NORTH Sea-focused Ithaca Energy has become embroiled in a legal dispute connected to the giant Greater Stella Area oil development off eastern Scotland.
Aberdeen-based Ithaca said it has received a Statement of Claim regarding the alleged misrepresentation of the past schedule for completion of work on the production facility that will be used on the field.
The expected date of first oil from Greater Stella has been put back following delays in completion of work on the FPF-1 facility.
Ithaca said it vigorously refuted any such allegations and strongly denies any suggested wrongdoing.
The Canada-registered company said it had received a claim from a law firm that advertises itself as undertaking investor lawsuits, which it did not identify.
A Canadian law firm, Morganti Legal, confirmed it had launched a class action in Calgary.
In a claim filed against Ithaca and its chief executive Les Thomas on Tuesday May 26, it is alleged that class members suffered damages as a result of misrepresentations made by the defendants.
The plaintiff in the claim is named as Andre Demers, who bought 21,000 shares in Ithaca in December and sold them in March.
Westhouse Securities said it is unclear how material the claim is.
Morganti Legal said in March it was investigating whether Ithaca's views about the completion date for the FPF-1 production facility were "overly optimistic".
The company's Andrew Morganti said yesterday he had been contacted by investors that claimed they had lost capital after Ithaca issued an update regarding Stella on 25 February.
Ithaca said in the February announcement that the expected start of production from Stella had been put back to the second quarter of 2016.
The company said then the schedule had changed following delays in work on the FPF-1 production facility. Petrofac is managing work on the FPF-1 facility, which is being completed in Poland.
Shares in Ithaca closed down around 30 per cent in London on the day of the announcement, at 46.75p. Ithaca is also listed in Toronto.
In January Ithaca said it expected work on FPF-1 to be complete in time for production from Stella to start in the third quarter of 2015. In May last year Ithaca had said the expected start of production would be delayed to mid-2015, from the end of 2014, as work on FPF-1 was progressing more slowly than planned.
The claim filed in Calgary alleges: "During the Class Period (12 August 2014 to 25 February 2015) Ithaca recognised or negligently failed to recognise a trend of discrepancies between the actual status of the FPF-1 modification program and that represented to investors and in the company's press releases and MD&As (Management's Discussion and Analysis) dated January 12,2015, November 13, 2014 and August 12, 2014. This failure resulted in the Defendants publishing misrepresentations by way of announcing 2015 pro forma hydrocarbon production and revenue projections for the GSA that they knew or ought to have known could not be achieved."
In an announcement to the London Stock Exchange, Ithaca said: "The Company will be taking all necessary legal measures to defend itself against the Statement of Claim."
Shares in Ithaca closed down 0.25p in London at 52p.
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