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Apache is an independent energy company that explores for, develops, and produces natural gas, crude oil, and natural gas liquids. Historically, the U.S. has represented nearly 60% of Apache’s production and 70% of its estimated year-end proved reserves. One of the Company’s purported key “core growth areas” was the Permian region in West Texas and New Mexico.
The Class Period commences on September 7, 2016, when Apache, while under immense pressure to show results from its new strategy and reverse its lagging share price, announced the discovery of a new resource play called Alpine High. John J. Christmann IV, Apache’s Chief Executive Officer and President, touted the Alpine High discovery and its potential for large amounts of economic drilling opportunities stating at the time that “[w]e are incredibly excited about the Alpine High play and its large inventory of repeatable, high-value drilling opportunities,” and that they are “looking forward to further delineat[e] what we believe will be a significant number of oil-prone locations.” Following the Alpine High announcement, Apache’s stock price increased more than 6%, to close at $55.13 per share on September 7, 2016.
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.
If you are a member of the class described above, you may no later than April 26, 2021 move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453 or Adrienne Bell, Esq. (484) 270-1435; toll-free at (844) 887-9500; or via e-mail at firstname.lastname@example.org. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.