Case 4:12-cv-00900 Document 69 Filed in TXSD on 07/20/12 Page 1 of 124 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re ANADARKO PETROLEUM Lead Case No. 4:12-CV-00900 CORP. CLASS ACTION LITIGATION Honorable Keith P. Ellison FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP John C. Browne Jeremy P. Robinson Brett Van Benthysen 1285 Avenue of the Americas New York, NY 10019 Telephone: (212) 554-1400 Facsimile: (212) 554-1444 Attorneys for Lead Plaintiffs Case 4:12-cv-00900 Document 69 Filed in TXSD on 07/20/12 Page 2 of 124 TABLE OF CONTENTS PAGES I. NATURE OF THE ACTION .............................................................................................. 1 II. JURISDICTION AND VENUE .......................................................................................... 9 III. PARTIES ............................................................................................................................. 9 A. Lead Plaintiffs ......................................................................................................... 9 B. Defendants ............................................................................................................ 10 1. Anadarko...................................................................................................10 2. The Individual Defendants ........................................................................ 10 C. Relevant Non-Parties ............................................................................................ 11 IV. BACKGROUND ............................................................................................................... 12 A. Anadarko Touts Itself As The “Premier Deepwater Producer In The Gulf Of Mexico” And Assures Investors That A “Safety First Culture Is A Way Of Life At Anadarko” ........................................................................................... 12 B. Anadarko And BP Become Co-Owners Of The Macondo Oil Well And Anadarko Is Provided With Detailed Information Regarding The Well ............. 14 V. DRILLING THE MACONDO OIL WELL ...................................................................... 25 A. Overview Of The Deepwater Drilling Process And The Initial Plan For TheMacondo Well ............................................................................................... 25 B. Anadarko And BP Start Drilling The Macondo Well And Immediately Encounter Significant Delays And Additional Costs ............................................ 26 C. “The Nightmare Well”: Faced With Extensive Delays And Millions Of Dollars Over-Budget, Anadarko and BP Sacrifice Safety In Order To Reduce Costs And Save Time ............................................................................... 28 1. Anadarko Approved The Use Of A Less Safe Well Casing Design That Saved Time And Money ................................................................... 30 2. Anadarko Approved The Use Of A Dangerously Small Number Of Well Casing Centralizers In Order To Save Time: “Who Cares, It’s Done, End Of Story, [It] Will Probably Be Fine” .............................. 36 3. Anadarko Approved The Failure To Conduct Proper Cement Circulation Or Properly Test The Cement Job ......................................... 39 Case 4:12-cv-00900 Document 69 Filed in TXSD on 07/20/12 Page 3 of 124 VI. THE DEEPWATER HORIZON RIG EXPLODES AND THE MACONDO CO- OWNERS ARE UNABLE TO STEM THE FLOOD OF OIL GUSHING INTO THEGULF OF MEXICO ................................................................................................ 43 A. The Explosion And Fire On The Deepwater Horizon ..........................................43 B. The Macondo Co-Owners Are Unable To Contain The Oil Spill For Months.................................................................................................................. 44 C. The Woefully Deficient And Materially False And Misleading Oil Spill Response Plan And Exploration Plan ................................................................... 47 1. Government Regulations Required An OSRP And EP To Be Publicly Filed for the Macondo Well ........................................................ 47 2. The OSRP and EP Were Materially False ................................................ 50 VII. THE TRUTH IS REVEALED ........................................................................................... 54 VIII. DEFENDANTS’ MATERIALLY FALSE AND MISLEADING STATEMENTS DURING THE CLASS PERIOD ..................................................................................... 67 B. Defendants’ Materially False And Misleading Statements In The OSRP and EP ................................................................................................................... 67 C. Defendants’ Materially False And Misleading Statements Published On Anadarko’s Website Throughout The Class Period .............................................. 70 D. Defendants’ Materially False And Misleading Statements Made During The Second Quarter Of 2009 ................................................................................ 73 E. Defendants’ Materially False And Misleading Statements Made During The Third Quarter Of 2009 ................................................................................... 73 F. Defendants’ Materially False And Misleading Statements Made During The Fourth Quarter Of 2009 ................................................................................. 75 G. Defendants’ Materially False And Misleading Statements Made During The First Quarter Of 2010 ..................................................................................... 79 H. Defendants’ Materially False And Misleading Statements Made During The Second Quarter Of 2010 ................................................................................ 83 IX. ADDITIONAL ALLEGATIONS CONFIRMING ANADARKO’S WILFUL OR RECKLESS MISCONDUCT AT THE MACONDO WELL .......................................... 88 A. Defendants Acknowledge That Recklessness Or Willful Misconduct Caused The Macondo Disaster ............................................................................. 88 ii Case 4:12-cv-00900 Document 69 Filed in TXSD on 07/20/12 Page 4 of 124 B. Anadarko Willfully Or Recklessly Ignored BP’s Abysmal Safety Record .......... 89 C. Anadarko Is Sued By The U.S. Government For Its Role In The Disaster .......... 94 D. Numerous Investigations Confirm That The Spill Was Preventable And Resulted From Reckless Decisions Made To Save Time And Money ................ 96 E. Anadarko Sues BP And Admits That The Macondo Well Disaster Was Caused By A Series Of Deliberate Or Reckless Decisions Onboard The DeepwaterHorizon ............................................................................................. 101 F. Anadarko Pays $4 Billion To BP To Settle Macondo-Related Claims .............. 103 X. ADDITIONAL SCIENTER ALLEGATIONS ................................................................ 103 XI. LOSS CAUSATION ........................................................................................................ 106 XII. CLASS ACTION ALLEGATIONS ................................................................................ 111 XIII. INAPPLICABILITY OF THE STATUTORY SAFE HARBOR ................................... 113 XIV. PRESUMPTION OF RELIANCE ................................................................................... 114 XV. CLAIMS FOR RELIEF UNDER THE EXCHANGE ACT............................................ 115 COUNT ONE FOR VIOLATION OF SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 PROMULGATED THEREUNDER AGAINST ALL DEFENDANTS.............................................................................................................. 115 COUNT TWO FOR VIOLATIONS OF SECTION 20(A) OF THE EXCHANGE ACT AGAINST INDIVIDUAL DEFENDANTS ................................................................... 118 DEMAND FOR JURY TRIAL .................................................................................................. 119 PRAYER FOR RELIEF ............................................................................................................. 119 iii Case 4:12-cv-00900 Document 69 Filed in TXSD on 07/20/12 Page 5 of 124 Court-appointed Lead Plaintiffs, the Pension Trust Fund for Operating Engineers and the Employees’ Retirement System of the Government of the Virgin Islands (collectively, “Lead Plaintiffs”) bring this consolidated class action alleging violations of the federal securities laws on behalf of themselves and all other persons and entities, other than Defendants, their affiliates, and BP (defined below in ¶29), who purchased or otherwise acquired the publicly-traded securities of Anadarko Petroleum Corporation (together with its affiliates, including Anadarko E&P Company, LP, “Anadarko” or the “Company”) between June 12, 2009 and June 9, 2010 (the “Class Period) and were injured thereby. I. NATURE OF THE ACTION 1. This securities class action arises out of one of the largest environmental catastrophes in United States history. The April 20, 2010 explosion and fire on board the Deepwater Horizon oil-rig, located forty-nine miles off the Louisiana coast in the Gulf of Mexico, killed eleven people and injured dozens more. The resulting oil spill from the ruptured Macondo well lasted approximately 87 days and leaked approximately 206 million gallons of crude oil into the Gulf of Mexico, polluting hundreds of miles of beaches,