According to the Order entered on October 9, 2002, U.S. District Judge Vicki Miles-LaGrange granted the Plaintiffs’ motion for order for Distribution of Class Settlement Fund. Earlier, on July 16, 2001, the Court entered the Order and Final Judgment approving the Stipulation and Agreement of Settlement, dated April 9, 2001, as fair, reasonable and adequate for the settlement of all claims asserted by the Class against the Defendants in the Complaint. The Court granted Plaintiffs’ Counsel an award of attorney fees in the amount of $1,033,333.00 and $167,510.75 in reimbursement of expenses, paid from the Settlement Funds and with interest.
On May 7, 2001 Plaintiffs entered into a proposed settlement of this action that will resolve all claims of the plaintiffs and the Class against defendants. A Settlement Fund consisting of $3,100,000 in cash, plus interest, has been established.
The plaintiffs in this lawsuit purport to sue on their own behalf and on behalf of all persons who purchased shares of Common Stock on or traceable to the Initial Public Offering. In the lawsuit, plaintiffs allege claims under the Securities Act of 1933 and the Oklahoma Securities Act. The plaintiffs allege that the registration statement and prospectus for the Initial Public Offering contained materially false and misleading information and omitted to disclose material facts. In particular, the plaintiffs allege that such registration statement and prospectus failed to disclose financial difficulties of Chesapeake, the Company's largest customer, and the effects of such difficulties on Chesapeake's ability to continue to provide the Company with substantial drilling contracts. The petitions further allege that the Company failed to disclose pre-offering negotiations with R.T. Oliver Drilling, Inc., whom the plaintiffs allege was a related party, for the purchase of drilling rigs. In addition, the petitions allege that the Company failed to disclose that its growth strategy required costly refurbishment of older drilling rigs that would dramatically increase the Company's costs, which could not be sustained by internally generated cash flows, and would negatively impact the Company's liquidity.