A Louisiana pension fund has filed a lawsuit to stop Continental Resources Inc.'s acquisition of a company whose principal owner is CEO Harold Hamm.
The lawsuit filed by the Louisiana Municipal Police Employees' Retirement System accused Continental's board of breaching its fiduciary duty to the company's shareholders in agreeing to the $340 million deal to acquire Wheatland Oil Co. The suit, filed Tuesday in federal court in Oklahoma City, contends the purchase price is excessive.
Hamm owns 75 percent of Wheatland, with former Continental President Jeff Hume holding the remaining stake.
The suit contends the proposed deal is tainted by conflicts of interest because negotiations were led by board member Mark Monroe, who preceded Hamm and Hume as Continental's president.
Continental spokeswoman Kristin Miskovsky declined to comment on the lawsuit Wednesday, citing company policy for pending litigation.
“We believe that the allegations are without merit,” she said.
The Wheatland deal was supposed to be voted on Thursday by shareholders at Continental's annual meeting, but it is not on the agenda. The sale's fate now is to be determined at an as-yet-unscheduled special meeting.
The lawsuit contends Wheatland acquired its stake in Continental's Bakken Shale wells in North Dakota and Montana through a participation program similar to the one at Chesapeake Energy Corp. Continental's participation program ran for 10 years, expiring on Jan. 1, according to the lawsuit.
Chesapeake has announced plans to end co-founder Aubrey McClendon's well participation rights next summer after criticism arose in April over up to $1.1 billion in personal loans McClendon secured, using his stake in those wells as collateral.