The boards of directors of Quest Resource Corporation , Quest Energy Partners, L.P. and Quest Midstream Partners, L.P have accepted the resignation of Jerry Cash, as Chairman and CEO of all three entities, effective immediately. The resignation followed the discovery, in connection with an inquiry from the Oklahoma Department of Securities, of questionable transfers of company funds to an entity controlled by Mr. Cash. Initial indications are that the amount in question appears to involve about $10 million.

Promptly following the discovery, members of the three boards met in joint sessions on Friday and over the weekend. The boards immediately formed a Joint Special Committee comprised of representatives from each board, including the chairs of the audit committees of Quest Resource Corporation and Quest Energy Partners, to investigate the matter and consider the effects on the companies' financial statements. The Joint Special Committee has retained Spencer C. Barasch of Andrews Kurth LLP to lead the investigation. Chief Financial Officer David Grose was placed on a paid administrative leave of absence during the investigation. Quest has reported this matter to, and intends to fully cooperate with, the U.S. Securities and Exchange Commission and other appropriate governmental and regulatory organizations.

The boards also announced they have unanimously elected David Lawler as president of each entity and have appointed him as a director of Quest Resource Corporation to fill the vacancy created by Cash's resignation. Lawler has more than 17 years of oil and gas industry experience in various senior management and engineering positions and has served as the Chief Operating Officer of Quest Resource Corporation since May 2007. Mr. Lawler has been a director and Chief Operating Officer of Quest Energy Partners since its initial public offering in November 2007. Prior to joining Quest, Lawler served in roles of increasing responsibility for Shell Exploration & Production, most recently as engineering and operations manager for multiple assets along the U.S. Gulf Coast. Prior to joining Shell, Lawler was employed by predecessor companies of ConocoPhillips in various domestic engineering and operations positions.

The company has retained Kroll Zolfo Cooper LLC to assist in the accounting and finance functions during Mr. Grose's absence. Kevin Golmont will be leading Kroll Zolfo Cooper’s efforts in this capacity.

The boards have also formed a Joint Strategic Review Committee comprised of one representative of each of the boards to assist Lawler in undertaking a detailed review of each entity's strategy.

"The boards have tremendous confidence in David's abilities," said Jay Rateau, lead director for Quest Resource Corporation. "During his tenure as COO, David has displayed exceptional leadership skills and demonstrated sound financial and technical ability," Rateau added.

"I appreciate the board members' confidence in my ability to lead the Quest entities. In my prior role of COO, I learned the strength of our organization comes from our dedicated employees and our assets. I will work with our employees and board members to continue to execute our business plans as I conduct a strategic review of each organization," said David Lawler.

Tags: Quest Resource Corporation