One of the large drilling operations in Oklahoma’s STACK formation has been sued by a pension fund and accused of violating SEC regulations.
The class-action lawsuit by the Plumbers and Pipefitters National Pension Fund was filed several weeks ago in the U.S. District Court of the Southern District of New York against Silver Run Acquisition Corporation II which in 2018 acquired Alta Mesa Holdings, LP and Kingfisher Midstream LLC in a $3.8 billion agreement. It is the acquisition that led to the lawsuit.
Silver Run was described as a blank-check company led by James Hackett, a former CEO at Anadarko Petroleum Corp.
The defendants are Silver Run II, its Board of Directors and Silver Run II’s private equity sponsor. The union contends that Silver Run II issued a “materially false and misleading Definitive Merger Proxy Statement” last year in order to secure shareholder support. The suit claims the proxy statement made “false and/or misleading statements of fact and omitted facts necessary to make the statements.”
The union also claims the Proxy “overstated the value of the assets to be acquired” and did not disclose operational setbacks, customer uncertainty and predictable well shutdowns.
As the lawsuit pointed out less than two months after the closing of the acquisition, Silver Run II issued a release announcing that some of its earnings and production estimates in the proxy “were materially overstated.” The union also claimed that rather than the “hyperbolic growth portrayed in the proxy, Silver Run II revealed that Alta Mesa’s oil production had actually declined sequentially during the quarter.” It also charged that the Kingfisher operations were not on track to achieve even the drastically reduced March 2018 guidance.
Alta Mesa has not responded to OK Energy Today email requests for a comment about its Oklahoma operations.