Apache Corporation

Period: 09/07/2016 to 03/13/2020
Lead Plaintiff Deadline: 04/26/2021

SUMMARY OF CASE:

A securities class action has been filed against Apache Corporation (APA) on behalf of investors who purchased or acquired Apache common stock between September 7, 2016 through March 13, 2020.  This case has been filed in the USDC – S.D.TX.

The Complaint alleges that throughout the Class Period, the defendants claimed that Alpine High had valuable oil and gas reserves and promoted Alpine High as the centerpiece of its development business. For example, in a May 3, 2018 conference call with investors, Christmann asserted that Alpine High was “going very well and there is a tremendous amount of interest” and monetization opportunities when “the value of this infrastructure is going to grow significantly over the next 5, 6, 7, 8 years.”

The truth about Alpine High and its lack of viability emerged in a series of disclosures between April 2019 and March 2020 that caused Apache’s stock price to decline over 83% from its Class Period high. Specifically, on April 23, 2019, Apache 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.” Following this news, Apache’s stock price fell $4.03 per share, or approximately 11%, over four trading days, from a close of $37.09 per share on April 22, 2019, to close at $33.06 per share on April 26, 2019.

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.” Following this news, Apache’s stock price fell by $1.16 per share, or approximately 5%, from a close of $23.23 per share on October 24, 2019, to close at $22.07 per share on October 25, 2019.”

Several months later, on February 26, 2020, Apache 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 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. Following this news, the price of Apache’s common stock fell $0.49 per share, or approximately 6%, from a close of $8.25 per share on March 11, 2020, to close at $7.76 per share on March 12, 2020.

Finally, on March 16, 2020, a Seeking Alpha article published pre-market explained that Apache 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.” Following this news, Apache’s stock price fell $3.61 per share, or approximately 45%, over two trading days, from a close of $8.07 per share on March 13, 2020, to close at $4.46 per share on March 17, 2020.

The complaint alleges that, throughout the Class Period, the defendants failed to disclose to investors that: (1) Apache intentionally used unrealistic assumptions regarding the amount and composition of available oil and gas in Alpine High; (2) 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; (3) these misleading statements and omissions artificially inflated the value of Apache’s operations in the Permian Basin; and (4) as a result, Apache’s public statements were materially false and misleading at all relevant times.