We are pleased to present Baker Botts’ Annual Review of Securities Class Action Litigation in the Energy Industry.

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Energy industry companies face potential exposure to securities class actions when market-moving events, regulatory challenges, project-related setbacks, and other disruptions cause stock price declines. Given these dynamics, energy companies remain regular targets for shareholder lawsuits. But energy companies achieved favorable outcomes in many cases in 2024.

Key findings from our Review include:

• Energy industry filings increased notably in 2024. Energy companies faced 15 new federal securities class action complaints in 2024, consistent with longer-term trends but a significant increase from the reduced number of filings in recent years.
• Event-driven cases dominate new filings. Many recent securities complaints arose from discrete, adverse events unrelated to traditional financial reporting issues, such as environmental events and incidences, regulatory shifts, and project delays impacting operations.
• In recent years, energy-industry defendants have achieved strong litigation outcomes in securities cases. Over the past decade, energy-industry defendants prevailed—either obtaining dismissal or summary judgment—in roughly 60% of resolved cases. The remainder ended in settlement. No energy cases have been tried to verdict during this period.
• In 2024, the average value of settlements in securities class action involving energy companies was $18 million, slightly lower than the average settlement amount for all securities class actions, below the broader securities litigation average. The median time from filing to settlement exceeded four years, consistent with historical patterns.

Our Review also highlights recent federal court decisions establishing valuable precedents for energy companies and others defending against securities claims:

• Pure omissions are not actionable: The Supreme Court reaffirmed that securities fraud claims must identify affirmative misleading statements; mere silence on certain risks does not constitute securities fraud.
• Protections for forward-looking statements remain strong: Courts continued to enforce the safe harbor for “forward-looking” statements, offering robust defense against claims premised projections or failure to predict future adverse events.
• Courts continued to recognize that broad aspirational statements about issues such as corporate values or safety commitments are too generalized to support securities fraud claims.

We hope our Review will help management, in-house counsel, and other stakeholders in the energy industry navigate the securities litigation landscape, identify sources of litigation risk, and strengthen their defense strategies.

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.