Oilman denies stealing 'secret recipes'

An employee allegedly downloaded millions of dollars worth of highly sensitive Tag Oil seismic and wellsite files shortly before leaving to join its competitor, New Zealand Energy Corporation, the New Plymouth District Court has heard.

James Winston Watchorn, who was working as a production manager for Tag Oil (NZ) Ltd two years ago, denies three counts of dishonestly accessing the exploration and production company's computer on June 7, 2012.

Watchorn downloaded onto his hard drive all Tag Oil's geoscience files which revealed where gas and oil reserves could be found, Crown solicitor Cherie Clarke told Judge Allan Roberts in the judge-alone trial which began yesterday.

During interviews with police he said he did a drag and drop of the Z drive on the Tag computer.

Watchorn knew at the time he had no authority to do it, particularly the geoscience data, Clarke said.

The "highly valuable information" had seismic information which Tag Oil's competitor NZEC was directly interested in, Ms Clarke said.

Two of Watchorn's folders which had the valuable geoscience data on it were hooked up to the NZEC computers.

However the Crown accepted there was no evidence that he copied that information to the NZEC computer, she said.

Defence counsel Susan Hughes QC said her client always acknowledged two substantial downloads on June 7 but he had not done so for an unlawful purpose.

Hughes said the Crown was required to prove whether he did so dishonestly and without claim of right.

When her client downloaded the information he honestly believed he had the right to do so because he was required to work while in Canada for five weeks while visiting his ill mother.

He had not realised the sensitive seismic information was on the Z drive.

There was no evidence he provided information to NZCE.

Hughes said she would be asking for the case to be discharged because there was no case to answer.

Tag Oil chief operating officer Edward Andrew Cadenhead told the court Tag was a very successful New Zealand-based oil and gas exploration and production company.

The company relied on critical seismic data (underground sound waves) to interpret where oil and gas reserves could be found.

Watchorn was aware that the oil industry was a highly confidential industry and any information belonged to the company and could not be used for any other purpose when an employee left.

Technical information was "absolutely confidential" and should not be divulged, Mr Cadenhead said.

Watchorn, an engineer on the production side of the operation, had little to do with exploration.

The accumulation of the geotechnical data gathered by Tag was the "secret recipe" used to find new gas and oil pools and Tag had proved a "bit of a success story" in finding gas through this data, he said.

Its first five wells brought in $59 million and the company was now worth hundreds of millions of dollars. "For a competitor to get their hands on the data would be a disaster for Tag," Mr Cadenhead said.

The relationship between Tag Oil and NZEC was not friendly and the employees were all told "don't help those guys".

NZEC, who "wanted to be the next Tag" was keen to find out what Tag's successful recipe was, he said.

To do this, NZEC had secured land, through the Government's permit system, next to Tag Oil's and was bidding for more permits.

As a company that had done the hard yards Tag did not welcome a direct competitor, Mr Cadenhead said.

Conversely, Tag saw long-term exploration companies such as Shell and Todd as their peers and not as competitors, he said.

In April and May 2012, Mr Cadenhead said Tag thought it had placed a successful bid for Origin property but found NZEC won the deal for a lower price.

Cadenhead said he was stunned until he found out the person he was dealing with was hired by NZEC "and it was clear in my mind it wasn't a straight deal".

After Watchorn, whom he had "trusted implicitly", left to go to NZEC Cadenhead said he realised Watchorn had downloaded Tag's entire data files along with "incredibly sensitive information". He started getting quite angry about it.

There were no security barriers to the information at that time but there were now "so it couldn't happen again".

In cross-examination, Cadenhead told Ms Hughes he was unaware that Watchorn sent 300 emails while on holiday in Canada.

Cadenhead agreed Watchorn was a diligent employee.

But when he emailed Watchorn and he said he did not have any of the company's information, only his own, Mr Cadenhead said: "I could see it was a blatant lie. He's not ‘fessing up."

Cadenhead agreed Tag had a $2.5m case going through the civil court but the information was confidential and he was still waiting for a response.

The trial continues today.

Taranaki Daily News