Canadian Superior said this week that it plans to fight the recently-filed class action lawsuits, which charge that the company and its management issued a number of “materially false and misleading statements” about its El Paso Mariner I-85 well prior to abandonment. The well is located in the Atlantic Ocean off Nova Scotia.
The company reported late last week that despite encountering gas pay in multiple zones on its Mariner I-85 well, it had halted and abandoned drilling on the deepwater prospect because of pack ice and potential cost overruns (see Daily GPI, March 12). On this news, shares of Canadian Superior skidded 44.44%, or $1.44 per share, to close at $1.80 per share on March 11 on heavy volume of 14.9 million shares. In Thursday trading (March 18), the company’s shares fell 11 cents, a drop of almost 8% to close at $1.31.
The suits brought against Canadian Superior, Greg Noval, president, and Michael Coolen, director of East Coast Operations, alleges that “positive statements” issued by Canadian Superior failed to disclose and indicate:
Taking things one step further, Abbey Gardy LLP’s suit charges that “while in possession of materially adverse information, defendant Noval sold 25% of his Canadian Superior stock at artificially inflated prices.”
In addition to holding a conference call Monday (see Daily GPI, March 17), Canadian Superior released a statement Wednesday in an attempt to allay concerns. “Canadian Superior views these allegations to be groundless, frivolous and a misuse of the United States legal system,” the company said. “Canadian Superior intends to vigorously and aggressively deal with this matter in court.
“It is Canadian Superior’s opinion that these actions amount to jockeying by various United States legal counsel to determine who, if any, will represent a plaintiff, if one exists, against Canadian Superior. Canadian Superior views these actions as regrettable and detrimental to its shareholders and accordingly these actions will be aggressively dealt with in court.”
During the Monday call, company execs said that its partner and operator of the well, El Paso Corp., did not accept a recommendation to continue from its own technical team and chose to put Canadian Superior on notice, so that any drill stem testing or any additional work on the well would be 100% to Canadian Superior’s account if it did not accept El Paso’s decision not to drill stem test and plug and abandon the well. The companies abandoned the well following 3-1/2 months of drilling.
The suits (see Daily GPI, March 16) were filed in the United States District Court for the Southern District of New York on behalf of purchasers of the securities of Canadian Superior Energy.
Following its own investigation, Scott + Scott LLC joined the class action fray on Thursday, which already includes the firms of Abbey Gardy LLP, Cauley Geller Bowman & Rudman LLP, Schiffrin & Barroway LLP and the Law Offices Of Charles J. Piven.
Canadian Superior is a Calgary-based oil and gas exploration and production company has operations in western Canada, offshore Nova Scotia and offshore Trinidad. The company is one of the largest acreage holders offshore Nova Scotia, with interests in 1,293,946 acres.
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