Shareholders Sue Oil Driller Continental CEO Over Pipeline Investment

Shareholder Backlash

A backlash from shareholders over alleged self-dealings contributed to the departures last year of energy CEOs including Aubrey McClendon at Chesapeake Energy and Tom Ward at SandRidge Energy, two other Oklahoma-based drillers. The boards of both companies said they found no wrongdoing by either CEO.

SEC filings show that Continental has paid Hamm-affiliated firms for services such as oil and gas processing or transportation. Most payments - around $300 million - have occurred since Continental went public in 2007.

In the filings, Continental says that business with other Hamm-owned firms could lead to conflicts of interest that may not be resolved in Continental's favor.

Eissenstat told Reuters the firm's payments to other Hamm-affiliated firms since 2007 constituted less than 2 percent of the company's total expenses during that period.

There is no question that Continental shareholders have been richly rewarded. The company's shares have risen more than sevenfold since its 2007 initial public offering, as Hamm transformed Continental into a leading driller in North Dakota, where a boom in Bakken production has helped push U.S. oil output to near 25-year highs.

The lawsuit questions why the driller would need access to a pipeline it may not use. Hamm has said railroads are the firm's preferred mode of shipping Bakken crude to market.

Representatives of the Pennsylvania pension fund and attorneys handling the case declined requests for comment.


View Full Article


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.