The complaint for this class action alleges that Anadarko Petroleum Corporation has not taken proper safety precautions in its Colorado oil and gas operations, for example in an instance where two people were killed by an explosion in a Colorado home.
The class for this action is all persons who acquired the common stock of Anadarko between February 8, 2016 and May 2, 2017.
Anadarko explores for, develops, and produces oil and gas, primarily in three geographic areas: the Delaware Basin in Texas, the Gulf of Mexico, and the Denver Julesberg Basin in Colorado.
From 2011 to 2014, Anadarko accrued over $9 billion in environmental fines and settlements. Most of this amount came from two causes: (1) the explosion of the Macondo well, in which the company owned a 25% interest, and (2) the company’s acquisition of Kerr-McGee Corporation, which had harmed the environment to such an extent that Anadarko had to pay the largest environmental settlement in US history. After this, Anadarko repeatedly assured investors that it was now complying with all safety environmental regulations.
In late 2013, the company completed a land swap with a competitor in which it acquired more than 1,500 wells. However, many were safety and environmental hazards. Anadarko intended to remediate the wells, the complaint says, but when the price of oil fell in 2014, Anadarko cut its remediation budget.
According to the complaint, in choosing which wells to remediate, Anadarko did not consider public safety; it chose good producers or those whose condition interfered with production. The complaint alleges that senior executives were aware of safety issues and held several meetings to discuss them.
Anadarko also cut its workforce, laying off between 1,000 and 1,500 workers in Colorado. This left the company with fewer skilled employees than it needed, the complaint claims. For example, the complaint says that a 28,000 gallon oil spill in January 2017 was caused by a lack of trained personnel, and Anadarko decided not to inform Colorado regulators of the cause.
On April 17, 2017, a home near an unremediated Anadarko well in Colorado exploded, killing two men and badly injuring a woman, while a child escaped by jumping out of a window. Ten days later, the fire department announced that the explosion had been caused by an Anadarko well that had been abandoned but never sealed, as required by law. The flowline had leaked methane into the home, and the methane had exploded when the home owner tried to install a heater. This incident led to declines in Anadarko’s stock price.
Anadarko later admitted that 2,400 of its flowlines had been abandoned but not sealed. Although the company expressed sympathy for the accident victims in public, the complaint alleges that in private executives admitted they were not concerned about the incident.
The complaint claims that the company violated the Securities Exchange Act of 1934, among other things, in not disclosing the extent to which it was disregarding safety and regulations.