A legal battle over a small oil-drilling company is testing Mexico’s promises of greater transparency and competition made five years ago when the country opened its oil industry. The company, Oro Negro, filed for bankruptcy protection in Mexico last year after slumping crude prices prompted state oil company Petróleos Mexicanos to slash the day rates it pays drillers, and eventually cancel Oro Negro’s contracts. Now, U.S. shareholders of closely held Oro Negro accuse Pemex of fraud and discrimination in an arbitration complaint against Mexico under the rules of the North American Free Trade Agreement. The investors argue Pemex improperly terminated the company’s contracts, gave preferential treatment to rival drilling firm Seamex and conspired with holders of Oro Negro bonds to put the company out of business—allowing bondholders to seize its rigs—and hand its contracts to its competitor. The complaint says that because Pemex is a government entity, […]