UPDATE 1-SandRidge board finds no wrongdoing in land deals of CEO, family
NEW YORK Jan 25 (Reuters) - SandRidge Energy Inc's board said Friday it reviewed land deals involving entities controlled by Chief Executive Tom Ward and his family and found no wrongdoing.
The company said in a statement its independent directors would consider requests from two activist investors - who are already working to have Ward removed - to hire outside investigators to look into the charges.
Hedge fund TPG-Axon, one of SandRidge's top investors, had alleged that WCT Resources, an Oklahoma company run by Ward's son Trent, had run ahead of the company to acquire land, later flipping that land to SandRidge or other oil and gas companies.
Another top shareholder, Mount Kellett Capital Management, joined TPG-Axon in urging the board to further investigate the land deals.
Ward is under fire from the two investors, who had asked him to step down based on the company's performance before making the charges relating to the land deals.
TPG-Axon has also launched an effort to have the company's board replaced.
The hedge fund released a presentation earlier this week describing land deals in the Mississippian rock formation that spans northern Oklahoma and southern Kansas made by WCT Resources and other entities controlled by Ward and his family.
SandRidge has paid WCT - which is owned by trusts benefiting Ward's three adult children - around $5 million since 2008 to lease property and for royalties on wells operated by SandRidge on WCT's land, according to an analysis of SEC filings.
The investor presented examples where WCT bought mineral rights months before SandRidge would buy up the rights to adjacent acreage.
TPG-Axon said then that the dealings "cause us enormous concern, and lead us to question whether company management and resources are focused exclusively on building shareholder value, or instead have also been used for the benefit of others."
The SandRidge board disputed the hedge fund's charges.
"TPG-Axon goes to great lengths to establish that WCT Resources owns leasehold acreage adjacent to acreage held by the company," SandRidge said in the statement, noting that it owns interests covering nearly a third of the 17 million acres in the Mississippian.
"Virtually all companies active in the play are likely to have some interests that could be characterized as adjacent to the Company's holdings," it said.
The company also defended its dealings with TLW Land & Cattle, a ranching operation in which Ward has an ownership stake. SandRidge has paid TLW Land & Cattle around $3.9 million since 2008.
It said that TLW acquired most of its property before 2009, more than a year before SandRidge had active operations in the region.
It said that all of the company's related party transactions are reviewed and approved by disinterested members of the company's board.
SandRidge shares rose 6 cents to $7.11 on the New York Stock Exchange on Friday.