Embattled US independent Alta Mesa Resources confirmed last week it is being investigated by federal securities regulators as the company faces accusations from investors that it lied about the value of its assets to drum up support.

In its annual report filed last week, the Anadarko basin-focused player said the US Securities and Exchange Commission was looking into "the facts involved in the material weakness in our internal controls over financial reporting" as well as a fourth-quarter 2018 impairment charge of $2 billion.

An SEC spokesman declined comment.

"At this point we are unable to predict the timing or outcome of this investigation," the company said. "If the SEC determines that violations of the federal securities laws have occurred, the agency has a broad range of civil penalties and other remedies available, some of which, if imposed on us, could be material to our business, financial condition or results of operations."

The investigation was disclosed following the filing of a lawsuit in US District Court in Texas accusing Alta Mesa and its predecessor entity, Silver Run Capital II, of misleading investors about the value of the company's assets.

Anadarko basin-focused Alta Mesa, along with pipeline operator Kingfisher Midstream, was acquired in 2018 by Silver Run for $3.8 billion.

Under the terms of the deal, Silver Run was renamed Alta Mesa Resources and began trading on the Nasdaq stock exchange.

However, in the lawsuit, investors said a January 2018 proxy statement recommending shareholders approve the deal included false and misleading information.

As a result, the company failed to perform as expected, with disappointing results in the quarters following the February 2018 acquisition weighing on Alta Mesa's share price, according to the suit.

"The value of the Silver Run II securities held by plaintiff and other members of the class declined substantially in value subsequent and due to the approval of the acquisition, causing economic loss and damages as the truth about Alta Mesa and Kingfisher and the defendant’s false and misleading statements, including those in the proxy, were revealed slowly over time," according to the suit.

"By February 2019, the price of Silver Run II Class A common stock had fallen astronomically from a class period high of $10.73 per share, trading at well below $.50 per share."

In the annual report filed last week, Alta Mesa noted its financial difficulty and said the company had "substantial doubt" about its ability to continue as a going concern.

"Our parent’s board of directors and its financial advisors are evaluating the financial alternatives available to it, including, without limitation, seeking amendments or waivers to the covenants or other provisions of our indebtedness, raising new capital from the private or public markets or taking other actions to address our capital structure," the company said.

The company last month hired Perella Weinberg Partners and Tudor Pickering Holt as financial advisors to evaluate potential alternatives.

The company is also in danger of losing its Nasdaq listing for delays in filing its 2018 annual report as well as the filing of its first-quarter 2019 report.

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Alta Mesa hit by SEC probe