The Hong Kong Stock Exchange censured CHK Oil (HKG:0632) and its former executive director, chief executive officer, and chairman, Yu Jiyuan, over disclosure failures related to terminated U.S. oil and gas leases, according to a Tuesday regulatory statement.
Shares of the oil company were down 37% in Wednesday's late-morning trade.
The exchange also issued a "prejudice to investors' interests" statement against Yu, saying his continued role as a director or senior manager of the company or its subsidiaries may harm investors.
The disciplinary action relates to the termination in November 2022 of certain U.S. oil and gas leases held by a subsidiary after it failed to comply with government orders to restore production.
Yu was aware of the orders and the termination but did not inform the company's board, audit committee, or auditors for more than two years, the exchange said.
As a result, the company continued to include the terminated leases in its financial statements, leading to materially inaccurate results and reports for 2022 and 2023.
The leases accounted for about 40% of the group's total assets in 2022, and their inclusion caused total assets to be overstated by about 65.5% in 2022 and 58.1% in 2023, the statement said.
The company only disclosed the termination in September 2024 after the board became aware of the issue a month earlier and restated the affected financial results.
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