Class-action law firm Pomerantz has launched a suit against rig operator Valaris –formerly EnscoRowan – alleging that it misled investors about the risks it faced in the offshore E&P market.
Valaris was formed through the combination of Ensco and Rowan Drilling on April 11th and it is now the world’s largest offshore rig operator. The firm’s share price fell from $8 to less than $4 in the days after July 31st, when it issued its first-ever quarterly earnings report as a combined company. It booked a loss of $1.32 per share in Q2.
Pomerantz has alleged that the company misled investors by failing to disclose the state of the ultra-deepwater market segment, the rate of its cash usage and its negative cash flow. The class action further contends that the merger that created Valaris could not deliver on the advertised benefits.
Valaris noted in its second quarter statement that nearly all of the world fleet’s freshly-delivered new floaters were uncontracted, another 10 were due for delivery this year, and 20 more were under construction for the years ahead.
The lawyers said that the suit was open to anyone who bought shares of Valaris between April 11th and July 31st, the period between when Valaris was formed and when it issued its Q2 earnings statement.
Pomerantz won a $3bn class action lawsuit against Brazilian oil company Petrobras on behalf of a group of institutional investors.