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Houston Appellate Court Slashes Verdict Against Apache in Oil and Gas Construction Dispute

Houston Appellate Court Slashes Verdict Against Apache in Oil and Gas Construction Dispute

Houston Appellate Court Slashes Verdict Against Apache in Oil and Gas Construction Dispute

On May 11, 2021, our client, Apache Corp., obtained an 83 percent reduction in damages it had been ordered to pay by a district court jury two years earlier. The Fourteenth Court of Appeals in Houston knocked down the initial $80.4 million figure—which had been awarded to Castex Energy Partners in a dispute over the construction of a large-scale oil and gas construction project in Louisiana—to about $13.5 million after holding that Castex failed to prove our client engaged in willful misconduct regarding the drilling of a well.

Apache and Castex were joint owners of a gas well and processing facility in the the Atchafalaya Bay area; Apache was the operator, and Castex participated in the building of infrastructure and the drilling of wells. In 2015, Apache alleged that Castex owed millions of dollars in unpaid joint interest billings related to their assets. In response, Castex filed a counterclaim arguing that Apache had been grossly negligent or engaged in willful misconduct in its role as operator, resulting in construction costs for a processing plant that exceeded the authorized budget amount by more than $100 million. Castex also claimed that Apache was grossly negligent or committed willful misconduct when improperly drilling and completing an oil and gas well that damaged a major gas reservoir and allegedly caused Castex damages of over $70 million.

In April 2019, the jury awarded Castex about $62 million in damages (which grew to $80.4 million with interest) after a month-long jury trial in Harris County, Texas, far below what Castex sought. After Apache appealed the judgment, the Fourteenth Court of Appeals in Houston heard oral argument in October 2020 before announcing its findings this month.

Read Law360’s coverage of the case.