© 2016 The Texas Lawbook.
By Natalie Posgate
PECOS, TEXAS (Nov. 4) – Lawyers for oil mogul T. Boone Pickens and Mesa Petroleum Partners told jurors in a West Texas courtroom Friday that the Dallas billionaire “may give money to charity, but he’s not going to let you cheat him out of his rights.”
In opening statements in a business dispute in which hundreds of millions of dollars are at stake, attorney Andrés Correa accused another legendary name in oil, J. Cleo Thompson, and three Midland exploration & production companies of conspiring to cut Mesa out of a deal and steal Mesa’s 15 percent share in the ownership interests.
Lawyers for J. Cleo and the three oil and gas firms told Reeves County jurors that their clients did nothing wrong, that the evidence completely contradicts Pickens’ allegations and that Pickens brought the lawsuit only to appease his own ego for making bad business decisions during the financial crisis in 2008 and 2009.
“The decision is in your hands whether or not to hold Pickens [and others at Mesa] responsible for their actions,” said Yetter Coleman partner Tim McConn, who represents Midland-based Baytech LLP and Delaware Basin Resources. “We ask you to clear the good names of the [the defendants] and more importantly, the good people who work for these companies.”
The heart of the issue is whether J. Cleo and Baytech honored their end of an agreement they signed in 2007 with Mesa regarding ownership interests and revenues in more than 160 wells in West Texas’ Reeves and Pecos counties.
The legal dispute dates back to 2007, when Mesa signed an agreement with Baytech and J. Cleo Thompson to participate in acquisition of land oil wells in the Red Bull area of Reeves and Pecos counties. Mesa paid more than $125,000 to Baytech for its 15 percent share in the partnership. It also paid $75,000 to J. Cleo Thompson.
Pickens’ lawyers told jurors that the terms of the agreement required Baytech and J. Cleo Thompson, the operating partner, to notify Mesa and offer it the opportunity to participate in every interest that was acquired in the Red Bull area between 2007 and 2012.
Correa, an associate at Lynn Pinker Cox & Hurst, told the four-woman, eight-man jury that they will see “a lot of pieces of paper” throughout the trial, which is expected to last for more than two weeks.
“But [the defendants] won’t be able to show you one that Mr. Pickens signed” in which Mesa agreed to sell its 15 percent stake in the partnership to Baytech, he said.
Correa said there are key three facts jurors need to know about the case: that Mesa, J. Cleo Thompson and Baytech had a written deal; that Baytech and J. Cleo Thompson wanted Mesa out of the deal; and that Mesa rejected the defendants’ efforts to buy them out.
The contract said if there was a change, the defendants would have to pay Pickens and it had to be in writing, he told jurors.
Correa argued that Baytech and J. Cleo Thompson took Mesa’s shares and then created a “fairytale” to cover up their actions by fabricating a phone call from Pickens to J. Cleo Thompson and Baytech saying, “I’m out.”
Correa told the jury about a series of communications between Baytech and Alex Szewczyk, who worked for Pickens, which discussed a potential deal for Baytech to buy out Mesa’s stake from late 2008 to early 2009.
“December goes by, January goes by, and February goes by, and there’s no deal,” he said.
Baytech started feeling pressure, so it conspired with J. Cleo Thompson to cut Mesa out of the deal, Correa said.
Chrysta Castañeda, Pickens’ lead attorney, told jurors that the defense will try to tell them that Mesa got kicked out of the deal because it didn’t pay its fair share. But Mesa did not learn it got cut out until 2014, she said.
“In 2009, they kicked us out of the deal. But we didn’t know that because we kept paying,” she sad. “There’s no free lunch and we agree that there’s no free lunch. The argument is about what we agreed to pay and continued to pay.”
Lawyers for the defendants said the evidence they have is no fairytale.
Defense attorneys contend that Pickens saw 70 percent of his net worth – or about $2 billion – disappear in the fall of 2008 when oil and natural gas prices tanked by more than 50 percent and the stock market crashed.
Pickens said he wanted out on all areas of the project except for the Lyda Well, the defense lawyers told the jury. The defense argues that it has evidence that Mesa acknowledged it was selling all of its interests in the Red Bull area except for the Lyda well.
Houston attorney Geoff Bracken, who represents J. Cleo Thompson, said the only bills Mesa is continuing to pay involves the company’s interests in the Lyda Well.
“They knew what they were being billed for, and that they were only paying for the Lyda charges,” said Bracken, a partner at Dallas-based Gardere Wynne Sewell. “Otherwise, why not pay the entire bill?
“If [they] knew they owned more and were only being billed for the Lyda portion for the last five years, shouldn’t [they] pick up the phone and find out?”
Bracken and McConn told jurors that J. Cleo Thompson and Baytech “did not hear a peep” from Pickens during the years when oil and gas prices were low but only heard from him when oil prices surged in 2014.
Opening statements concluded mid-afternoon. Mesa called its first witness, Ben Strickland, to the stand shortly after. Strickland is the president of Baytech and DBR. Pickens is anticipated to testify early next week.
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