A jury in La Salle County has awarded $100 million to Houston-based Matrix Petroleum after finding that Repsol-owned Talisman Energy committed accounting fraud and breached an agreement the two companies had to drill wells in the Eagle Ford Shale.
Matrix could have received as much as $3.6 billion in punitive damages if the jury had unanimously agreed that Talisman’s actions were grossly negligent.
Even so, lawyers involved in the case believe the $100 million verdict, which was handed down last Wednesday, is likely the largest amount ever awarded in La Salle County.
The legal dispute dates back to 2010, when Matrix, Talisman and others acquired leasehold working interests in the Cooke Ranch – which is located near Cotulla, Texas – and entered a joint operating agreement. About five months after Talisman acquired its interest in the Cooke Ranch leases, the company breached the term assignments by instead drilling three Eagle Ford Shale wells within approximately 100 feet south of Cooke Ranch, Matrix alleged.
By doing so, Talisman nearly lost the drilling rights in Cooke Ranch, since work there did not begin within the required 90 days. Matrix argued at trial that Talisman was dismissive of its concerns.
“They made all these empty promises, and refused to change anything,” said John Kim, Matrix’s lead trial attorney. “Through their actions and inactions, including ignoring multiple requests from Matrix for required daily drilling reports and detailed accounting statements, Talisman put the business interests of everyone in the joint operating agreement in jeopardy.”
Houston Liskow & Lewis partner Robert Theriot, who represented Talisman and Spain-based Repsol (which acquired Talisman in 2015), did not respond to a request for comment.
Kim only got involved with the case in May, but the dispute had already been in litigation for two-and-a-half years at that point, he said.
After four weeks of testimony and arguments, the jury deliberated for about 24 hours over a period of two days before returning a favorable verdict Wednesday afternoon that was “pretty much to the penny” of what Matrix had asked for, Kim said.
Taking into account post-judgement interest, Kim said the judgement is actually around $110 million – which doesn’t include the attorneys’ fees he plans to ask for.
“I think [the verdict] demonstrates that the residents of Cotulla don’t believe that a large company can come in and bully their non-operating working interest owners,” said Kim, founding partner of The Kim Law Firm in Houston. “I believe that accountability and transparency when dealing with other people’s money is paramount.”
Kim said that Talisman argued during the trial that any errors it made were more simply judgment-based and not deliberate, and that it did not owe Matrix anything.
The remainder of Matrix’s trial team from The Kim Law Firm included Tim Rothberg, Denise Kim (who also served as the jury consultant) and Crystal Dang.