reasonably affect the price of a security.
For purposes of our policy, securities include common
stock, preferred stock, options, bonds and any derivative
securities.
To provide guidance to individuals who want to purchase
or sell our securities and minimize the risk of using
inside information, we establish window periods each
year during which directors, officers and employees can
purchase, sell or enter into transactions with respect
to our securities. The established windows are the only
time periods during which you may purchase, sell or enter
into transactions with respect to our securities. Although
we will announce when the window opens and closes, you
must first obtain approval from the Corporate Secretary
(who will seek further approval from the Board of Directors
if you wish to purchase, sell or enter into a transaction
with respect to our securities within a window period.
However, if you possess or know material inside information
about the Company, you cannot purchase, sell or enter
into transactions with respect to our securities whether
or not the window is open.
The foregoing restrictions apply to your spouse, dependents
and other family members living in your household and
you are responsible for their compliance. Any questions
should be directed to the Corporate Secretary who can
provide you detailed guidelines governing transactions
in our securities as well as the complete policy on insider
trading. The violation of these policies could result
in immediate termination, monetary liability and, in
some cases, criminal liability.
Company Property
You are responsible for safeguarding against theft,
loss and misuse of Company property that you use to do
your job. Company property includes:
• Physical assets such as our buildings, vehicles, field
equipment, pipe inventory, office equipment, telephones,
computers and similar assets;
• Intangible assets such as computer programs and data,
proprietary information such as log data, seismic data,
and leasehold information, and intellectual property,
such as patents, copyrights and trademarks; and
• The property of others for which the Company is responsible,
such as equipment, proprietary information and reports,
or computer programs that are leased or loaned to the
Company.
While Company property is to be used for business purposes
only, your supervisor can authorize occasional personal
use. The use of Company property for personal gain is
strictly prohibited.
Company Records and Records Management
In the course of your job duties you will record or
report important Company information such as reports
to regulatory agencies, drilling reports, accounting
reports, and so forth. Further, in accordance with the
Company's internal control procedures, you are required
to properly document and report all business and financial
transactions honestly, completely and accurately. Under
no circumstances should you create false or misleading
records or documents, nor should you alter or untimely
destroy any business documents or transactions held in
physical or electronic form.
Company records or documents should only be destroyed
in accordance with your department's established records
retention policies. If you are unsure of your department's
policies in regard to a particular document, you should
contact your supervisor or department head. You should
immediately cease the destruction of documents under
the Company's records retention policies if you learn
of a subpoena or a pending, imminent or contemplated
litigation or governmental investigation. If you are
instructed by your supervisor or department head to destroy
or shred documents outside of your department's established
records retention policies, you are required to report
such request to the Executive Vice President or President immediately.
Confidential Information
Our investors, partners and vendors entrust our Company
with important information relating to their businesses.
The nature of this relationship requires maintenance
of confidentiality. Any violation of confidentiality
seriously injures our reputation and effectiveness and
could subject the Company to liability. Therefore, you
are requested not to discuss our business with anyone
who does not work for us or discuss specific business
transactions with anyone else who does not have direct
involvement with the transaction. Please recognize that
even casual remarks can be misinterpreted and repeated.
You have an ethical and legal duty not to disclose confidential,
non-public, personal information, proprietary information about the Company,
or its customers, business partners, vendors and others
with whom the Company does business (“Confidential Information”).
Confidential information may include, but is not limited
to, trade secrets, proprietary information, leases, maps,
geophysical data, business plans, marketing plans, financial
information, compensation and benefit information, cost
and pricing information, information technology, customer
contacts and information provided to the Company by a
third party under restrictions against disclosure. You
should treat all Confidential Information in your possession
as confidential, unless you know that such information
has been publicly disclosed. You are responsible for
ensuring that Confidential Information in your possession
is not made available to unauthorized persons. You should
remember that unauthorized persons may include your co-workers.
Accordingly, you should discuss Confidential Information
only with
those persons you know to be authorized to receive, and
that have a need to know the information. Protection
of our Company's Confidential Information is vital to
our success and growth in the competitive industry in
which we work. Upon termination, you must return all
originals and copies of documents or materials containing
Confidential Information.
No one is permitted to remove or keep copies of any
Company records, reports or documents without prior management
approval. Confidential Information which could be of
value to someone outside of the Company should be destroyed
when no longer needed (if permitted by our document retention
policy).
If you are questioned by someone outside the Company
or your department and you are concerned about the appropriateness
of giving them certain documents or information, please
immediately refer the request to your supervisor.
You are expected to conduct your business and personal
activities in a manner that does not adversely reflect
upon the reputability of the Company or compromise the
confidentiality of Company information. You are prohibited
from participating or expressing an opinion as a representative
of the Company in any public forum unless you have been
expressly appointed by the Company's President to do
so. Press releases, publications, speeches, participation
in Internet chat rooms or any public communication which
might be considered as representing the Company's position
must be approved in advance by the Company's CEO.
If you release Confidential Information or communicate
publicly on behalf of the Company without proper authorization,
you will be subject to disciplinary action, up to and
including termination.
RESPONSIBILITIES TO THE PUBLIC
Financial Reporting
The integrity of the Company's financial records and
reports is essential; shareholders, potential investors,
regulatory agencies, lending institutions and others
depend on the accuracy of such information. It is the
Company's policy to fully, accurately, timely and fairly
report all financial transactions in the accounting records
of the Company and in the Company's published financial
reports. Further, the financial statements must fairly
present the financial position and results of operations
of the Company, in all material respects, in accordance
with Generally Accepted Accounting Principles (GAAP).
The Company strictly prohibits you from engaging in
any actions, omissions or practices, whether intentional
or reckless, that would result in rendering the Company's
financial statements materially inaccurate or misleading.
In addition, the Company further prohibits you from engaging
in any actions, omissions or practices, whether intentional
or reckless, that circumvent the Company's established
internal and/or disclosure controls. Every individual
involved in creating, transmitting or entering information
into the Company's financial and operational records
is responsible for doing so fully, accurately, and with
appropriate supporting documentation. You may not make
any entry that intentionally hides or disguises the true
nature of any transaction.
For example, you may not understate or overstate known
liabilities and assets, defer or accelerate the proper
period for recording items that should be expensed, or
falsify quality or safety results.
Knowingly entering inaccurate or fraudulent information,
or failing to enter material information, into the Company's
accounting system is unacceptable and may be illegal.
If you know that an entry or process is false, you are
expected to inform your supervisor or, if necessary,
the Executive Vice President or President.
In addition, it is your responsibility to give your full
cooperation to the Company's authorized auditors.
Regulatory Agencies
The Company is subject to the requirements, restrictions
and compliance standards of many different regulatory
agencies pertaining to securities, environmental protection,
fair business practices, equal employment opportunities,
and so forth. In its efforts to be a good corporate citizen,
the Company expects you to familiarize yourself and comply
with all regulations that apply to your duties with the
Company. Further, you are prohibited from discussing
Company matters with regulatory agencies unless authorized
to do so by the Company.
For more information on the regulatory requirements
affecting our business and the way we perform our jobs,
please contact your supervisor or department head.
Political Process
The Company is an active participant in the processes
of our government at the national, state and local levels,
within the parameters of the law. The Company also encourages
you to participate in our political system by voting,
speaking out on public issues and becoming active in
civic and political activities. It is important, however,
that you clearly distinguish your personal views and
actions from those of the Company, unless specifically
authorized by the Company. In addition, you are prohibited
from using Company funds, time, equipment, supplies or
facilities when making personal contributions in support
of candidates or political organizations.
REPORTING, PENALTIES, WAIVERS/AMENDMENTS AND
COMPLIANCE
Reporting Violations
You have a duty to adhere to this Code of Business Conduct
and Ethics and all other Company policies and procedures
and to report any suspected violations. If you observe
or otherwise become aware of any violation or potential
violation of this Code or other Company policy or procedure,
you should first attempt to resolve the issue with your
supervisor or department head. If you are not satisfied
with the response or you feel it is inappropriate to
discuss the issue with your supervisor or department
head, you should report the matter to the Executive Vice
President or President, if you feel that is not possible
or appropriate, to any member of the Board of Directors.
The Executive Vice President or President is responsible
for investigating all reported violations and confirming
whether or not a violation of the Code has actually occurred.
If a violation of the Code has occurred, the Executive
Vice President or President , together
with the supervisor and department head of the violator
shall determine what, if any, disciplinary action is
appropriate. The Executive Vice President or President,
together with any officers of the Company deemed appropriate
by the Executive Vice President or President, shall also
determine what, if any, corrective actions are necessary
to mitigate or prevent any harm done by the violation
and to prevent any future violations of a similar nature.
The Executive Vice President or President must immediately
report any violation by a director or officer to the
chairman of the Board of Directors of the Board of Directors.
The chairman of the Board of Directors, in conjunction
with the members of the Board of Directors and management,
will determine what, if any, disciplinary action and
corrective measures are appropriate. The Executive Vice
President or President will provide an annual report
to the Board of Directors listing the types and numbers
of violations and any other detail requested by the Board
of Directors. The Board of Directors may, at any time,
require that certain specified violations be reported
immediately to the Board of Directors to be dealt with
by such Committee, rather than by the Executive Vice
President or President.
The Company will not tolerate retaliation against anyone
who, in good faith, reports an actual or suspected violation
of law or this Code. Employees who do retaliate will
be subject to disciplinary action, including the possibility
of termination of employment.
Penalties for Violations
Violations of this Code or other Company policies and
procedures, even in the first instance, may result in
disciplinary action up to and including termination of
employment. In addition, violations of laws or regulations
applicable to the Company could result in substantial
fines to the Company and/or individual violators and,
in certain circumstances, imprisonment.
Waivers/Amendments of Code
Waivers of provisions of this Code of Business Conduct
and Ethics as to any director or executive officer and
amendments to this Code of Business Conduct and Ethics
must be approved by a vote of a majority of the members
of the Board of Directors.
Compliance Certification
All directors and employees at the manager level and
above will be asked to certify this Code upon receipt.
By certifying, the director or employee acknowledges
that he/she has read and understands the conditions of
the Code.
SOUTHERN
PACIFIC EXPLORATION COMPANY
Telephone and Fax (toll free): 1-888-OIL-NATION
Email: admin@spxco.com
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