Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 1 of 10 PageID #: 1
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`MATTHEW WHITFIELD,
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`Plaintiff,
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`v.
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`Case No. ______________
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`JURY TRIAL DEMANDED
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`COMPLAINT FOR VIOLATION OF THE
`SECURITIES EXCHANGE ACT OF 1934
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`WHITING PETROLEUM CORP., KEVIN S.
`MCCARTHY, JANET L. CARRIG, SUSAN
`M. CUNNINGHAM, PAUL J. KORUS,
`LYNN A. PETERSON, DANIEL J. RICE,
`and ANNE TAYLOR,
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`Defendants.
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`Plaintiff, by his attorneys, for this complaint against defendants, alleges the following upon
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`personal knowledge with respect to himself, and upon information and belief based upon the
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`investigation of counsel as to all other allegations herein:
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`NATURE OF ACTION
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`1.
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`On March 7, 2022, Whiting Petroleum Corp. (“Whiting” or the “Company”)
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`entered into an agreement and plan of merger (the “Merger Agreement”) to be acquired by Oasis
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`Petroleum Inc. (“Oasis”), Ohm Merger Sub Inc. (“Merger Sub”), and New Ohm LLC (“LLC Sub”)
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`(the “Proposed Merger”).
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`2.
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`Under the terms of the Merger Agreement, Whiting’s stockholders will receive
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`0.5774 shares of Oasis common stock and $6.25 in cash per share.
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`3.
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`On April 28, 2022, defendants filed a registration statement (the “Registration
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`Statement”) with the U.S. Securities and Exchange Commission (the “SEC”).
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`4.
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`As alleged herein, the Registration Statement fails to disclose material information
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`regarding the Proposed Merger, and defendants violated Sections 14(a) and 20(a) of the Securities
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`Exchange Act of 1934 (the “Exchange Act”).
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`Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 2 of 10 PageID #: 2
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein pursuant to Section 27
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`of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934
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`Act and Rule 14a-9.
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`6.
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`This Court has jurisdiction over defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an
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`individual with sufficient minimum contacts with this District so as to make the exercise of
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`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper under 28 U.S.C. § 1391(b) because a portion of the transactions
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`and wrongs complained of herein occurred in this District.
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`THE PARTIES
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`8.
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`Plaintiff is and has been continuously throughout all relevant times the owner of
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`Whiting common stock.
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`9.
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`Defendant Whiting is a Delaware corporation. Whiting’s common stock is traded
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`on the New York Stock Exchange under the ticker symbol “WLL.”
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`10.
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`Defendant Kevin S. McCarthy is Chairperson of the Board of Directors of Whiting
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`(the “Board”).
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`11.
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`12.
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`13.
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`14.
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`15.
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`16.
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`Defendant Janet L. Carrig is a director of the Company.
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`Defendant Susan M. Cunningham is a member of the Board.
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`Defendant Paul J. Korus is a member of the Board.
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`Defendant Lynn A. Peterson is a member of the Board.
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`Defendant Daniel J. Rice is a member of the Board.
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`Defendant Anne Taylor is a member of the Board.
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`17.
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`Defendants identified in ¶¶ 10-16 are referred to herein as the “Individual
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`Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`18. Whiting is an independent oil and gas company engaged in the development,
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`production and acquisition of crude oil, NGLs and natural gas primarily in the Rocky
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`Mountains region of the United States.
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`19.
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`The Company’s largest projects are in the Bakken and Three Forks plays in North
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`Dakota and Montana.
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`20.
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`21.
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`On March 7, 2022, Whiting entered into the Merger Agreement.
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`The press release announcing the Proposed Merger provides as follows:
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`Whiting Petroleum Corporation (NYSE: WLL) (“Whiting”) and Oasis Petroleum
`Inc. (NASDAQ: OAS) ("Oasis") today announced they have entered into an
`agreement to combine in a merger of equals transaction. The combined company
`will have a premier Williston Basin position with top tier assets across
`approximately 972K net acres, combined production of 167.8 thousand boepd,
`significant scale and enhanced free cash flow generation to return capital to
`shareholders.
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`Under the terms of the agreement, Whiting shareholders will receive 0.5774 shares
`of Oasis common stock and $6.25 in cash for each share of Whiting common stock
`owned. In connection with the closing of the transaction, Oasis shareholders will
`receive a special dividend of $15.00 per share. The combined company will have
`an enterprise value of ~$6.0B based on the exchange ratio and the closing share
`prices for Whiting and Oasis as of March 4, 2022. Upon completion of the
`transaction, Whiting shareholders will own approximately 53% and Oasis
`shareholders will own approximately 47% of the combined company on a fully
`diluted basis.
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`Upon closing, Whiting’s President and CEO, Lynn Peterson, will serve as
`Executive Chair of the Board of Directors of the combined company. Oasis’ CEO,
`Danny Brown, will serve as President and Chief Executive Officer and as a member
`of the Board. The combined company will be headquartered in Houston upon
`closing but will retain the Denver office for the foreseeable future. The combined
`company will operate under a new name and is expected to trade on the NASDAQ
`under a new ticker to be announced prior to closing.
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`“The combination will bring together two excellent operators with complementary
`and high-quality assets to create a leader in the Williston Basin, poised for
`significant and resilient cash flow generation,” said Mr. Brown. “Over the last year,
`both companies have executed a series of deliberate strategic transactions, reducing
`costs and establishing a leading framework for ESG and return of capital. The
`combination of the two companies, together with the ongoing momentum from
`these strategic actions, will accelerate our efforts and ideally position the combined
`company to generate strong free cash flow, execute a focused strategy and enhance
`the return of capital.”
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`Mr. Peterson added, “We are bringing together two like-minded companies and
`cultures through a merger-of-equals transaction. Both organizations have
`outstanding talent and operational practices that we are excited to integrate to create
`an even stronger combined company. This is also an exciting and very positive
`development for the communities in which we operate and the great states of North
`Dakota and Montana. We look forward to unlocking the enormous potential of our
`assets and organizations for the benefit of our stakeholders.”
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`Combined Company Positioned to Succeed in Dynamic E&P Environment
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`Premier Williston Basin Position with Enhanced Scale and Top Tier Assets.
`The combined company will be positioned as a premier operator in the Williston
`Basin, combining high quality assets with low breakeven pricing operated by an
`experienced team. The combined company expects to produce 164-169 Mboe/d in
`2022.
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`Accretive to Financial Metrics. The transaction is expected to be accretive to key
`per-share metrics, including: E&P cash flow, E&P free cash flow, return of capital
`and net asset value. The combination is also expected to enhance the combined
`company’s credit profile and cost of capital, as it will have enhanced scale and
`stronger cash flow while maintaining an attractive balance sheet with expected net
`debt to EBITDAX of ~0.2x at close.
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`Enhances Sustainable Free Cash Flow Profile. The combined company is
`expected to generate significant free cash flow from its high-quality assets and
`disciplined capital spending across a wide range of commodity price scenarios. The
`combined company expects approximately $1.2B of free cash flow and a
`reinvestment rate below 40% in 2022 at $85/bbl WTI and $3.50/MMBtu NYMEX
`gas.
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`Commitment to Enhanced Capital Return Program through Base Plus
`Variable Dividend Strategy and Share Repurchases. Shareholder returns will be
`central to the strategy of the combined company. During the second half of 2022,
`the combined company will target a return of capital program representing 60% of
`free cash flow. The combined company is expected to increase its aggregate base
`dividend at close to ~$25MM per quarter, or $0.585 per share, using variable
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`Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 5 of 10 PageID #: 5
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`dividends and share repurchases to return the full targeted amount. Both companies
`will continue their respective formally announced programs before the transaction
`closes. The combined company board is expected to establish a formal long-term
`return of capital program after close. Given the strong assets, significant free cash
`flow generation, capital discipline and excellent financial position of the
`organization, this program is expected to provide meaningful returns of capital to
`shareholders.
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`Delivers Significant Cost Saving and Operational Synergy Opportunity.
`Whiting and Oasis shareholders will each benefit from the significant upside
`potential created from identified administrative and operational cost synergies of
`$65MM on an annual basis by the second half of 2023. Both companies are industry
`leaders in operational excellence and will combine best practices to further advance
`efficiencies across operating expenses and capital expenditures.
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`Strong Financial Position and Relatively Unlevered Balance Sheet at Close.
`The combined company will have a peer-leading balance sheet with expected
`leverage of ~0.2x at close, including the impact of the merger consideration and
`special dividend. Additionally, the combined company expects to have minimal
`borrowings under its $900MM borrowing base, resulting in strong liquidity at
`close. The balance sheet is further bolstered by no near-term maturities.
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`Continued ESG Commitment. Together, the combined company will continue
`Whiting’s and Oasis’ existing ESG efforts, including applying best practices across
`both companies related to safety, gas capture and emissions reduction.
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`Governance and Leadership
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`Upon closing, the Board of Directors of the combined company will consist of ten
`directors, comprising four independent directors from the current Whiting Board,
`as well as Mr. Peterson, and four independent directors from the current Oasis
`Board, along with Mr. Brown.
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`The remainder of the company’s leadership team includes Michael Lou, Oasis’
`CFO, Chip Rimer, Whiting’s COO and Scott Regan, Whiting’s GC, who will serve
`in their respective capacities in the combined company.
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`Timing and Approvals
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`The transaction, which is expected to close in the second half of 2022, has been
`unanimously approved by the boards of directors of both companies. The closing
`of the transaction is subject to customary closing conditions, including, among
`others, approval by Whiting and Oasis shareholders.
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`Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 6 of 10 PageID #: 6
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`Advisors
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`Citi is serving as financial advisor and Kirkland & Ellis LLP is serving as legal
`advisor to Whiting. Tudor, Pickering, Holt & Co. and RBC Capital Markets LLC
`are serving as financial advisors and Vinson & Elkins LLP is serving as legal
`advisor to Oasis.
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`22.
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`On April 28, 2022, defendants filed the Registration Statement, which fails to
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`disclose material information regarding the Proposed Merger.
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`Financial Projections
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`23.
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`The Registration Statement fails to disclose material information regarding the
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`Company’s and Oasis’ financial projections, specifically: (i) the line items underlying the financial
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`projections; and (ii) net income.
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`24.
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`The disclosure of projected financial information is material because it provides
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`stockholders with a basis to project the future financial performance of a company, and allows
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`stockholders to better understand the financial analyses performed by the company’s financial
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`advisor in support of its fairness opinion.
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`Financial Analyses
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`25.
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`The Registration Statement omits material information regarding the financial
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`analyses conducted by Citi. When a banker’s endorsement of the fairness of a transaction is touted
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`to shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and
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`range of ultimate values generated by those analyses must also be fairly disclosed.
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`26.
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`Regarding Citi’s Selected Public Companies Analyses, the Registration Statement
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`fails to disclose the individual multiples and metrics for the companies utilized by Citi.
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`27.
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`Regarding Citi’s Net Asset Value Analyses, the Registration Statement fails to
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`disclose: (i) the inputs and assumptions underlying the discount rates utilized by Citi; (ii) the free
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`cash flows utilized by Citi; and (iii) the taxes and net debt utilized by Citi.
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`28.
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`Regarding Citi’s price target analyses, the Registration Statement fails to disclose:
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`(i) the price targets utilized by Citi; and (ii) the sources of the price targets utilized by Citi.
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`Banker Engagement
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`29.
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`The Registration Statement fails to disclose the fees received by Citi for the prior
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`services it performed for Whiting.
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`Background of the Proposed Merger
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`30.
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`The Registration Statement fails to disclose whether Whiting entered into any
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`NDAs containing don’t ask, don’t waive provisions.
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`31.
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`The Registration Statement fails to disclose the timing and details of all discussions
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`regarding post-Proposed Merger employment.
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`COUNT I
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`Claim Against the Individual Defendants and Whiting for Violation of Section 14(a) of the
`Exchange Act and Rule 14a-9
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`32.
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`Plaintiff repeats and realleges the above-referenced allegations as if fully set forth
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`herein.
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`33.
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`The Individual Defendants disseminated the false and misleading Registration
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`Statement, which contained statements that, in violation of Section 14(a) of the Exchange Act and
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`Rule 14a-9, in light of the circumstances under which they were made, failed to state material facts
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`necessary to make the statements therein not materially false or misleading.
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`34. Whiting is liable as the issuer of these statements.
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`35.
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`The Registration Statement was prepared, reviewed, and/or disseminated by the
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`Individual Defendants. By virtue of their positions within the Company, the Individual Defendants
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`were aware of this information and their duty to disclose this information in the Registration
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`Statement.
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`36.
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`The Individual Defendants were at least negligent in filing the Registration
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`Statement with these materially false and misleading statements.
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`37.
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`The omissions and false and misleading statements in the Registration Statement
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`are material in that a reasonable stockholder will consider them important in deciding how to vote
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`on the Proposed Merger.
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`38.
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`A reasonable investor will view a full and accurate disclosure as significantly
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`altering the total mix of information made available in the Registration Statement and in other
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`information reasonably available to stockholders.
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`39.
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`The Registration Statement is an essential link in causing plaintiff to approve the
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`Proposed Merger.
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`40.
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`Accordingly, defendants violated Section 14(a) of the Exchange Act and Rule 14a-
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`9.
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`41.
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`Plaintiff is threatened with irreparable harm.
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`COUNT II
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`Claim Against the Individual Defendants for Violation of Section 20(a) of the Exchange Act
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`Plaintiff repeats and realleges the above-referenced allegations as if fully set forth
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`42.
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`herein.
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`43.
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`The Individual Defendants acted as controlling persons of Whiting within the
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`meaning of Section 20(a) of the Exchange Act as alleged herein.
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`44.
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`Due to their positions as officers and/or directors of Whiting and participation in
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`and/or awareness of the Company’s operations and/or intimate knowledge of the false statements
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`contained in the Registration Statement, they had the power to influence and control and did
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`influence and control, directly or indirectly, the decision making of the Company, including the
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`Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 9 of 10 PageID #: 9
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`content and dissemination of the various statements that plaintiff contends are false and
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`misleading.
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`45.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Registration Statement alleged by plaintiff to be misleading prior to and/or shortly
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`after these statements were issued and had the ability to prevent the issuance of the statements or
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`cause them to be corrected.
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`46.
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`Each of the Individual Defendants had direct and supervisory involvement in the
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`day-to-day operations of the Company, and, therefore, is presumed to have had the power to
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`control and influence the particular transactions giving rise to the violations as alleged herein, and
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`exercised the same.
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`47.
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`The Registration Statement contains the unanimous recommendation of the
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`Individual Defendants to approve the Proposed Merger. They were thus directly involved in the
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`making of the Registration Statement.
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`48.
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`Accordingly, the Individual Defendants violated Section 20(a) of the Exchange
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`Act.
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`49.
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`The Individual Defendants had the ability to exercise control over and did control
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`a person or persons who have each violated Section 14(a) of the Exchange Act and Rule 14a-9, by
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`their acts and omissions as alleged herein.
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`50.
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`51.
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`These defendants are liable pursuant to Section 20(a) of the Exchange Act.
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`Plaintiff is threatened with irreparable harm.
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`PRAYER FOR RELIEF
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`WHEREFORE, plaintiff prays for judgment and relief against defendants as follows:
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`A.
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`Preliminarily and permanently enjoining defendants and all persons acting in
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`Case 1:22-cv-03044 Document 1 Filed 05/23/22 Page 10 of 10 PageID #: 10
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`concert with them from consummating the Proposed Merger;
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`B.
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`In the event defendants consummate the Proposed Merger, rescinding it and setting
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`it aside or awarding rescissory damages;
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`C.
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`Directing the Individual Defendants to disseminate a Registration Statement that
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`does not contain any untrue statements of material fact and that states all material facts required in
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`it or necessary to make the statements contained therein not misleading;
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`D.
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`Declaring that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act,
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`as well as Rule 14a-9 promulgated thereunder;
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`E.
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`Awarding plaintiff the costs of this action, including reasonable allowance for
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`attorneys’ and experts’ fees; and
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`F.
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`Granting such other and further relief as this Court may deem just and proper.
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`Plaintiff requests a trial by jury on all issues so triable.
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`JURY DEMAND
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`Dated: May 23, 2022
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`By:
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`GRABAR LAW OFFICE
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`Joshua H. Grabar (#5906953)
`One Liberty Place
`1650 Market Street, Suite 3600
`Philadelphia, PA 19103
`267-507-6085
`jgrabar@grabarlaw.com
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`Counsel for Plaintiff
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