Anadarko Petroleum Corporation Class Action Lawsuit
- Company Name
- Anadarko Petroleum Corporation
- Stock Symbol
- Class Period
- February 20, 2015 to May 2, 2017
- Southern District of Texas
On February 19, 2020, the Anadarko Petroleum Corporation securities class action lawsuit was filed charging Anadarko and certain of its officers with violations of the Securities Exchange Act of 1934. The Anadarko securities class action lawsuit was commenced in the Southern District of Texas on behalf of purchasers of Anadarko common stock between February 20, 2015 and May 2, 2017 (the “Class Period”) and is captioned Georgia Firefighters' Pension Fund v. Anadarko Petroleum Corporation, et al., No. 20-cv-00576.
Anadarko is an energy company that develops oil and natural gas resources in the United States and worldwide. In August 2019, Anadarko became an indirect, wholly owned subsidiary of Occidental Petroleum Corporation. Prior to Anadarko’s acquisition by Occidental, Anadarko common stock traded on the New York Stock Exchange under the ticker symbol “APC.”
In 2009, Anadarko discovered the “Shenandoah” oil field in the Gulf of Mexico. After drilling an initial exploratory well named Shenandoah-1, Anadarko spent the following eight years appraising the field by drilling and evaluating five appraisal wells (Shenandoah-2, Shenandoah-3, Shenandoah-4, Shenandoah-5 and Shenandoah-6).
The Anadarko securities class action lawsuit alleges that during the Class Period, defendants misrepresented and/or failed to disclose adverse information about Anadarko’s Shenandoah assets, including that the value of the assets and the success of the appraisal wells were overstated and that Anadarko lacked effective internal control over financial reporting. As a consequence, defendants’ statements about the Shenandoah assets during the Class Period lacked a reasonable basis and were misleading. As a result of this information being withheld from the market, the price of Anadarko common stock was artificially inflated to more than $94 per share during the Class Period.
On February 20, 2015, the beginning of the Class Period, Anadarko filed with the U.S. Securities and Exchange Commission its annual report on a Form 10-K for the year ended December 31, 2014. With respect to the Shenandoah-3 well, the Form 10-K represented that Anadarko had “found approximately 50% (1,470 feet) more of the same reservoir sands 1,500 feet down-dip and 2.3 miles east of the Shenandoah-2 well, which encountered over 1,000 feet of net oil pay in excellent quality Lower Tertiary-aged sands.” Anadarko further stated that “[t]he Shenandoah-3 well confirmed the sand depositional environment, lateral sand continuity, excellent reservoir qualities, and down-dip thickening.” Defendants continued to make additional positive representations about, and tout the progress of, Anadarko’s Shenandoah assets throughout the Class Period.
For example, in mid-2015, Anadarko began to drill the Shenandoah-4 well and, on October 28, 2015, defendant Robert G. Gwin told investors that, given the findings from the Shenandoah-4 well, “we’re right where we thought” on the expected resource range at Shenandoah. Similarly, on February 2, 2016, defendant Robert P. Daniels stated that Anadarko was “very pleased with” the Shenandoah-4 well and that Anadarko had “high expectations for” the Shenandoah-5 well.
Then, on May 2, 2017, in connection with the release of Anadarko’s first quarter 2017 financial results, Anadarko disclosed that it had recorded a $467 million impairment charge and expensed $435 million in suspended exploratory well costs related to the Shenandoah project. Anadarko stated that, “[g]iven the results of [Shenandoah-6] and the present commodity-price environment, [Anadarko] has currently suspended further appraisal activities,” and that the Shenandoah exploratory well costs could no longer be capitalized. Following this news, the price of Anadarko common stock fell $4.33 per share, or approximately 8%, to close at $51.95 per share on May 3, 2017.
Subsequently, on November 4, 2019, allegations from a whistleblower case against Anadarko were made public in an opinion from the Fifth Circuit Court of Appeals in Frye v. Anadarko Petroleum Corp., No. 18-20543, which disclosed allegations by the whistleblower that Anadarko had “fraudulently overstated the economic prospects of its Shenandoah [assets] and then retaliated against her for objecting to these misrepresentations.”
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