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Murphy, Apache in Lawsuit Over B.C. Discovery

Murphy, Apache in Lawsuit Over B.C. Discovery

Having bought out 75% of a leaseholding near their 100 MMcf/d Ladyfern gas find in northeast British Columbia, joint venture subsidiaries of Murphy Oil and Apache Corp. are going after the other 25%, accusing the remaining leaseholder, Predator Corp., and others of misappropriating and misusing confidential data about the discovery well.

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

The lawsuit, filed in Alberta's Court of Queen's Bench in Calgary, says a wireline service company working for Murphy and Apache passed confidential well data on to Predator. Personnel from Predator then trespassed on the discovery well site to gain additional 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 when Predator and partner, Ricks Nova Scotia Inc., a Canadian offshoot of Ricks Exploration of Oklahoma City, outbid Murphy Oil and Apache, paying C$8.7 million for a three-section posting near the Ladyfern discovery last March. In July the companies again won out for another two sections of land, bidding C$8.6 million. Ricks and Predator then filed for and were granted a permit to build a 10-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 pipeline application by Apache and Murphy Oil, but it started up hearings on the proposal last week. In evidence laid before the board, the Murphy team predicts it will achieve gas production of 172-310 MMcf/d from the B.C. region, with 17 wells in the Ladyfern and Foxglove-Chinchaga drilling plays. A target of early spring has been set to finish the pipeline and ramp up production. The B.C. government has intervened in the case, urging the NEB to approve the Murphy group's plans without delay because provincial royalties as well as corporate treasuries stand to make significant gains, especially while high prices last.

On Jan. 20 Ricks settled with Murphy/Apache, turning over its 75% interest in the leases at cost. In a counter-suit filed by Predator, 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 and driving Predator out of business. Predator's counter-suit is seeking $6.1 billion.

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

The Predator faction's 27-page counterclaim alleges that the B.C. leasing interests were sacrificed as a result of a campaign by the Murphy group that went beyond the bounds of normal business competition. The lawsuit claims the campaign was carried out in arenas ranging from confrontations out in the gas field to maneuvering in corporate offices, the board of governors of the Canadian Association of Petroleum Producers, the B.C. Oil and Gas Commission, the NEB and the United States District Court of the Western District of Oklahoma.

The feud has also turned personal. The court filings by both sides insist that there is personal liability for behavior by the officers of the companies in the opposing faction. Besides demanding compensation for alleged lost business prospects and seeking recovery of the Ladyfern interests turned over to Murphy in its settlement with Ricks in the U.S., the Predator faction's counterclaim asks for damages to make up for "severe emotional trauma."

Gordon Jaremko, Calgary; Ellen Beswick, Washington

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