A dissident SandRidge Energy Inc. shareholder isn't satisfied with the company's explanation of its dealings with entities associated with CEO Tom Ward.
TPG-Axon Capital, which owns about 6.7 percent of the company's outstanding stock, said Friday's statement from the SandRidge board did not refute its allegations of “front running” by Ward.
The board said last week it had vetted a number of deals between SandRidge and entities tied to Ward without finding any wrongdoing.
TPG-Axon called that response disappointing because of its disregard for the facts and the company's stockholders.
“There can be no doubt that SandRidge's board of directors has failed stockholders by allowing its CEO's immediate family, using entities he created or funded, to compete with the company in one of the most crucial aspects of its primary business — acquiring the mineral rights to land in the Mississippian,” TPG said in a statement Monday.
The Mississippian is the oil-rich play in northern Oklahoma and southern Kansas that SandRidge has identified as its core area of operations.
TPG-Axon joined fellow institutional shareholder Mount Kellett Capital Management in calling for an outside investigation of SandRidge's dealings with entities tied to its chief executive.
“We believe the time has long passed to simply ‘consider' the appointment of independent counsel — that should have been done already,” TPG-Axon said. “The board should suspend Mr. Ward while they engage credible experts to analyze the transactions and review the behavior.
“We challenge the board to either do something, or make clear they will not. Stockholders cannot afford more inactivity or delay by their board.”
SandRidge declined further comment on Monday.
TPG-Axon has accused WCT Resources LLC, a company formed by trusts created for Ward's children, of buying mineral leases in the area then selling them to SandRidge, often maintaining an interest in future wells.
The hedge fund rejected the notion that WCT is an independent company, noting it is run by Ward's son and recently shared an address with SandRidge.
“We challenge the board to show that the pattern of overlap between WCT Resources and SandRidge is modest compared to that of others. It is simply astonishing that family-controlled entities are active in the same business that SandRidge is active in,” TPG-Axon said. “It is even more astonishing that these entities have frequently, as opposed to rarely, appeared ahead of, or alongside, SandRidge in areas of interest.”
As a result of its concerns about the company, TPG-Axon is asking fellow SandRidge shareholders to oust Ward and other board members in favor of its own slate of directors.
The ongoing consent solicitation will be open until next month.