On August 28, 2019, a Texas State Court jury found that Defendant Crimson Exploration Operating, Inc., a subsidiary of Contango Oil & Gas Co., breached its agreement with Plaintiff BHP Billiton Petroleum (TxLa Operating) Co. to pay 20% of the costs for drilling a horizontal Eagle Ford well in Bee County, Texas. BHP Billiton Petroleum (TxLa Operating) Co.—a subsidiary of BPX Energy Inc. and now known as BPX Operating Company—drilled the well with the Defendant’s consent, but the Defendant then refused to pay its joint interest billings because the well was not a success.
The jury found that the Defendant, a non-operator working interest partner, breached the contract by failing to pay more than $1.25 million in joint interest billings, rejecting a claim that the plaintiff operator failed to comply with its contractual obligations during drilling operations. The amount of prejudgment interest and attorney’s fees will be decided by the trial court at a later date.
Lead counsel Land Murphy, of Smyser Kaplan & Veselka said, “We are very gratified that the jury rejected the Defendant’s argument that it could refuse to pay its share under the parties’ industry-standard model form operating agreement by second-guessing operational decisions with the benefit of 20-20 hindsight.”
SKV attorneys Murphy, Sydney Scott, and Sam Jarvis represented the BPX Energy subsidiary in the five-day trial in Houston. The hotly-contested dispute dates back to the summer of 2012.
“After years of hard work by everyone on the trial team, we were able to tell our client’s story to a jury and obtain a complete victory,” said Jarvis.