The board at SandRidge Energy Inc. on Friday refuted shareholder allegations that CEO Tom Ward has been “front running” and “flipping” leaseholds to the company.
“The board has reviewed issues related to these allegations several times over the company's history and has found no wrongdoing to have taken place,” the board said in a statement issued Friday.
SandRidge's board also promised to listen to the concerns of shareholders like TPG-Axon Capital and Mount Kellett Capital Management, which are pushing for a leadership change at the company.
“While the board's perspective on these and other issues may diverge from TPG-Axon's, the company's directors continue to value the input of its stockholders,” the board said. “As part of its continuing oversight duties, the independent members of the board will consider the requests of TPG-Axon and Mount Kellett for the appointment of independent counsel and other investigative measures concerning the activities surrounding their allegations.”
Mount Kellett last week asked the board to suspend Ward and commission an inquiry into his activities by an independent law firm and forensic accounting firm.
Ward is the board's chairman with independent directors Jim J. Brewer, Everett R. Dobson, William A. Gilliland, Daniel W. Jordan, Roy T. Oliver Jr. and Jeffrey S. Serota.
Hedge fund TPG-Axon contends entities affiliated with Ward have been “flipping” leases to SandRidge.
TPG-Axon detailed its concerns Wednesday in a presentation posted on its website, shareholdersforSandRidge.com, including a number of transactions it said were not disclosed to shareholders. It is continuing to investigate ties between SandRidge and the Ward entities.
SandRidge's board said WCT Resources LLC, the company at the center of TPG-Axon's allegations, is independent of the company, with no nonpublic access to information about its land and mineral acquisition programs, even though one of its managers is Ward's son. Ward is not involved in the company, which was created by trusts established to benefit his adult children, according to the board.
“Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to ‘allow' WCT Resources to engage in any business regardless of whether it competes with the company,” the board said. “As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses.”
Deals between SandRidge and WCT have been rare and carefully scrutinized by disinterested board members, as required by a written company policy, according to Friday's statement. Such deals also have been disclosed in U.S. Securities and Exchange Commission filings.
The board also dismissed TPG-Axon's concerns about WCT leasing acreage adjacent to SandRidge's holdings in the Mississippian oil play.
“Given the company's vast acreage holdings in the Mississippian play, which include interests in over 7,500 sections covering nearly five million acres in 30 counties throughout an area that encompasses approximately 17 million acres, this is an entirely unremarkable fact,” according to the board's statement. “Virtually all companies active in the play are likely to have some interests that could be characterized as adjacent to the company's holdings.”
The board said its dealings with TLW Land and Cattle LP, another company Ward has a stake in, involve acreage acquired well before SandRidge was formed in 2006.
“Mr. Ward disclosed these longtime business interests to the board early in the company's history and has discussed them with the board several times over the past several years, and the board has found no evidence of impropriety or ‘front running,'” the board said.
SandRidge's stock was up 2 cents Friday, closing at $7.07 a share.