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Former oil exec says company made allegations against him to distract shareholders

  • Author: Alex DeMarban
  • Updated: September 12, 2017
  • Published September 12, 2017

An independent company with a stake in a big Alaska oil discovery claimed in court that a former chief executive misspent its money by the millions, buying homes, flying friends around the world and financing a play in England.

But now the former executive, Paul Devine, says in his own lawsuit in U.S. District Court in Anchorage that the principals at NordAq Energy made up the allegations to "wrest control" of the company from him.

Their goal was distracting shareholders of the privately held company from the lost value that would have been theirs if the company had retained the full value of its leases at Smith Bay, where Dallas-based Caelus Energy in October announced a giant discovery, Devine's lawsuit asserts.

Devine is suing Nuoxin Co., the major shareholder in NordAq Energy and an affiliate of a Beijing investment company, according to the lawsuit, filed Sept. 1. Devine is also suing Doris Cheng, a Nuoxin representative and NordAq board member, and David Pfeiffer, a NordAq employee.

Devine asserts Nuoxin paid only $20 million of a $60 million obligation designed to help fund Nordaq's drilling plans at Smith Bay starting in late 2014. The lack of money forced Devine to raise large sums of money to rescue the company.

In response, Devine said, he worked out a $150 million deal giving much of Nordaq's stake in Smith Bay to Caelus. The deal made Caelus a 75 percent stakeholder in the so-called Tulimaniq leases, while NordAq retained 17.5 percent, far less than the value of the leases it once held.

In October, Caelus Energy heralded a giant oil discovery at Smith Bay, about 50 miles southeast of Barrow, saying the field could contain 6 billion to 10 billion barrels of light oil. The results of the drilling are confidential, and Caelus has delayed drilling a critical appraisal well it had planned for this winter, leaving the discovery unconfirmed.

In November and in February, Nordaq brought lawsuits in U.S. District Court in Anchorage claiming that Devine improperly spent at least $6.5 million, and that company founder Johnathon Kidd sometimes assisted him.

The lawsuits say that the two men improperly enriched themselves with lavish bonuses and other benefits, and used company money to help friends and family take vacations and pay school tuition.

NordAq asserted that Devine moved $5.3 million in nearly 200 wire transfers from NordAq bank accounts to his personal account. NordAq alleges that among other missteps, Devine improperly purchased flights for friends, bought homes and financed a stage production in London that Kidd was producing called "Yarico."

Funds owed and paid to Devine were for Devine's own use, his lawsuit argues.

Nuoxin's affiliate, Chinanx Huafu Investment Fund Management, agreed to invest in NordAq in 2014. A new board was formed at NordAq, leading to a review of company records, Kevin Clarkson, an Anchorage attorney representing NordAq, said in February. 

NordAq fired Devine and Kidd in summer 2015.

The lawsuit NordAq brought against Devine also names two other parties from the United Kingdom as defendants — Lothian Investment Partners and its sole shareholder, Andrew Knott.

In his lawsuit, Devine says the defendants are suing to distract NordAq shareholders after they lost "hundreds of millions" in value because Nuoxin didn't fulfill its commitment.

Devine says the defendants made their allegations based on false affidavits and misrepresentations in order to take the company from him. Devine, a British citizen and a U.S. resident, says the allegations in court have come as he battles near-terminal cancer in a hospital in the U.K.

Devine claims he is owed millions of dollars by NordAq Energy, including as part of an incentive compensation that gave him a 2.5 percent slice of the roughly $340 million he raised since joining Nordaq in 2010.

Devine, who had earned $300,000 in salary, asserts he is still owed at least $7.5 million for those efforts.

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