» Texas jury awards $100 million in lawsuit between oil companies over underpayments under joint operating agreement

Texas jury awards $100 million in lawsuit between oil companies over underpayments under joint operating agreement

A Texas jury issued an award of $100 million in a lawsuit between two oil companies.

Jurors found that Talisman Energy USA, a Canadian firm, underpaid Matrix Petroleum of Houston and breached a joint operating agreement for gas and oil production in the Eagle Ford Shale. Talisman was acquired by Repsol in 2015 and is now called Repsol Oil & Gas USA.

The joint operating agreement dates back to 1954 and governs drilling and production on 12,600 acres of the Cooke Ranch. Talisman acquired its interest in 2010, along with its joint venture partner Statoil. Matrix was a non-operating partner, but the lawsuit alleges that Matrix was treated as a passive investor instead, with Talisman assuming unilateral control and breaching governing documents related to Cooke Ranch operations.

According to the complaint, an early dispute arose when Talisman drilled wells on a nearby property within 100 feet of the Cooke Ranch, without drilling an offset well on Cooke Ranch as required by the lease. The lawsuit also claimed that Talisman used improperly sized meters which failed to accurately measure the gas and oil produced from the Cooke Ranch field, resulting in Matrix not being paid for all of the gas and oil that Talisman produced from the well. The complaint alleged that Talisman sold the gas and oil to a third party, profiting from the difference. Repsol is expected to appeal the verdict.

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