By Neil Ritchie

CANADIAN James Watchorn, the production manager found guilty of stealing highly-confidential geoscience information from TAG Oil, has been ordered to pay more than NZ$70,000, with most of it going to his former employer.

Mr Watchorn was found guilty in the New Plymouth District Court earlier this year on three charges relating to the theft of hundreds of thousands of commercially sensitive files from the New Plymouth office of Canadian listed junior TAG Oil. However, he has yet to be sentenced by the court.

It is understood TAG also initially took two separate cases against Watchorn to the Employment Relations Authority (ERA), one for alleged professional negligence and the other for alleged breach of contract.

The ERA, on June 10, released its decisions regarding the TAG claims and ordered Watchorn to pay NZ$65,567 in special damages to TAG. But it also ordered TAG to pay Watchorn costs of NZ$6,500 after TAG withdrew its professional negligence claim seeking damages of NZ$2.5 million.

The ERA further ordered Watchorn to pay four penalties of NZ$3,000 each, half of which (NZ$6,000) was to be paid to TAG and half to the Crown.

The former production manager copied and took with him large amounts of data, much of it confidential and commercially sensitive, before he left TAG in July 2012, said the ERA.

And, after leaving TAG, Watchorn went to work for a direct competitor, fellow listed Canadian junior New Zealand Energy Corporation.

TAG chief operating officer Drew Cadenhead told the ERA of the “fiercely competitive” nature of the oil and gas business, and said the geophysical information contained in the data taken by Watchorn would be of “incalculable value” to a company like NZEC. However, he acknowledged there had been no evidence so far of “damage” caused to TAG by Watchorn taking the files.

Watchorn had earlier admitted downloading a large amount of TAG data to his laptop’s hard drive on 7 June 2012, the day before he flew to Canada for family reasons but said he downloaded the data in case he needed to access it for work purposes while on leave. While there he also met NZEC management to discuss work prospects.

On his return to New Zealand he gave TAG notice that he would be leaving the company and transferred the TAG data to a USB stick which he later took to NZEC’s New Plymouth office and used the memory device to access the confidential TAG data on his computer at NZEC.

He denied breaching the confidentiality provisions of his employment agreement with TAG and said he did not divulge the confidential information to anyone. He also denied breaching the termination provision that required him to return all property to his employer, saying he didn’t know the files he worked on during his employment were the company’s property.

However, ERA member Trish MacKinnon wasn’t convinced by this claim, or that Mr Watchorn had just been using the information for “templates”.

“Approximately 350,000 documents were captured in the dump of which, by Watchorn’s own estimate only 1000 would have been templates,” she said.

“Even if he genuinely believed he had an entitlement to templates, that left 349,000 documents to which he had no entitlement.”

But she did rule there was no evidence Watchorn had disclosed any of the information he took from TAG.

Watchorn had earlier, in the district court, denied three counts of stealing the computer files, which Cadenhead described as TAG’s “secret recipe” for finding oil and gas in Taranaki, including achieving 20 strikes from 20 wells, a success rate previously unheard of in New Zealand.

However, district court Judge Allan Roberts found Watchorn guilty, saying “I have no hesitation at all in determining that his actions in this regard were dishonest from the outset”.

This matter is highly unusual and very rare in the New Zealand energy sector. While a few companies have been litigious over the years, they have fought mostly over fields and who should control them or whether certain wells produce from their particular licence or from a competitor’s adjoining lease.