Canadian junior faces blizzard of class-action suits in U.S.

Gary Park

Petroleum News Calgary correspondent

Canadian Superior Energy is besieged with legal actions in the United States, with investors launching three new class-action suits, on top of the three already filed.

The Calgary-based junior E&P company and its Chief Executive Officer Greg Noval face accusations that stem mostly from the decision in March to abandon the highly touted Mariner I-85 well offshore Nova Scotia, sending Canadian Superior shares into a tailspin.

The shares are now trading at close to C$1.60, down from C$4.28 when Canadian Superior and El Paso plugged the well without doing further testing. A suit filed by Bull & Lifshitz said the defendants “issued materially false statements (about Mariner I-85)” and failed to disclose that the well did not contain a big enough reservoir to support a commercial project.

It also said the “costs of testing and drilling at the well were significantly exceeding the budget” of C$30 million. Abbey Gardy alleged that Noval sold 25 percent of his Canadian Superior shares at artificially inflated prices.

Insider trading reports filed with securities regulators indicated Noval sold 1.14 million shares in late January at an average C$3.75 a share, around the time that Canadian Superior issued statements that it was “very pleased” with progress on Mariner I-85 and claimed “significant gas shows.” Canadian Superior has dismissed the legal actions as “groundless, frivolous and a misuse of the United States legal system,” declaring that they will be “aggressively dealt with in court.”