BIG SPRING — During a daylong hearing in Martin County Friday, a judge was told Pioneer Natural Resources had “fabricated” the basis for its lawsuit seeking $534 million in damages from a smaller competitor that it accused of interfering with its West Texas leases.
Pioneer, which was acquired last year by Houston energy giant ExxonMobil, filed suit against Pony Oil in 2021. The company alleges Pony caused it $178 million in actual damages by signing so-called top leases on Pioneer’s acreage that prevented it from drilling 11 planned wells. A top lease is a contract signed on land already under lease that will take effect in the future if a bottom lease already in place on a property expires.
Pioneer had asked the court to triple its actual damages based on Pony’s alleged tortious interference with its leases, which the company claimed caused it to abandon plans to drill. But in its most recent filings with the court, Pioneer has drastically scaled back its damages request, seeking only $19 million in damages for the delay it suffered in drilling nine of the 11 wells, allegedly because of Pony’s actions.
Founded by Dallas resident and former Bachelorette contestant John Paul Merritt, Pony contends its taking of top leases is “legal and commonplace in Texas oil and gas” but that the practice irked Pioneer. In a motion asking Judge Shane R. Seaton to hit Pioneer with death-penalty sanctions, dismiss the case and award it about $2 million in attorney fees, Pony said Pioneer “built a fabricated narrative” and sued Pony to “make an example” of the company.
Pioneer has called the request for sanctions and dismissal “baseless” and said the Pony’s allegations are sanctionable on their own.
Pony filed the motion seeking those extreme remedies after receiving in discovery a document called a rig schedule, which Pony claims proves Pioneer’s case is a sham.
“Pioneer’s $534,000,000.00 lawsuit was born of perjury and kept alive by discovery abuse and more perjury,” Pony told the court in a June 4 motion. “Pioneer fabricated its core causation and damages theories and repeated perjurious testimony for years through sworn affidavits, briefing, and argument — each time successfully avoiding dismissal and ratcheting up defense costs.”
Pony has alleged the conduct by Pioneer in this lawsuit that merits an award of sanctions and dismissal includes the filing of affidavits from employees that “it knew were false,” and “concealing for years the only document (the rig schedule) that would have exposed the truth from day one.”
The rig schedule, Pony claims, shows that Pioneer’s decision not to drill those wells had nothing to do with Pony’s actions.
“Once the rig schedule was in hand, the truth was obvious,” Pony told the court in its motion. “The rig schedule disproves every critical piece of testimony that Pioneer submitted to support its case, and production of the rig schedule should have ended this case three years ago. Instead, Pioneer buried it for as long as possible so Pioneer could continue to rely heavily on the sworn testimony it disproved.”
In a response to that motion Pioneer filed with the court Thursday, the company called Pony’s request for sanctions and dismissal “baseless.”
“This is at least the seventh time defendants have tried to convince the Court to dismiss Pioneer’s affirmative claim for tortious interference,” Pioneer wrote. “Defendants’ latest attempt is so devoid of any basis in fact or law that it is itself sanctionable.”
Pioneer told the court Pony is mistaken about the significance of the rig schedule and its impact on the claims in this case.
“Based on their false assumption, defendants then embark on a crusade of hyperbole and baseless criminal accusations in their motion, accusing at least three different Pioneer employees of third-degree felonies, including aggravated perjury and fabrication of evidence,” Pioneer wrote. “According to defendants, if they locate one document that they believe contradicts an affidavit, then the affiant has committed aggravated perjury… But defendants have not shown that a single false statement has been made by any Pioneer witness, and indeed no false statement was made.”
Judge Seaton was mostly silent during the hearing Friday, allowing counsel for both sides to present arguments with few interruptions.
The lead attorney for Pony, Rob Vartabedian of Vartabedian Hester & Haynes, arrived at the small district court building with a team of six while Pioneer’s lawyer, Corey Wehmeyer of Santoyo Wehmeyer, had two attorneys with him. The gallery was empty.
Vartabedian argued that Pioneer lied about why it removed the 11 wells from the rig schedule and about when it discovered the top leases.
The rig schedule shows drilling of the wells stopped in July 2020, which Vartabedian said was “happening all over the industry” at the time due to the COVID-19 pandemic.
Pioneer began drilling in nine of the wells in 2021.
At one point during his presentation, Vartabedian displayed a photo of NBA players and told the court Pioneer had “flopped” in claiming Pony’s actions harmed the company. Pioneer was only pretending to be injured, he argued.
Vartabedian told the court he doesn’t like to pursue sanctions but feels it is needed in this case, in part to reimburse Pony “for the work it had to put in to defend claims of Pioneer.”
“There is no way this is going to stop unless the court makes this stop,” Vartabedian said.
Wehmeyer sat in the courtroom for the two hours Vartabedian presented, shaking his head often. When it was his turn to speak, he said calling Pioneer’s claimed injuries a “flop” was a “farce.”
Wehmeyer addressed Pony’s claims of perjury and stated that if Vartabedian did not believe Pioneer’s in-house legal counsel, Barry Thomson — who said in an affidavit the wells were removed from the drilling schedule in September 2020 after learning of the top leases — he should have filed a disciplinary action with the state bar.
“I haven’t seen him turn him into the state bar if he honestly believed this, I think he has a duty to do that,” Wehmeyer said.
The hearing concluded Friday without any ruling from Judge Seaton.
Pioneer is also represented by John W. Ellis, Patrick A. LeMasters and Andrew “Drew” Simank of Santoyo Wehmeyer and Jacob M. Davidson and Julie L. Griffis of Davis, Gerald & Cremer.
Pony is also represented by Alix D. Allison and Michael D. Thompson of Vartabedian Hester & Haynes.
The case is Pioneer Natural Resources USA, Inc., v. John Paul Merritt, Pony Oil LLC, Pony Oil Operating LLC, and AXE Energy LLC, 7738.