Following unconfirmed reports of employment and exploration problems for Houston’s Alta Mesa Resources drilling in Oklahoma’s STACK, now comes a report that the company is struggling to stay afloat.
The Houston Chronicle says the oil and gas company has laid off nearly one-fourth of its employees and written down the value of its assets by $3.1 billion because of admitted failures in its financial reporting.
As OK Energy Today reported last week, the company had been sued by a New York based pension fund. At the time, there were unsubstantiated reports of drilling rigs being laid down in the STACK and of completion crews being let go. The company did not respond to an inquiry by OK Energy Today.
But the reports followed the abrupt resignations a few weeks ago by the company’s three leading executives including CEO Hal Chappelle, Chief Operating Officer Michael Ellis and Chief Financial Officer Michael McCabe. The firm’s executive chairman, former Anadarko CEO James Hackett took over as the interim chief executive.
In a prepared statement, Hackett said, “The company has been diligent in reducing activity levels and taking the initial steps to right-size the cost structure for the current commodity environment and business outlook.”
Alta Mesa did not respond to requests for comment. The former executives could not be reached for comment.
A new Alta Mesa was created last year from two privately held companies bought by an acquisition entity led by Hackett and taken public. The company’s stock, which reached a peak of nearly $11 per share, has plummeted 97 percent to 27 cents.
The company disclosed in a filing this week with the Securities and Exchange Commission that it was taking the multibillion-dollar write-down because of “ineffective internal control over financial reporting due to an identified material weakness.” The company, which reported about $350 million in revenues in the first nine months of 2018, said it would delay reporting its fourth-quarter earnings.
The SEC declined to comment.
Several law firms representing shareholders said this week that they are investigating Alta Mesa for potential violations of securities laws. The Chronicle reported what OK Energy Today had published last week that the New York firm Bronstein, Gewirtz & Grossman has filed a class-action lawsuit against the company, alleging that it and the acquisition entity, Silver Run Acquisition Corp. II, used false and misleading information to manipulate shareholders, who have seen their investments crumble to very little.
The law firm declined comment Friday.
Alta Mesa was put together by Hackett’s acquisition entity, known as a blank-check firm, which was backed by Riverstone Holdings, an energy-focused private equity firm. To create the new Alta Mesa, Silver Run Acquisition Corp. II combined with two privately held companies, Alta Mesa Holdings and Kingfisher Midstream, both of which focused on Oklahoma oil and gas acreage and pipelines.
The company began trading in early 2018 under the “AMR” stock ticker, touting an aggregate Wall Street value of $3.8 billion. The company now has an estimated value of $48 million.
Alta Mesa employed about 200 people at its headquarters in Houston’s Energy Corridor. In a filing with the Texas Workforce Commission, Alta Mesa said it cut 58 jobs in February.