When a panel of jurors in tiny McMullen County in South Texas awarded SilverBow Resources $24.5 million in damages in February 2023, it was a hard-fought result eight years in the making.
It involved two trips to the Texas Supreme Court and overcoming a trial judge’s ruling that SilverBow had waited too long to lodge its claims that Energy Transfer interfered with its drilling rights via underground contamination linked to an injection well.
The Texas Supreme Court paved the way for a jury trial when it revived SilverBow’s lawsuit against Energy Transfer in May 2021, just one month after Jennifer Cadena was promoted to the role of SilverBow’s assistant general counsel and senior land manager after three years as senior exploration and production counsel.
“Ms. Cadena obtained a unanimous reversal from the Texas Supreme Court on the novel legal issue of when a subsurface trespass claim accrues for the owner of mineral rights,” said Todd Mensing of Ahmad, Zavitsanos & Mensing, who represented SilverBow at trial. “With outside counsel, Ms. Cadena managed the appeal to the Texas Supreme Court, managed discovery and pretrial, managed the trial team, and managed communications with key stakeholders and SilverBow witnesses.”
The Association of Corporate Counsel’s Houston Chapter and The Texas Lawbook have named Cadena, SilverBow and its outside counsel at AZA as one of three finalists for the 2024 Houston Corporate Counsel Award for Business Litigation of the Year.
ACC Houston and The Lawbook will honor the finalists and announce the winners tonight.
That Cadena’s being recognized for her outstanding work is no surprise to Reece Rondon at Hall Maines Lugrin, who has worked alongside Cadena on three different cases over the past five years.
“She’s got a lot of great traits — super bright, great personality and good character,” Rondon told The Lawbook in a recent interview. “Beyond just your basic lawyer skills, she brings a lot of human quality to what she does which is really important. If she says she’ll do something, I know it’s true. … [S]he’s involved and thorough, and she is not afraid to stand up for herself or the company.”
Corey Wehmeyer of Santoyo Wehmeyer, who has worked with Cadena when SilverBow has been faced with threatened or pending litigation, agreed with that sentiment.
“Jennifer has a keen ability to assess risk, reward and expense in the litigation chess game, always guiding the strategy to the most favorable outcome possible for the company,” he said. “This has included take-nothing results for the company in the face of unjust landowner lawsuits, and multi-million-dollar judgments after jury trial where the company has been injured.”
From Oil and Gas Towns to Oil and Gas Lawyer
Cadena was born in Houston. But having a mother and a father who both worked as accountants for oil and gas companies meant the family moved around a bit, living in Bakersfield for a time before moving to Midland.
Her father — one of seven siblings — and her mother — one of 10 siblings — had both grown up near Matagorda, a coastal town about 100 miles south of Houston. They each had jobs picking cotton when they were younger before attending community college after graduating high school.
Later, both parents attended college and pursued higher education and got jobs as accountants. Cadena said there were no lawyers in her family, and aside from what she had learned through TV portrayals where lawyers “always seemed to have the right thing to say at the right time,” she didn’t know much about what the job entailed.
Cadena graduated from Texas A&M University in 2001 with a bachelor’s degree in history. She had a job lined up, too: teaching history at a private school.
“But as luck would have it, for various reasons the private school closed between the time of accepting an offer and the time I graduated,” she said. “So, I had to figure out my next steps.”
She took a job recruiting technology consultants in Houston.
“I appreciate the experience, but the job didn’t fit my personality,” she recalled.
Around the time she realized the job wasn’t a match for her, her aunt — a court reporter in San Antonio – introduced her to the judge she was working for.
“We talked for a while, and he thought that I should become an attorney rather than a history teacher,” she said. “He recommended that I work for a law firm. So, I did. At Fulbright, the partner that I worked for said the same, so I went to law school.”
But before she enrolled at the American University Washington College of Law in 2005, it was an experience she had while working as a paralegal on a nursing home medical malpractice case in New Mexico that solidified her path forward.
She was responsible for handling the voluminous document production required in the case and stayed in New Mexico for a month.
“It was miserable,” she recalled.
The case settled at trial, which was Cadena’s first trial, too.
“After everything was settled, the managing partner of the local firm in New Mexico said that I deserved a break and offered the use of his family’s home in Santa Fe,” she said. “I could never have afforded it, but I remember sitting outside by myself at a local café and taking in the fact that we had succeeded. It confirmed that I should go to law school.”
She graduated with her law degree in 2008.
For four years after graduation, she worked at Fulbright & Jaworski in Washington, D.C., and Denver. And from 2012 until 2015, she was an attorney at Wellborn Sullivan Meck & Tooley in Denver.
Then came her first in-house role: vice president of land and legal for Incremental Oil & Gas in the Denver area.
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“I had worked with the CEO for many years as outside counsel, and he asked that I go in-house to manage various departments,” she said. “Working in-house was so different than working at a law firm, as I felt as if I was learning something new every single day.”
After three years there, she made the move to SilverBow Resources. In her six years there, the company has undergone significant changes, she said.
“The amount of growth, change in personnel and strategy have been the biggest challenges,” she said, noting that the work is also exciting. “With growth comes changes, which leads to revised risk assessments. The majority of my time at SilverBow is [spent] figuring out which risks we’re fine with taking to achieve something great and which risks we’re not willing to take on.”
She’s worn many hats at SilverBow, starting as senior exploration and production counsel then moving on to assistant general counsel and senior land manager in 2021. In March 2023, she took on the role of vice president for land, ESG and assistant general counsel, managing the ESG, land and regulatory departments while also providing advice and counsel on the exploration and production side of the business.
One of her best days at SilverBow, she said, was closing out the company’s first joint venture.
“We had been negotiating with a party for over a year when negotiations ended,” she said. “I hadn’t been responsible at that point, but when I transitioned to managing the land department as well, I re-engaged. We made it work and I moved it forward. It was the first of many transactions.”
Philosophy & Relationships
When it comes to hiring outside counsel, Cadena said she looks for three things.
“Ability to listen, tenacity and approachability,” she said. “As it relates to litigation, I don’t expect any attorney to be knowledgeable about any one thing, but I expect them to be knowledgeable about opposing counsel, the process [and] strategy. With that said, I’m still the client and they need to understand SilverBow’s needs, even if we’re hiring them to be the experts in their field.”
She describes herself as a generalist at SilverBow, with an expertise in energy who understands her “value is understanding how various departments coalesce in making an organization run.” Listening to her colleagues and connecting departments, she said, helps her “mitigate risk holistically.”
“As the only attorney supporting operations, my role involves general advice and counsel, litigation, transactional, acquisitions and divestitures,” she said. “This means that I’m busy but also that I have to shift my advocate mindset multiple times a day — sometimes, I’m looking at something as a litigator, while other times I’m looking at something from a transactional perspective. In all things, I just try to be a voice of reason.”
That attention to detail and ability to relate to and work with others is something that has stood out to her coworker, Annie Foley, who is vice president, assistant general counsel and secretary of SilverBow.
“Jennifer is approachable for her team and creates that environment at the office,” she said. “She is also able to leverage her ability to connect to continue to develop relationships with outside counsel, vendors and landowners — all key constituents of her role.”
Wehmeyer distilled what makes Cadena so good at her job down to four things.
“The four pillars or qualities necessary to make an invaluable general counsel are hard work, substantive command over legal subject matter, creativity and leadership,” he said. “Jennifer excels in each of these areas. Drawing on her corporate background and the expertise she has built in the energy industry and associated dispute resolution, Jennifer is tireless in leading her teams and the company in finding out-of-the-box solutions to thorny and dynamic problems.”
Both Weymeyer and Rondon complimented Cadena’s desire to be hands-on in litigation affecting the business in a way that’s not necessarily commonplace for in-house attorneys.
“She’s not afraid to ask questions to better educate herself but also not afraid to make sure the advice we’re giving her is sound,” Rondon explained. “Some GCs are overly firm or micromanage … she’s absolutely not on that end of the spectrum. And some GCs are very detached and don’t pay attention. She’s not that, either. She balances both of those things, making her a quality client to work for.”
The Eight-Year (and counting) Legal Battle
In the McMullen County litigation — which Cadena inherited when it was on appeal at the Fourth Court of Appeals in San Antonio, prior to its second trip to the Texas Supreme Court and before the jury trial took place — Cadena had two roles: ensure SilverBow employees who would be witnesses at trial understood the importance of the case and make them comfortable with the idea of speaking with outside counsel, and coordinate with the AZA team that was brought on specifically to bring the case to trial.
“We knew about AZA from prior wins,” she said. “We wanted a firm that could dig into the facts, since the case had been ongoing for so long. We wanted an aggressive firm who knew how to win at trial.”
“Settlement negotiations had previously failed, and so although we’re always open to settlement we also recognized that this would likely be tried. We knew, just from a lunch, that they were the right team. I’m thankful that they took on a case where they weren’t the first firm, learned the arguments quickly and prepared everyone for deposition and trial within a short amount of time.”
McMullen County is one of the least populated counties in Texas, with about 600 residents. The jury panel that was selected from that pool heard from about two dozen experts over two weeks and deliberated for about five hours before returning the unanimous February 2023 verdict in favor of both SilverBow and El Dorado Oil & Gas Inc., awarding the companies a combined $42 million in damages.
AZA went up against another Houston-based law firm at trial. Yetter Coleman represented Energy Transfer.
Cadena said the case was important not just for SilverBow but for “all the individuals in McMullen County” who are concerned about the release of the hydrogen sulfide. She graded AZA’s performance at trial as “excellent.”
“I may have even shed a tear at one point,” she said. “Every litigator knows that every jury is different and responds to attorneys differently. What AZA did here was to understand the jury and recognize what appealed to the jury. I really enjoyed seeing them work — discuss, disagree and figure out a path forward. A culture such as that can only start from within the organization itself. I was extremely impressed and really thankful that we hired them to pursue this case.”
SilverBow and El Dorado had argued that the hydrogen sulfide and carbon dioxide gas that Energy Transfer put in an underground injection well had migrated beyond what Energy Transfer’s modeling showed was possible, trespassing on the leases they owned and interfering with their drilling plans.
Hydrogen sulfide is flammable, poisonous and corrosive enough to eat through steel. Its presence requires oil and gas companies to use different, more robust and more expensive equipment and materials to drill safely.
The jury found Energy Transfer interfered with the rights of SilverBow and El Dorado to “explore, obtain, produce and possess minerals.” It awarded SilverBow about $24.5 million in damages to cover lost net revenues from the company’s future wells and the cost to plug and abandon existing wells.
El Dorado was awarded about $17.3 million in damages for the cost of plugging and abandoning its existing wells and for the lost net revenue from future recompletions of existing wells, court documents show.
But the jury rejected a claim that the harm done to SilverBow and El Dorado was the result of Energy Transfer’s gross negligence.
The case dates back to 2014 when surface mineral rights owners sued Regency Field Services, which is now Energy Transfer. Swift Energy, now known as SilverBow, intervened in 2015, alleging trespass and tort claims.
The case first went to the Texas Supreme Court in June 2017, when Energy Transfer filed a petition for writ of mandamus challenging rulings from the trial court and the Fourth Court of Appeals declined its request to transfer venue out of McMullen County.
“The claimants’ case is founded on assertions that relator Regency is responsible for creating an ongoing life-and-death health risk to every member of the county’s tiny jury pool as well as their children,” the petition argued. “Both sides agree that due to the nature of the case and the claimants’ allegations all prospective county jurors will have an ‘interest’ in the outcome of the litigation. Yet the trial court denied Regency’s motion and declined to explain why.”
A month later, Regency moved to withdraw its request, telling the court “all members of two of the three groups of real parties in interest, plaintiffs and/or intervenors … resolved their dispute with relators and settled all of their claims pursuant to confidential settlements.”
The claims of the remaining party, SilverBow, were dismissed by the trial court via summary judgment after finding SilverBow brought suit too late, outside the two-year statute of limitations.
The fight to revive those claims meant the case would take a second trip to the Texas Supreme Court.
In June and August 2019, respectively, Energy Transfer and SilverBow each filed petitions for review with the state’s high court.
SilverBow argued at the early stage of the case that the record had no evidence establishing a definitive date for its legal injury and that the trial court and the court of appeals got it wrong by tossing its claims. It argued the date of its legal injury wasn’t when “one molecule of hydrogen sulfide” migrated into its lease space, as the lower courts found.
It urged the court to announce a new rule: “In a case of migrating contamination beneath the ground, a mineral lessee does not suffer a legal injury merely from the contamination crossing a lease border into the space associated with the lease, but rather from a substantial interference with the lessee’s ability to exercise its rights.”
The Texas Supreme Court issued an opinion in May 2021 reviving SilverBow’s claims against Energy Transfer.
“Because the pleadings and evidence do not conclusively establish that [Energy Transfer’s] alleged wrongful conduct caused [SilverBow] to sustain a legal injury before Sept. 2, 2013, we conclude that [Energy Transfer] did not establish a right to summary judgment based on limitations,” the court said in rejecting the statute of limitations argument.
It was after that remand that AZA got involved with the case.
“We said we were taking responsibility by identifying the risk and doing the right thing by coming up with a plan that allowed minerals to still be produced out of this county,” Mensing told The Lawbook shortly after the February 2023 jury verdict. “We were the responsible ones, we worked through a problem. They, on the other hand, were treating it like someone else’s problem, even though they were the ones creating the risk.”
The case is currently pending before the Fourth Court of Appeals in San Antonio.
Cadena said the trial court victory was especially gratifying for another reason.
“The legal department doesn’t often bring in an inflow of cash — even if still in appeal — but protects the company through risk mitigation,” she said. “It was great to be on the other side!”