SEC
1746 (11-02) Page
1
of 9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|
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SCHEDULE
13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
Canadian Superior
Energy, Inc.
(Name of Issuer)
Common Shares
(Title of Class of
Securities)
136644101
(CUSIP Number)
Ellyn Roberts, Esq.
Shartsis Friese LLP
One Maritime Plaza, 18
th
Floor
San Francisco, California 94111
(415) 421-6500
(Name, Address and
Telephone Number of Person
Authorized to Receive Notices and Communications)
February 12, 2009
(Date of Event Which
Requires Filing of this Statement)
If the filing
person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of sections 240.13d-1(e), 240.13d-1(f) or 140.13d-1(g), check the following box. [ ]
Note:
Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See section
240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing
information which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this
cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Potential
persons who are to respond to the collection of information contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
SEC
1746 (11-02) Page
1
of 9
1. Names
of Reporting Persons
Palo Alto Investors
2. Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
X
3. SEC
Use Only
4. Source
of Funds (See Instructions)
AF
5. Check
if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ____
6. Citizenship
or Place of Organization
California
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
|
7. Sole Voting Power
0
|
8. Shared Voting Power
1
5
,
75
2,500
|
9. Sole Dispositive Power
0
|
10. Shared Dispositive Power
15,752,500
|
11. Aggregate
Amount Beneficially Owned by Each Reporting Person
15,752,500
12. Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
13. Percent
of Class Represented by Amount in Row (11)
9
.
3
%
14. Type
of Reporting Person (See Instructions)
CO, HC
1. Names
of Reporting Persons
Palo Alto Investors, LLC
2. Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
X
3. SEC
Use Only
4. Source
of Funds (See Instructions)
AF
5. Check
if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ____
6. Citizenship
or Place of Organization
California
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
|
7. Sole Voting Power
0
|
8. Shared Voting Power
15,752,500
|
9. Sole Dispositive Power
0
|
10. Shared Dispositive Power
15,752,500
|
11. Aggregate
Amount Beneficially Owned by Each Reporting Person
15,752,500
12. Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
13. Percent
of Class Represented by Amount in Row (11)
9
.
3
%
14. Type
of Reporting Person (See Instructions)
IA, OO
1. Names
of Reporting Persons
William Leland Edwards
2. Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
X
3. SEC
Use Only
4. Source
of Funds (See Instructions)
AF
5. Check
if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ____
6. Citizenship
or Place of Organization
_______
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
|
7. Sole Voting Power
50,000
|
8. Shared Voting Power
15,752,500
|
9. Sole Dispositive Power
50,000
|
10. Shared Dispositive Power
15,752,500
|
11. Aggregate
Amount Beneficially Owned by Each Reporting Person
15,802,500
12. Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) ______
13. Percent
of Class Represented by Amount in Row (11)
9
.
3
%
14. Type
of Reporting Person (See Instructions)
IN, HC
1. Names
of Reporting Persons
Anthony Joonky
o
o Yu
n
, MD
2. Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
X
3. SEC
Use Only
4. Source
of Funds (See Instructions)
AF
5. Check
if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ____
6. Citizenship
or Place of Organization
U.S.A.
Number of
Shares
Beneficially
Owned by
Each Reporting
Person With
|
7. Sole Voting Power
0
|
8. Shared Voting Power
15,752,500
|
9. Sole Dispositive Power
0
|
10. Shared Dispositive Power
15,752,500
|
11. Aggregate
Amount Beneficially Owned by Each Reporting Person
15,752,500
12. Check
if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
13. Percent
of Class Represented by Amount in Row (11)
9
.
3
%
14. Type
of Reporting Person (See Instructions)
IN, HC
Item
1. Security and Issuer
This statement
relates to the Common Shares (the "Stock") of
Canadian Superior Energy, Inc.
(the "Issuer"). The principal executive office of
the Issuer is located at
Suite 3200, 500 - 4th Avenue SW, Calgary, Alberta, Canada, T2P 2V6
.
Item
2. Identity and Background
The persons filing
this statement and the persons enumerated in Instruction C of Schedule 13D and, where applicable, their respective places of
organization, general partners, directors, executive officers and controlling persons, and the information regarding them, are as
follows:
(a) William
Leland Edwards, Palo Alto Investors, LLC ("PAI LLC"), Palo Alto Investors ("PAI Corp") and Anthony Joonkyoo Yun, MD (collectively,
the "Filers").
(b) The
business address of the Filers is:
470 University
Avenue, Palo Alto, CA 94301
(c) Present
principal occupation or employment or the Filers and the name, principal business and address of any corporation or other
organization in which such employment is conducted:
PAI LLC is an investment adviser
registered with the Securities and Exchange Commission and is the general partner of, and investment adviser to, investment limited
partnerships. The sole manager of PAI LLC is PAI Corp. Mr. Edwards is the president and controlling shareholder of PAI Corp and the
controlling owner of PAI LLC. Mr. Yun is the president of PAI LLC.
(d) During
the last five years, none of the Filers has been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During
the last five years, none of the Filers was a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such
laws.
(f) Mr.
Edwards and Mr. Yun are United States citizens.
Item
3. Source and Amount of Funds or Other Consideration
The source and amount
of funds used in purchasing the Stock were as follows:
Purchaser
|
Source of Funds
|
Amount
|
PAI LLC
|
Funds Under Management
|
$32,303,231
|
|
Item
4. Purpose of Transaction
The Filers acquired
the Stock for investment purposes. On September 29, 2008, Greg Noval sent a letter to Palo Alto Investors on behalf of the Issuer's
Board of Directors responding to a letter from Palo Alto Investors sent earlier in the day, and Palo Alto Investors sent a further
response to the Board. A copy of that correspondence is incorporated by reference herein as Exhibit B. On November 5, 2008, PAI LLC
sent a letter to the Board, a copy of which is incorporated by reference herein as Exhibit F. On February 11, 2009, PAI LLC sent a
letter to the Board questioning the timing and strategy of the Issuers proposed monetization of part of its Block 5(c) assets
in Trinidad and Tobago (the February 11 Letter). On February 12, 2009, PAI LLC issued a press release including the text
of the February 11 Letter and requesting additional disclosure by the Issuer with regard to its financial position and the status of
that project and requesting that the Issuer hold a public conference call to update shareholders. A copy of that press release is
attached hereto as Exhibit G.
In pursuing their investment
purposes, the Filers may from time to time further purchase, hold, vote, trade, dispose of, engage in option, swap or other
derivative securities transactions with respect to or otherwise deal in the Stock at times, and in such manner, as they deem
advisable to benefit from changes in the Stock's market price, changes in the Issuer's operations, business strategy or prospects, or
from sale or merger of the Issuer. To evaluate such alternatives, the Filers routinely will monitor the Issuer's operations,
prospects, business development, management, competitive and strategic matters, capital structure and prevailing market conditions,
as well as alternative investment opportunities, the Filers' liquidity requirements and other investment considerations. Consistent
with their investment research methods and evaluation criteria, the Filers may discuss such matters with the Issuer's management,
Board of Directors, other shareholders, industry analysts, existing or potential strategic partners or competitors, investment and
financing professionals, sources of credit and other investors. Such factors and discussions may affect materially, and result in,
the Filers' modifying their ownership of the Stock, exchanging information with the Issuer pursuant to appropriate confidentiality or
similar agreements, proposing changes in the Issuer's operations, governance or capitalization, or in proposing or taking one or more
of the actions described in paragraphs (a) through (j) of Item 4 of Schedule 13D. The Filers may reconsider and change their plans or
proposals relating to the Stock at any time.
Item
5. Interest in Securities of the Issuer
(a), (b), (d) Each
Filer's beneficial ownership of the Stock on the date of this report is reflected on that Filer's cover page. PAI LLC is an
investment adviser with the power to invest in, vote and dispose of the Stock on behalf of its clients. Its clients have the right
to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Stock. No client individually
holds more than 5% of the outstanding Stock. Mr. Edwards is the controlling shareholder of PAI Corp., which is the sole manager of
PAI LLC, and is the controlling owner of PAI LLC. Mr. Yun is the president of PAI Corp. and PAI LLC. The Filers are filing this
Schedule 13D jointly, but not as members of a group, and each of them expressly disclaims membership in a group. Each Filer disclaims
beneficial ownership of the Stock except to the extent of that Filer's pecuniary interest therein.
(c) There
were no transactions in the Stock by the Filers during the 60 days before the date on the cover page.
Item 6. Contracts,
Arrangement, Understandings or Relationships with Respect to Securities of the Issuer
PAI LLC is the
general partner of investment partnerships pursuant to agreements of limited partnership that grant to PAI LLC the authority, among
other things, to invest the funds of such investment partnerships in the Stock, to vote and dispose of the Stock and to file this
statement on behalf of such investment partnerships Pursuant to such agreements, PAI LLC is entitled to allocations based on assets
under management and realized and unrealized gains.
In addition, 750,000
shares of the Stock are represented by warrants, the form of which is incorporated by reference herein as Exhibit C. In addition,
those warrants are governed by and subject to the terms of a Securities Purchase Agreement and Registration Rights Agreement, the
forms of which are incorporated by reference herein as Exhibits D and E.
Item
7. Material to Be Filed as Exhibits
Exhibit A
Agreement
Regarding Joint Filing of Statement on Schedule 13D or 13G
Exhibit B
Correspondence
dated September 29, 2008 between the Issuer's Board of Directors and Palo Alto Investors incorporated by reference to the Filers
initial Schedule 13D and Amendment No. 1 thereto both filed September 30, 2008
Exhibit C
Form
of Warrant to Purchase Shares of Common Stock, incorporated by reference to the Issuer's Form F-3 filed September 26, 2008
Exhibit D
Form
of Securities Purchase Agreement, incorporated by reference to the Issuer's Form F-3 filed September 26, 2008
Exhibit E
Form
of Registration Rights Agreement, incorporated by reference to the Issuer's Form F-3 filed September 26, 2008
Exhibit F
Letter
dated November 5, 2008 from PAI LLC to the Issuer's Board of Directors incorporated by reference to Amendment No. 2 to this Schedule
13D filed November 6, 2008
Exhibit G
Press
Release by PAI LLC dated February 12, 2009 including the text of the February 11 Letter
SIGNATURES
After reasonable
inquiry and to the best of my knowledge, I certify that the information set forth in this statement is true, complete and correct.
Dated: February
12, 2009
PALO ALTO INVESTORS
By: Mark Shamia, Chief Operating Officer
|
PALO ALTO INVESTORS, LLC
By: Mark Shamia, Chief Operating Officer
|
Anthony Joonkyoo Yun, MD
|
William Leland Edwards
|
EXHIBIT A
AGREEMENT REGARDING
JOINT FILING
OF STATEMENT ON SCHEDULE 13D OR 13G
The undersigned agree to file
jointly with the Securities and Exchange Commission (the "SEC") any and all statements on Schedule 13D or Schedule 13G (and any
amendments or supplements thereto) required under section 13(d) of the Securities Exchange Act of 1934, as amended, in connection
with purchases and sales by the undersigned of the securities of any issuer until such time as the undersigned file with the SEC a
statement terminating this Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G. For that purpose, the undersigned
hereby constitute and appoint Palo Alto Investors, LLC, a California limited liability company, as their true and lawful agent and
attorney-in-fact, with full power and authority for and on behalf of the undersigned to prepare or cause to be prepared, sign, file
with the SEC and furnish to any other person all certificates, instruments, agreements and documents necessary to comply with section
13(d) and section 16(a) of the Securities Exchange Act of 1934, as amended, in connection with said purchases and sales, and to do
and perform every act necessary and proper to be done incident to the exercise of the foregoing power, as fully as the undersigned
might or could do if personally present, until such time as the undersigned file with the SEC a statement terminating this Agreement
Regarding Joint Filing of Statement on Schedule 13D or 13G.
Dated: September
29, 2008
PALO ALTO INVESTORS
By: /S/ Mark Shamia, Chief Operating Officer
|
PALO ALTO INVESTORS, LLC
By: /S/ Mark Shamia, Chief Operating Officer
|
/S/ Anthony Joonkyoo Yun, MD
|
/S/ William Leland Edwards
|
EXHIBIT G
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Media Contacts
:
Mary
Beth Kissane Paul Del Colle
Walek
& Associates Walek & Associates
212-590-0536 212-590-0526
FOR
IMMEDIATE RELEASE
Palo
Alto Investors
Questions
Monetization of Canadian Superiors Trinidad Assets
Requests
Public Conference Call to Update Shareholders
Palo
Alto, Calif. (February 12, 2009) Palo Alto Investors, LLC, an investment advisory firm,
sent
a letter
on the evening of February 11, 2009
to
the Board of Directors
o
f Canadian Superior
Energy, Inc. ("Canadian Sup
erior", the "Company") (TSX: SNG)
(AMEX:
SNG
)
questioning the timing and strategy of the companys proposed monetization of part of its
Block 5(c) assets in Trinidad and Tobago (the property).
This
letter was sent prior to todays announcement by the Company that an interim Receiver has been appointed to operate the property
in conjunction with BG International Limited (BG).
Palo
Alto Investors has requested additional disclosure by the Company with regard to its financial position and the status of the project
and has requested that the Company hold a public conference call to update shareholders.
The
text of the
letter follows:
To the Board of
Directors of Canadian Superior,
This
week, Canadian Superior Energy Inc. (Canadian Superior or the Company) announced its intention to monetize a
portion of its ownership in the Intrepid Block 5(c) offshore Trinidad and Tobago. We understand the Company is in the process of
retaining a financial advisor to assist in the sale of the asset. Palo Alto Investors, LLC, a significant shareholder in Canadian
Superior, believes monetization of Block 5(c) is not in the best interests of the Company at this time and we request that any
potential deal be postponed until further alternatives are evaluated. We also request a public conference call for shareholders to
hear managements current view on operations and strategy as it pertains to these key assets in Trinidad.
Canadian
Superiors announcement comes less than one week after the announcement by Challenger Energy Corp. (Challenger)
that it is pursuing strategic alternatives, which would include the sale of its interest in Block 5(c). Palo Alto Investors has
previously criticized the conflicts of interest that have arisen in transactions involving Canadian Superior and Challenger. In
the absence of additional information, Palo Alto Investors believes the coincident nature of these two announcements further
highlights the continuing conflict of interest arising from Mr. Greg Noval's 10% ownership interest in Challenger and his
position as Chairman of the Board of Canadian Superior.
Palo Alto Investors
has previously requested that the Company enhance its Board of Directors to include individuals with significant international oil
and gas experience. The Board of Directors has taken no action with regard to this suggestion, and has since lost the services of
former CEO Craig McKenzie, one of the few members of the board who had such experience. We believe the significant project that
Canadian Superior is pursuing in Trinidad requires deep knowledge of LNG development strategies and the international business
contacts and acumen to pursue the proper courses of action to maximize stakeholder returns. Without further clarification of Canadian
Superiors strategy and financial position, we believe that selling this asset now, immediately after the exploration phase and
before ultimate project sanction, is not in the best interests of Canadian Superior or its shareholders.
As noted
above, Canadian Superiors partner in Block 5(c), Challenger, announced its intention to pursue strategic alternatives last
week. With Challenger, and its 25% interest in Block 5(c), available to a buyer, we recognize that Canadian Superiors offering
of 25% or more of Block 5(c) right now provides a potential buyer the a
bility to aggregate a
position of more than
50%. Clearly, this may attract buyers and may maximize the value of
Challengers interest, but it does not necessarily maximize Canadian Superiors value. The difference is that Canadian
Superior has other assets and operations and Challenger does not, which allows for strategies that may significantly differ between
the two companies. It is our opinion that this may be another situation where the conflicts of interest inherent in the Chairman of
the Boards ownership of Challenger have the potential to impact decisions of the board of Canadian Superior.
Moreover,
Challenger announced that it intends to use the proceeds of its sale to pay amounts owed to Canadian Superior. Therefore, selling
the two interests simultaneously suggests that Canadian Superior will not yet have been paid the amounts Challenger owes it under the
Joint Operating Agreement (the JOA) and under the $14 million Bridge Note provided to Challenger by Canadian Superior
since September 2008. Canadian Superior will be in a much better financial and negotiating position, relative to its own interest in
Block 5(c), after Challenger has fulfilled its obligations for payments under the JOA and the Bridge Note.
We request
that the Company provide full disclosure of its existing farm-out agreement with Challenger and the Intrepid Block 5(c) offshore
Trinidad and Tobago agreement, which as non-ordinary course material contracts, should be part of the public record of both
companies. In addition, to give shareholders a better understanding of the transactions, we believe the Company should provide
complete disclosure of the ownership structure of the Liberty LNG Joint Venture and all other worldwide projects being pursued by the
Company in which Directors or Company employees have an ownership interest.
We request that Canadian Superior host a
conference call, open to all shareholders and the public, to discuss the status of operations in Trinidad and the overall strategy
for development and, the reasons and justification for the proposed monetization. We believe that communication is necessary at this
crucial juncture given the important strategic nature of these assets, and we believe the independent directors of Canadian Superior
should be included in that call. Until such
a
discussion
takes place, we do not believe any transaction involving the Trinidad assets should be pursued. We believe the Canadian Superior
board owes an answer to shareholders on this topic. Should you choose to proceed with the proposed monetization, we would anticipate
exploring all avenues of recourse available to us at that time.
We await your prompt response.
Sincerely,
David
J. Anderson
Palo Alto Investors, LLC
About
Palo Alto Investors
Since
its inception in 1989, Palo Alto Investors, LLC (PAI) has focused exclusively on overlooked, misunderstood and
undervalued segments of the equity markets. PAI is committed to providing world class money management services to high net worth and
institutional investors. Located in Palo Alto, Calif., PAI employs 22 professionals and manages over $1 billion in assets. The firm
is independently owned with significant Partner ownership interest.
.
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