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Anadarko Exec Possibly Misled Investors, Says Judge

July 22, 2013
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Anadarko Petroleum Corp., a one-quarter partner in BP plc's ill-fated Macondo well, is facing a lawsuit that claims a top executive misled investors about the well's impact, a Houston district judge has ruled.

U.S. District Judge Keith P Ellison dismissed most of the investor allegations against Anadarko but found that there was reason to proceed with the lawsuit because of statements made in May 2010, shortly after the well blowout, by Anadarko Senior Vice President Robert Daniels (In re Anadarko Petroleum Corp. Class Action Litigation, 12-cv-00900, U.S. District Court, Southern District of Texas). Lead plaintiffs are the Employees Retirement System of the Government of the Virgin Islands and the Pension Trust Fund for Operating Engineers in Alameda, CA.

On a conference call to discuss 1Q2010 performance, Daniels said the Macondo well's design and procedures were completed before Anadarko became involved in the project. The comments originally had been attributed to Executive Chairman Jim Hackett (see NGI, May 10, 2010).

An analyst asked executives during the quarterly conference call three years ago how, as a nonoperator of Macondo, "passive" it had been on the well design.

Daniels responded that Anadarko farmed into Macondo "after the well had already spud. So the well design and procedures, operating procedures, were all done before we actually farmed in. When you typically approve these as a nonoperator, you basically approve just the capital spending level and the targeted zones from a geological perspective as opposed to looking at the detail, well design or procedures. So we were not involved with that in that or all in this well."

Daniels' statements could be considered misleading, said Ellison. "Viewing the statement in isolation, the inference that Daniels spoke with knowledge that his statement was misleading, or with reckless disregard for whether it was true, is 'cogent and compelling,' particularly because he spoke so directly and did not use any qualifying or hedging words."

Although the statements were "actionable," they were "apparently an isolated occurrence, not repeated by Daniels or any other Anadarko executive," Ellison noted. The judge found no merit in other investor claims, including allegations that Anadarko had misrepresented its commitment to safety and risk management practices and that it was responsible for any misstatements by BP executives. He also rejected a claim that Anadarko had misstated insurance coverage for the disaster.

Anadarko had disputed the claims and had asked Ellison to reject the case. The company now is "reviewing the ruling to determine the appropriate steps," said spokesman John Christiansen. Anadarko was given a month to respond.

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