July 20, 2012
Bernstein Liebhard LLP today announced that a securities class action lawsuit has been commenced in the United States District Court for the Northern District of Texas on behalf of a class (the “Class”) of purchasers of Kosmos Energy, Ltd. (“Kosmos” or the “Company”) common stock pursuant and/or traceable to the initial public offering on or about May 12, 2011 (the “IPO”) through November 10, 2011.
The complaint charges Kosmos, certain of its officers and/or directors and the underwriters of its May 12, 2011 IPO with violations of the Securities Act of 1933. Kosmos is an oil and gas exploration company that focuses its exploration efforts almost entirely on the Jubilee oil field located in deep water off the coast of the Republic of Ghana.
The complaint alleges that in 2007, Kosmos entered into partnership with several other gas exploration companies to share the costs of developing the Jubilee oil field. Kosmos and its partners agreed to spend over $3.3 billion to develop the Jubilee oil field, which was projected to produce 120,000 barrels of oil per day (“BOPD”) by the third quarter of 2011.
On or about April 25, 2011, Kosmos filed with the SEC the Form S-1/A Registration Statement for the IPO. On or about May 12, 2011, the Prospectus with respect to the IPO, which forms part of the Registration Statement, became effective and 34,518,242 shares of Kosmos common stock (including partial exercise of the over-allotment) were sold to the public at $18.00 per share, thereby raising more than $620 million.
According to the complaint, the Registration Statement and Prospectus were negligently prepared and, as a result, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading and were not prepared in accordance with the rules and regulations governing their preparation. Specifically, the Registration Statement and Prospectus misstated, at the time of the IPO, the progress the Company had made in developing the Jubilee oil field. The statements in the Registration Statement and Prospectus were materially false because, at the time of the IPO, gross oil production from the Jubilee field was not on track to reach its design capacity of 120,000 BOPD by the third quarter of 2011. Rather, several of the Jubilee oil wells were not producing as expected due to design defects with the oil wells – defects which existed at the time of completion and pre-dated the IPO. These design defects would cost Kosmos hundreds of millions of dollars to remediate, and would keep the Jubilee oil wells from producing as expected for several years. None of this was reported in the Registration Statement and Prospectus.
Investors first began learning the truth about the Jubilee oil field on July 5, 2011, when one of Kosmos’s partners, Tullow Oil, issued a press release announcing that production from the Jubilee oil field was flowing at 80,000 BOPD, which was 40,000 barrels below the anticipated 120,000 BOPD.
Investors received more bad news about the Jubilee oil wells in August 2011, when Tullow Oil announced that production from the Jubilee oil field was flowing and was projected to remain at the 82,000-84,000 BOPD range, not the 120,000 BOPD range that Kosmos reported in the Registration Statement and Prospectus.
Then, on November 10, 2011, Kosmos finally addressed the problems with the Jubilee oil wells in the Company’s third quarter 2011 earnings release. Kosmos stated cryptically that it had “identified completion issues [that] require one of the producing wells to be sidetracked, as well as downhole remediation on certain other wells.” In response to the disclosure of the problems with the Jubilee oil wells, the price of Kosmos stock fell approximately 25% from the IPO price of $18 per share to trade in the $13 per share range.
Plaintiffs seek to recover damages on behalf of all Class members who purchased or otherwise acquired Kosmos stock during the Class Period. If you purchased or otherwise acquired Kosmos stock during the Class Period, and either lost money on the transaction or still hold the shares, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than September 10, 2012.
A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.
If you are interested in discussing your rights as a Kosmos shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or firstname.lastname@example.org.
Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3 billion for its clients. It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last nine years.
You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Northern District of Texas.