February 23, 2021 - An investor in shares of Apache Corporation (NASDAQ: APA) filed a lawsuit in the U.S. District Court for the Southern District of Texas over alleged violations of Federal Securities Laws by Apache Corporation in connection with certain allegedly false and misleading statements made between September 7, 2016 and March 13, 2020.
Houston, TX based Apache Corporation, an independent energy company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids (NGLs). On April 23, 2019, Apache Corporation issued a pre-market press release announcing that starting in late March, it began deferring natural gas production at its gas-heavy Alpine High play in order to positively impact Apache’s cash flow, blaming extremely low gas pricing in the Permian gas market. In an article also published before markets opened, Bloomberg called the Alpine High production deferral “another blow to the Apache project.”
Then, on October 25, 2019, news stories revealed that Steven Keenan, Apache’s Senior Vice President of Worldwide Exploration, had resigned from Apache. In response, an analyst at Credit Suisse noted that since the announcement of the Alpine High discovery at the start of the Class Period, “[Apache’s] shares have underperformed global [exploration and production companies] by >30%, likely a cause for Mr. Keenan’s resignation.”
Several months later, on February 26, 2020, Apache Corporation announced that it was immediately discontinuing its Alpine High project and posting a $3 billion write down. On Apache’s fourth quarter earnings call held the next day, Christmann admitted, “[i]n the end, a number of factors were problematic at Alpine High,” including steeply lower prices for gas and gas byproducts, the lack of infrastructure to handle output, and that productivity improvements “did not materialize.”
About two weeks later, on March 12, 2020, Apache Corporation announced that “to further strengthen its financial position,” Apache’s “board of directors has approved a reduction in the company’s quarterly dividend per share from $0.25 to $0.025.” Apache further revealed that, “[o]ver the coming weeks, the company will reduce its Permian rig count to zero, limiting exposure to short-cycle oil projects” in the Alpine High resource play.
Finally, on March 16, 2020, an article was published pre-market explained that Apache Corporation was particularly challenged amongst its peers, carrying “the highest debt-to-equity ratio among large-cap independent [exploration and production companies],” and noted that “[t]he company doesn’t have a strong balance sheet” and its “financial health isn’t great.” The article emphasized Apache’s “weak balance sheet marked by high levels of debt” of over $8 billion in 2019, “which translates into a lofty debt-to-equity ratio of almost 250% - the highest among all large-cap independent oil producers.” Regarding Alpine High, the article observed that low gas prices “forced Apache to shift capital away from the wet-gas rich Alpine High play which has been driving the company’s production growth.” The article also noted that “Apache also reduced Alpine High’s value by $1.4 billion.” Shares of Apache Corporation (NASDAQ: APA) declined from $33.77 per share in January 2020, to $3.80 per share on March 18, 2020.
According to the complaint the plaintiff alleges on behalf of purchasers of Apache Corporation (NASDAQ: APA) common shares between September 7, 2016 and March 13, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between September 7, 2016 and March 13, 2020, the defendants failed to disclose to investors that Apache intentionally used unrealistic assumptions regarding the amount and composition of available oil and gas in Alpine High, that Apache did not have the proper infrastructure in place to safely and/or economically drill and/or transport those resources even if they existed in the amounts purported, that these misleading statements and omissions artificially inflated the value of Apache’s operations in the Permian Basin, and that as a result, Apache’s public statements were materially false and misleading at all relevant times.