SandRidge Energy Inc. CEO Tom Ward's family stands to be a major beneficiary of the Oklahoma City oil company's plan to develop the emerging Mississippian oil play, one of the company's largest shareholders said Tuesday.
TPG-Axon Capital, which owns 7 percent of SandRidge's outstanding stock, contends a company owned by trusts established to benefit Ward's adult children has amassed a leading position in the play in northern Oklahoma and southern Kansas that SandRidge has identified as the focus of its future activity.
TPG-Axon said it believes WCT Resources' holdings of about 475,000 acres make it the fifth-largest exploration and production company in the play, based on its ongoing review of property records in 22 Oklahoma and Kansas counties. The company's acreage ranks behind only SandRidge, Chesapeake Energy Corp., Shell and Devon Energy Corp.
“TPG-Axon is concerned not only by the scale of WCT Resources' involvement in the Mississippian, but by the suspicious timing of the company's purchases,” the hedge fund said Tuesday of what it calls “an undeniable pattern of conflicted related-party transactions.”
SandRidge declined to comment Tuesday, but the company has maintained its board scrutinized each related-party transaction in accordance with its written policies. It also has said Ward has nothing to do with the operation of WCT Resources, which is run by his son, Trent.
In its Jan. 25 response to TPG-Axon's initial allegations, SandRidge said in a statement, “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. 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.”
TPG-Axon said SandRidge and WCT Resources actively acquired acreage within weeks and months of each other in many instances.
“Contrary to SandRidge's claims, based on the data TPG-Axon has reviewed, this pattern of activity is not rare; it is now clear that the degree of overlap and competition is truly massive,” TPG-Axon said.