BakerHostetler Team Secures $74 Million Judgment for Castex Energy Partners

News / June 3, 2019

After a month-long trial, on April 12, 2019, in District Court of Harris County, Texas, a 12-person jury awarded Castex Energy Partners and related entities more than $74 million in damages based on a counter claim asserted against Apache Corporation. The damages are related to cost overruns of a gas processing facility for one of the largest gas fields in South Louisiana, the drilling of a gas well which required five sidetracks and cost $25 million more than promised and Apache’s willful misconduct both in its management of the processing facility construction and in the drilling of the gas well, which resulted in ruining a well and damaging a major gas reservoir.

The lawsuit involved Apache and Castex’s joint ownership of oil and gas assets in the Atchafalaya Bay area in South Louisiana. Apache filed the lawsuit alleging that Castex owed over $18 million in unpaid joint interest billings related to the Atchafalaya Bay properties. 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 be unrecoverable.

Castex was represented by litigation and energy industry attorneys from BakerHostetler. The trial team was led by partner W. Ray Whitman, and included partner Joshua C. Thomas and associates Kristen H. Luck and Sushant Mohan. Partner Glen Shu assisted the team with appellate issues and preparation of the jury charge. Additional support was provided by associate Daniella Martinez and paralegal Carol Goehrs.

Upon the issuance of the jury verdict, Ray Whitman, the chair of BakerHostetler’s national Litigation Group, said, "We want to thank the jury for being so attentive in working through a number of incredibly complex and technical issues in arriving at the right decision in this case. We are also appreciative of our clients at Castex for their confidence and determination to pursue this case through a long trial in order to recover their damages."

The month-long trial included testimony from numerous experts and fact witnesses, including Apache’s current and former CEO.

“This is an especially satisfying outcome considering that we were not only able to defeat Apache’s initial claims, but Castex succeeded in its counterclaims,” added Whitman.

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