Anadarko Petroleum Corp., a partner in the BP (BP/) Plc well that blew up in 2010 and triggered the largest U.S. offshore oil spill, must face a lawsuit claiming it misled investors, a judge said.
U.S. District Judge Keith P. Ellison in Houston dismissed most of the investors’ allegations yesterday while finding they had sufficient reason to sue over a statement by an Anadarko senior vice president, Robert Daniels, after the spill that the company had no involvement in design or procedures at BP’s Macondo well.
“The court finds that one statement in the complaint, made by defendant Daniels, is adequately pled” under the federal law governing securities-fraud claims, Ellison said in his ruling. “Full dismissal is therefore not warranted.”
The investors accused Anadarko, which held a 25 percent interest in London-based BP’s well, of understating its role in the project and falsely claiming it faced minimal financial liability from the 2010 blowout off the Louisiana coast. The securities-fraud suit, a class action, was filed seeking recovery of billions of dollars of lost share value.
Anadarko disputed the investor claims and asked Ellison to throw out the case.
“We are currently reviewing the ruling to determine the appropriate steps,” John Christiansen, a spokesman for The Woodlands, Texas-based Anadarko, said in an e-mail.
Ellison gave the plaintiffs 30 days to re-plead, or re-argue, dismissed allegations.
“We’re pleased the court has held that Anadarko has to answer these allegations,” John Browne, an investor attorney, said in a phone interview. “We’re going to evaluate our options about re-pleading.”
The April 2010 blast aboard the Deepwater Horizon drilling rig killed 11 workers and generated hundreds of lawsuits against BP; Vernier, Switzerland-based Transocean Ltd. (RIG), owner of the rig; and Houston-based Halliburton Co. (HAL), which provided cementing services for the project.
The lawsuits also named Anadarko and Mitsui & Co. (8031)’s MOEX Offshore 2007, which had a 10 percent share in the well, as defendants. Anadarko agreed to pay BP $4 billion to settle its share of oil-spill claims by private parties. MOEX settled for $1.07 billion.
Anadarko fell from $73.94 on April 20, 2010, to $34.83 on June 9, 2010, losing $19.3 billion in market capitalization, the shareholders said.
The investors bringing the lawsuit, led by the pension funds of U.S. Virgin Islands retirees, seek to represent all investors in Anadarko from June 12, 2009, to June 9, 2010.
The investors claimed Anadarko wasn’t a passive partner in the Macondo well. It “expressly approved and funded a series of extremely risky decisions made in connection with drilling the well,” the investors said in court filings. Those decisions “contributed directly to the disaster,” they said.
Once the spill occurred, Anadarko attempted to prop up its shares by continuing to downplay its role in the project, the investors said.
The plaintiffs focused on a statement by Daniels in a May 4, 2010, conference call. Daniels said well design and procedures were completed before Anadarko became involved in the project, the plaintiffs said, citing the call.
“When you typically approve these as a non-operator, you basically approve just the capital spending level in the targeted zones from a geological perspective, as opposed to looking at the detail, well design or procedures. We were not involved in that at all on this well,” Daniels said, according to Ellison’s decision.
Ellison found Daniels’s statement could be considered misleading.
“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,” Ellison said.
The judge said that while the statement was “actionable,” it was “apparently an isolated occurrence, not repeated by Daniels or any other Anadarko executive.”
Ellison found no merit in the investors’ other claims, including allegations that Anadarko misrepresented its commitment to safety and its risk-management practices, and was responsible for misstatements by BP.
Ellison also rejected the plaintiffs’ claim that Anadarko misstated its insurance coverage for the disaster.
The case is In re Anadarko Petroleum Corp. (APC) Class Action Litigation, 12-cv-00900, U.S. District Court, Southern District of Texas (Houston).