Having bought out 75% of a leaseholding near their 100 MMcf/dLadyfern gas find in northeast British Columbia, joint venturesubsidiaries of Murphy Oil and Apache Corp. are going after theother 25%, accusing the remaining leaseholder, Predator Corp., andothers of misappropriating and misusing confidential data about thediscovery well.

News of the lawsuit broke just a week after Murphy Oil revealedit expects to produce between 172 MMcf/d and 310 MMcf/d this yearfrom its northeast B.C. prospects, including Ladyfern.

The lawsuit, filed in Alberta’s Court of Queen’s Bench inCalgary, says a wireline service company working for Murphy andApache passed confidential well data on to Predator. Personnel fromPredator then trespassed on the discovery well site to gainadditional information, the suit charges. These actions were”clearly illegal,” Apache COO G. Steven Farris said, adding that,”trespassing is against the law.”

The lawsuit is a continuation of a battle that started whenPredator and partner, Ricks Nova Scotia Inc., a Canadian offshootof Ricks Exploration of Oklahoma City, outbid Murphy Oil andApache, paying C$8.7 million for a three-section posting near theLadyfern discovery last March. In July the companies again won outfor another two sections of land, bidding C$8.6 million. Ricks andPredator then filed for and were granted a permit to build a10-mile pipeline connection by the National Energy Board,conditioned on their producing the gas to fill it.

At the time the board put off action on the rival pipelineapplication by Apache and Murphy Oil, but it started up hearings onthe proposal last week. In evidence laid before the board, theMurphy team predicts it will achieve gas production of 172-310MMcf/d from the B.C. region, with 17 wells in the Ladyfern andFoxglove-Chinchaga drilling plays. A target of early spring hasbeen set to finish the pipeline and ramp up production. The B.C.government has intervened in the case, urging the NEB to approvethe Murphy group’s plans without delay because provincial royaltiesas well as corporate treasuries stand to make significant gains,especially while high prices last.

On Jan. 20 Ricks settled with Murphy/Apache, turning over its75% interest in the leases at cost. In a counter-suit filed byPredator, that company claims a process of intimidation, code-named”Project Pistol,” which included the threat of criminal charges,drove Ricks to settle, thereby sinking their partnership anddriving Predator out of business. Predator’s counter-suit isseeking $6.1 billion.

Predator claims information about the well was disclosed lastyear by a Murphy/Apache partner in the Ladyfern venture at thetime, Beau Canada, which had put itself up for sale and was tryingto attract bidders. Murphy subsequently bought Beau Canada. Also,Predator’s principals, Bill Longdo, Robert V. Shields and GerryO’Reilly, cite their own extensive experience in Canadian drillingto back their claim that they didn’t need to steal well data.

The Predator faction’s 27-page counterclaim alleges that theB.C. leasing interests were sacrificed as a result of a campaign bythe Murphy group that went beyond the bounds of normal businesscompetition. The lawsuit claims the campaign was carried out inarenas ranging from confrontations out in the gas field tomaneuvering in corporate offices, the board of governors of theCanadian Association of Petroleum Producers, the B.C. Oil and GasCommission, the NEB and the United States District Court of theWestern District of Oklahoma.

The feud has also turned personal. The court filings by bothsides insist that there is personal liability for behavior by theofficers of the companies in the opposing faction. Besidesdemanding compensation for alleged lost business prospects andseeking recovery of the Ladyfern interests turned over to Murphy inits settlement with Ricks in the U.S., the Predator faction’scounterclaim asks for damages to make up for “severe emotionaltrauma.”

Gordon Jaremko, Calgary; Ellen Beswick, Washington

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