Contract dispute between oil barons goes up to $1 billion
Contract disputes in California and other states can be small incidental matters dealing with a small amount of damages or they can be massive battles between big-money companies that may involve up to a billion dollars or more in damages. A case involving the latter type of contract dispute is being set for a jury trial, with disputes over oil contract interests and revenue rights that is potentially worth up to $1 billion. The plaintiff is Mesa Petroleum, and the defendants are four exploration and production companies.
Two legendary oil names are involved, with Mesa Petroleum being owned by T. Boone Pickens and one of the four defendants being the J. Cleo Thompson oil conglomerate. The critical contractual terms were purportedly discussed and/or modified by T. Boone Pickens and J. Cleo Thompson personally, two oil industry pioneers. Mesa’s main claim is that the parties were signatories to an investment contract giving Mesa the right to invest in various acquisitions of the defendants on an ongoing basis over a five-year period.
Mesa claims that it accepted all offers that were presented but that the defendants hid most of them, did not reveal the drilling of at least 166 wells, and kept the revenues and royalties for themselves. That allegedly resulted in the defendants’ pocketing nearly $1 billion in profits due and owing to Mesa. Jury selection will start shortly in the case in a Texas state court. The defendants are arguing that Mesa manifested an intention, through word and deed, not to be involved in the transactions any longer.
It is alleged that Mr. Pickens told Mr. Thompson that he would no longer pay for any past or future acquisitions and did not want to receive further notice. The defendants claim to have written evidence supporting those allegations. This is a straightforward contract dispute regarding whether Mesa did breach the agreement early on and whether it tried to get back on the bandwagon after the acquisitions began to be lucrative. The same contractual principles would govern a case like this if was being litigated in California.
Source: dallasnews.com, “Billion-dollar showdown: T. Boone Pickens vs. West Texas wildcatter“, Mark Curriden, Oct. 31, 2016
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