SandRidge Energy's board has reviewed transactions between the company and CEO Tom Ward's family and found no wrongdoing, according to a statement Friday from the company's independent board members.
The statement came in response to a presentation posted online earlier in the week by activist investor TPG-Axon that claimed SandRidge has paid $9.5 million since 2008 to companies under Ward and his family's control. Another large shareholder, MountKellett Capital Management, has joined TPG-Axon in asking the board to further investigate the deals.
"The Board has reviewed issues related to these allegations several times over the Company's history and has found no wrongdoing to have taken place," the board members wrote in the statement.
However, they said they would consider TPG-Axon's request to have outside investigators examine the allegations.
TPG-Axon maintains that SandRidge improperly paid $3.9 million to TLW Land & Cattle LP, which Ward controls, and $5.6 million for royalties and leases to WCT Resources LLC, which is controlled by Ward's son, Trent.
The New York-based fund owns 6.7 percent of SandRidge shares and is pushing for an overhaul of company management, board and priorities. The fund has accused the Wards of profiting from insider knowledge by buying oil and natural gas leases and selling them shortly thereafter to SandRidge – a process called "flipping" or "front-running."
"In the case of SandRidge, our examination of the facts regarding related party transactions and competition cause us enormous concern, and lead us to question whether the company management and resources are focused exclusively on building shareholder value, or instead have also been used for the benefit of others, even sometimes in direct competition with the company," TPG-Axon wrote in the presentation.
TPG-Axon is in the process of asking SandRidge shareholders to remove Ward and replace the board with members of its choosing.
SandRidge denied that the companies profited from insider information. WCT Resources has independent mangers and no access to the company's acquisition plans, and the purchase of acreage and mineral rights from TLW Land & Cattle took place over many years and was properly disclosed to the board, according to the statement.
In a Jan. 18 letter to shareholders, SandRidge argued that TPG-Axon's nominees lack industry experience and electing them would violate debt covenants tied to change in company control. SandRidge also said that TPG-Axon has made "inflammatory and false statements" in order to take over the company and sell it.