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Apache Corporation

Case Details

Class Period: September 7, 2016 - March 13, 2020
Date Filed: February 23, 2021
Case Number: 4:21-cv-0575
Jurisdiction: Southern District of Texas
icon-casetype Case Type: Securities Case

Case Summary

On February 23, 2021, Saxena White and its Co-Counsel filed a securities fraud class action against Apache Corporation, and certain of its senior executives, for violations of the Securities Exchange Act of 1934. The Complaint, filed on behalf of all persons or entities that purchased Apache common stock during the class period, alleges that Defendants made false and misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects, thus artificially inflating the Company’s stock price and causing investors to suffer substantial losses when the truth eventually emerged.

Apache is an independent energy company that explores for, develops, and produces natural gas, natural gas liquids, and crude oil. During the relevant time period, Apache’s purported “core growth area” was an oil and gas field known as “Alpine High,” located along the western edge of the Permian Basin in West Texas. By January 2016, Apache had purchased over 300,000 acres in the Permian Basin, primarily as part of the highly touted Alpine High project.

The Complaint alleges that throughout the class period, and unbeknownst to investors, Defendants engaged in a fraudulent scheme to inflate Apache’s stock price by making materially false and misleading statements regarding the viability and profitability of Alpine High. Specifically, Apache concealed: (1) that it had intentionally used unrealistic assumptions regarding the amount and composition of available gas and oil in Alpine High; and (2) that it did not have the proper infrastructure in place to safely and economically drill and transport those resources, even if they did in fact exist in the amounts claimed.

The truth about Alpine High began to emerge on April 23, 2019, when Apache announced that it had begun a “[t]emporary” deferral of natural gas production at Alpine High. In response to this news, Apache’s stock price dropped $4.03 per share, or nearly 11% over the next four trading days. Then, on October 25, 2019, Apache’s Senior Vice President of Worldwide Exploration abruptly resigned from the Company, causing Apache’s stock price to decline another $1.16 per share, or approximately 5%.

By February 26, 2020, Apache announced that it was completely devaluing Alpine High after taking a $3 billion write-down on the project. Two weeks later, on March 12, 2020, Apache announced that it had slashed its quarterly dividend by 90% and was substantially reducing planned capital expenditures for the rest of 2020. On the heels of this news, the price of Apache common stock fell $0.49 per share, or approximately 6%. On March 17, 2020, as the market and analysts continued to grapple with this news, Apache’s stock price plunged another $3.61 per share, or approximately 45%, causing shareholders to incur significant damages.

On October 6, 2021, the Court appointed Plymouth County Retirement Association and Teamsters Union No. 142 Pension Fund as Lead Plaintiffs and Saxena White P.A. as Co-Lead Counsel. When appointing Saxena White as Co-Lead Counsel, the Court specifically noted the Firm’s substantial experience in securities class action lawsuits and that the Firm possessed the necessary resources to pursue the case.

On December 17, 2021, Lead Plaintiffs filed their consolidated class action complaint, and on February 15, 2022, Defendants filed their motion to dismiss the consolidated complaint.

On September 15, 2022, Magistrate Judge Andrew M. Edison issued his memorandum and recommendation, concluding that the Court should deny Defendants’ motion to dismiss in its entirety, an exceptional result for the Plaintiffs at this stage of the litigation. Judge Edison specifically noted that Plaintiffs’ complaint stood out among the “vast number of securities class action lawsuits” he “had the opportunity to review” throughout his career, “both as a lawyer and a judge,” and highlighted the Complaint’s “detailed discussion of the alleged misrepresentations at issue” and explanation as to “why Defendants allegedly knew at the time they spoke publicly that those statements were materially false.” He agreed with the Plaintiffs that “Defendants had years of data indicating Apache would not encounter commercially productive oil and gas reservoirs,” and that “Apache management disregarded [] explicit warnings and moved forward with a major public announcement and glowing reports on how Alpine High would drive shareholder value for years to come.” On November 29, 2022, U.S. District Court Judge George C. Hanks, Jr., accepted the Magistrate’s conclusions and issued an order adopting the memorandum and recommendation and denying Defendants’ motion to dismiss in its entirety.

After successfully defeating the Defendants’ motion to dismiss, Lead Plaintiffs commenced an expansive discovery effort in order to uncover the full depth of the Defendants’ fraud. On April 7, 2023, Plaintiffs filed their motion for class certification and on December 6, 2023, the Court held the hearing on the motion.

On February 9, 2024, the Magistrate Judge issued a memorandum and recommendation that Plaintiffs’ class certification motion be granted in part and denied in part. Specifically, the Magistrate Judge recommended that the Court certify a class of shareholders who purchased Apache shares between September 7, 2016 and February 22, 2018; appoint Plymouth County Retirement Association and Teamsters Union No. 142 Pension Fund as class representatives; and appoint Saxena White as Co-Lead Counsel.

On March 8, 2024, Defendants filed a notice of settlement, informing the Court of the parties’ agreement to settle the case. The parties will soon finalize and execute a term sheet setting forth the material terms of the action, including the settlement amount.