MehaffyWeber Prevails In Appeal For Oil and Gas Exploration Client

MehaffyWeber successfully appealed a lower court judgment on behalf of an oil and gas exploration company regarding a breach of contract dispute.

Firm attorneys David Gaultney and Corey Seel represented U.S. KingKing LLC, a limited liability company, which is a member of Amerril Energy LLC. Amerril is involved in oil and gas exploration, and it owns and operates mineral interests located throughout Texas. Companies Precision Energy Services, Inc., Weatherford International Inc., Weatherford US LP, Weatherford Laboratories Inc., and Weatherford Artificial Lift System LLC (collectively, “Weatherford”) alleged breach of contract and fraud against Amerril and sought to hold KingKing responsible for the debts of Amerril under alter ego theories of liability.

In early 2013, KingKing was the leaseholder and Amerril was the operator of the Seale 1H well located in Leon County, Texas. Amerril required goods and services to assist in drilling the well, and its engineers identified Weatherford as a company that could provide these goods and services.

The materials Weatherford provided for the well included cement plugs used in fracturing the well and a mud motor used in drilling operators. Around April 2013, the plugs and the mud motor allegedly failed, causing a delay in drilling operations and damage to the well. Weatherford continued providing labor and materials to Amerril, but Amerril failed to pay multiple invoices from each of the Weatherford entities that provided goods and services.

Weatherford alleged KingKing was responsible for Amerril’s breach of contract, even though these are separate entities, under the legal theory that KingKing was the alter ego of Amerril.

Weatherford alleged KingKing used Amerril to perpetrate an actual fraud on Weatherford. A trial court found both Amerril and KingKing responsible for repaying Weatherford.

MehaffyWeber attorneys filed an appeal for KingKing on the grounds that Weatherford failed to establish KingKing was in fact an alter ego of Amerril. The appeals court agreed, finding the previous court’s rulings against KingKing were incorrect. The appeals court determined Weatherford had failed to conclusively establish KingKing’s liability for Amerril’s obligations under Section 21.223(b). The appeals court reversed the trial court’s judgment.

Experienced Oil and Gas Litigation Attorneys

This successful appellate result is just one of many obtained by the experienced oil and gas litigation attorneys at MehaffyWeber. If you are facing a complex oil and gas dispute, contact us today.