Oil firm secures court orders
An Irish oil exploration company has secured court orders aimed at identifying people who allegedly posted defamatory material about it on internet message boards with a view to suing them following a "catastrophic" fall of £132 million in its market value in recent weeks.
It is claimed "wholly untrue" defamatory postings between November 8th and 22nd, including postings claiming the company's drilling project in Nevada, US, was a "scam" by "liars", materially contributed to its share price fall and damaged its company's reputation and ability to raise funds to exploit oil discoveries.
The market capitalisation of US Oil & Gas plc (USOP) on November 5th was £173 million when the share price was £4.15 and is now £41.6m with a share price of £1, the court heard.
Legal proceedings are intended against those who posted the material, Mr Justice Roderick Murphy was told. "There appears to be a view you can say what you like on the internet but that day is gone," Rossa Fanning, for USOP, said.
In an affidavit, Brian McDonnell, chief executive of USOP, said he has been involved in the oil and gas sector for up to six years and USOP, incorporated in Ireland in 2009, was a well-run, accountable and proper business formed to exploit the potential for substantial oil and gas finds in Nevada.
The material posted about USOP had had "a catastrophic effect" on his company's share price and individually and cumulatively alleged serious wrongdoing against himself and his company's employees, directors and officers, he said.
The gist of most of the statements was that he and USOP were engaged in a fraudulent attempt to induce investors to buy shares in a "sham" company, he said. It was also alleged he, the directors or their associates used insider information to trade in the shares and had manipulated company announcements to that end.
It cannot be acceptable that he could, in public, be called a "liar" or it could be alleged he was running a "ponzi scheme", was "corrupt" and "full of sh**" without an opportunity to know who was making such allegations so he could have those allegations deliberated upon in court, Mr McDonnell said.
To suggest without any evidence and falsely he was a "fraudster" and "ponzi scheme creator" was defamatory per se, he said. He had little option but to pursue the authors of such material through the courts.
Mr Fanning said the material complained of was posted on message boards on three websites - www.boards.ie operated by Boards.ie Ltd, an Irish company; www.iii.co.uk, operated by London South East Ltd, a UK company; and www.lse.co.uk, operated by two related companies, Interactive Investor Trading Ltd and Interactive Investor plc.
All the defendants had taken down the material when complaint was made, had behaved promptly and responsibly and his client had no issue with them but wished to get access to material aimed at identifying those who made the postings, counsel said.
Boards.ie Ltd had said it would provide IP addresses of those who posed the alleged defamatory material if the court ordered it to do so, he said. London South East Ltd had given a similar indication and, while Interactive had raised jursidcitional issues, it was not anticipated there would be a difficulty with that entity, counsel outlined.
Mr Justice Murphy said, having read the documents, he would make the orders directing the defendant companies to provide the information sought.
Earlier, Mr Fanning said USOP had acquired leases to drill in Hot Creek valley in Nevada and geological and other studies estimated 47 million barrels could be extracted at very low cost.
When listed on the GXG Markets, a Danish legal entity, in April 2012, the share price was 65 pence and it rose to a high of £6.20 in September 2012. On November 15th, USOP issued a press release confirming an oil discovery. By close of business on November 15th, the share price had fallen to 60 pence and was now Stg£1.
Over recent weeks, USOP was subject to a sustained attack by unknown persons on the message boards and believed the attacks materially contributed to the fall in its share price, he said.
In court documents, UPSOP said the boards.ie message board had, in 2008, claimed some 1.7 million visitors a month and 220,000 registered accounts while the iii.co.uk website, described as the UK's leading community of traders and investors, claimed its message board involved more people discussing UK investments and companies than any other website.
The lse.co.uk website, an independent share and general financial information website, has more than 82,000 members and contains a message board where members discuss companies and shares, USOP added.