$74 million win for energy client

Castex Energy Partners hoped to develop one of the largest gas fields in south Louisiana, a field shared with Apache Corporation in the Atchafalaya Bay area. But when the relationship went south, Castex found a teammate that truly had its best interests at heart: BakerHostetler. We recovered more than $74 million for Castex in a case involving Apache’s willful misconduct in the construction of a gas processing facility and the drilling of a once-promising gas well.

Apache sued Castex, claiming it owed more than $18 million in unpaid joint interest billings. Castex filed a counterclaim, asserting that due to Apache’s gross negligence and willful misconduct as operator, the construction cost of the gas processing facility and associated pipelines exceeded the authorized budget amount by more than $100 million (of which Castex paid 25 percent). Castex also alleged that Apache was grossly negligent and engaged in willful misconduct when it drilled and completed an oil and gas well in the field. Despite expectations that the well would produce billions of cubic feet of gas, it watered out mere weeks after completion, and Castex alleged that cross-flow of water from high-pressure water-bearing zones into a productive gas zone caused billions of cubic feet of gas to become unrecoverable. To prevail, the BakerHostetler team had to meet the unusually high standard of proving gross negligence or willful misconduct.

After a monthlong trial, a Harris County, Texas jury found that Apache was responsible for construction cost overruns, excess costs incurred in drilling the gas well and damage to the gas reservoir, along with Castex’s attorneys' fees and certain unpaid bills owed to a related entity. The judgment is expected to be one of the largest in Texas this year.