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Gulf Keystone Sues Over Blog Posts That Moved Shares

Gulf Keystone Petroleum Ltd. (GKP) got an injunction blocking a man from writing about the company after his comments on Internet message boards and Twitter caused its shares to fall.

Spencer Freeman’s posts about a deal with Exxon Mobil Corp. (XOM) and a potential share sale were “fantasy,” according to court documents. The result was that Gulf Keystone’s “share price collapsed” and it had to spend time “dealing with disgruntled investors and press inquiries,” the company’s lawyers said.

Freeman agreed to a court order not to write false or derogatory posts and, as a result, Gulf Keystone will drop its May 11 lawsuit against him for defamation and malicious falsehood, the company’s lawyer Matthew Nicklin said at a hearing in London today.

The company, which has wells in northern Iraq, said in a May 10 statement it would take legal action to prevent “unfounded speculation” on websites and social-media sites about the possibility it would raise money by selling equity at 160 pence a share. Gulf Keystone began London trading on May 1 at 242 pence and traded as high as 450 pence in February.

An account on Twitter Inc. (TWTR)’s micro blogging service in the name of Spencer Freeman has been deactivated. The user wrote about a potential placement of new Gulf Keystone shares, and an unannounced takeover bid by Exxon, according a history of the posts on social-media research site operated by Topsy Labs Inc. A “Spencer PR Freeman” also commented about the company on investor message boards.

‘Contempt of Court’

Freeman declined to comment outside court.

“If you break this undertaking, that’s contempt of court,” Judge David Bean warned him. “The other side can apply for an order committing you to prison.”

Gulf Keystone said in the May 10 statement there were no plans for an institutional fundraising.

The company, based in Bermuda and listed in the U.K., has been the subject of merger speculation in British newspapers after finding what it said was as much as 10 billion barrels of oil in the Shaikan field in the Kurdistan region of Iraq. It has promised to reward employees with a total of 10 million new shares if half the company or its assets were sold. Chief Executive Officer Todd Kozel would get 300,000 shares in a so-called exit event.

Jane Marsden, a lawyer for Gulf Keystone, didn’t immediately comment on the injunction when contacted by e-mail. Alan Jeffers, an Exxon spokesman, declined to comment.

Anonymous Bloggers

Shares of the company rose less than 1 percent, to 192.5 pence in London trading at 1:36 p.m.

Companies in the U.K. can obtain court orders forcing websites to reveal the details of anonymous bloggers who post defamatory material. In 2010, oil firm Nighthawk Energy Plc (HAWK) said it had won a ruling forcing websites Interactive Investor and ADVFN to provide information about comments that were “extremely damaging to the company and its reputation.”

Christopher Hamilton, a spokesman for the U.K. Financial Services Authority, said the regulator was aware of Spencer Freeman’s comments. He declined to comment further.

The case is: Gulf Keystone Petroleum Limited v. Spencer Freeman, High Court of Justice, Queen’s Bench Division, HQ12D01817.

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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