Federal jurors in Houston on Monday afternoon sided with Marathon Oil in a lawsuit stemming from the delivery of natural gas during February 2021’s Winter Storm Uri, rejecting a $123.7 million breach of contract claim lodged by Koch Energy Services.
The case involved whether Marathon had fulfilled its obligations during the historic winter storm that knocked out power, left more than 200 Texans dead and plunged the state into subfreezing temperatures for days. Marathon, which was acquired by ConocoPhillips in 2024, argued a force majeure provision excused its failure to provide gas to Koch Energy Services during the storm.
Koch had argued in seeking millions in damages that Marathon was required to purchase any available replacement gas, while Marathon argued it was only required to use reasonable efforts to keep its wells online and bring them back online as soon as possible, and was not required to buy replacement gas.
During the dayslong storm, prices for natural gas in Texas and Oklahoma reached record highs. This case centered on Marathon’s agreement to deliver natural gas to Koch Energy Services in Oklahoma.
U.S. District Judge Sim Lake presided over the trial that began with jury selection April 28. Jurors heard five days of testimony and began deliberating around lunchtime Monday.
“After deliberating less than three hours, the jury soundly rejected Koch’s view of the world,” Marathon Oil’s lead lawyer, Tim Shelby of AZA, said in a statement. “From an industry perspective, this jury verdict answers the fact questions identified in the Fifth Circuit’s 2024 decision in Mieco v. Pioneer regarding reasonable efforts and replacement gas.”
Shelby said he believes this case is the first Winter Storm Uri delivery trial to take place that required a seller to prove it fully complied with the force majeure provision to excuse performance.
“It provides guidance to the industry about what producers like Marathon are reasonably expected to do during weather events and rejects the expectation of buying replacement gas in the middle of a weather event,” Shelby said of the verdict.
Marathon originally filed the lawsuit in Harris County District Court and Koch Energy removed it to federal court in April 2021.In February 2024, Judge Lake granted partial summary judgment to Marathon, agreeing Koch owed it $9.8 million in withheld money under the contract.
Koch is represented by David T. McDowell, Jaclyn Zinsmeister, Justin Chapa, Siobhan K. Ray, William King and William Thomas of McDowell Hetherington. McDowell, the lead lawyer, did not immediately respond to an email seeking comment Tuesday afternoon.
Mark Trachtenberg of Haynes Boone, who also represents Marathon, called the verdict “a landmark result not just for our client but for the broader energy sector” and said the result “affirms a common-sense understanding of what it means to exercise ‘reasonable efforts’ under a force majeure clause.”
Marathon is also represented by Sammy Ford IV, Paul Galante, Emily Adler, Michael Gorrell and Ab Henry of AZA, and Ryan Pitts from Haynes Boone.
The case number is 4:21-cv-01262.