MANHATTAN (CN) – Texas oil company Anadarko Petroleum lied to investors to downplay drilling safety concerns about BP’s Deepwater Horizon drilling rig before the deadly explosion that caused the worst oil spill in U.S. history, shareholders claim in Federal Court.
Anadarko owns 25 percent of the Mancondo/Deepwater Horizon well, which has poured millions of gallons of oil into the Gulf of Mexico since April.
Its shareholders want the company held responsible for its part in the disaster, arguing that Anadarko ignored BP’s “horrible safety record” when the two agreed to a joint exploration deal in the Gulf three years ago.
BP had amassed 760 Occupation Safety and Health Administration (OSHA) violations, the plaintiffs said, compared to 19 violations committed during the same period by its four competitors, Exxon, Sunoco, Conoco-Philips and Citgo.
On April 20, the Deepwater Horizon well blew out and caused an explosion on the rig, killing 11 platform workers and injuring 17 others.
The class action, brought by lead plaintiff Shirley Harris, says the stock’s price dropped 20 percent on June 1 when news reports revealed the well could not be capped, and it became apparent that there was effectively no plan in place to stop the spill.
Anadarko’s majority partner in the well, BP Exploration & Gas, was not named in the suit.
“In spite of this disaster, defendants continued to issue materially false and misleading statements claiming the company would likely incur only approximately $177.5 million in liability for its part in the Mancondo/Deepwater Horizon venture,” the lawsuit alleges.
But shares fell another 20 percent on June 9, when investors learned Anadarko would be liable for more than $1 billion in clean-up costs, shareholders say.
The investors maintain that not only did Anadarko ignore BP’s shaky history, but it also issued false and misleading company ratings and analyst reports downplaying past safety problems associated with the well.
“As a result of defendants’ materially false and misleading statements, the prices of Anadarko securities were artificially inflated throughout the class period,” the lawsuit states. “Defendants’ substantially profited from the alleged fraud through their revised compensation agreements, which were upwardly revised in November 2009 and through the direct sale of over $65 million in personally held Anadarko common stock.”
Anadarko touts itself as one of the largest independent oil and gas exploration and production companies in the world, possessing 2.3 billion barrels of proved oil reserves, according to the lawsuit.
It’s the largest independent deepwater producer in the Gulf of Mexico, CEO James Hackett stated in an SEC filing.
In its quarterly filing to the securities commission, Hackett said BP has sought $1.2 billion from Anadarko to pay for spill response efforts, through the companies’ joint operating agreement.
BP incurred $3 billion in costs related to spill response and containment, relief well drilling, grants to Gulf Coast states for clean-up costs, tourism promotions and other obligations arising from the disaster.
Anadarko indicated in the SEC filing that it would not pay BP until a final determination was made about the root causes of the Deepwater Horizon disaster.
Hackett and executives Robert Gwin and M. Cathy Douglas were named along with Anadarko as defendants.
The class members are comprised of anyone who purchased Anadarko common stock from June 12, 2009 through June 9, 2010.
They are represented by Gregory Frank with Murray, Frank & Sailer.