Jury says Apache Deepwater acted in bad faith, yet awards millions in contract dispute

A federal jury in Houston determined that W&T Offshore failed to pay what it owed Apache Deepwater to plug and abandon three subsea oil and gas wells in the Gulf of Mexico. But the jury, after a two-week trial, also found that Apache acted in bad faith during the contract dispute.

Last week, the jury found that $43.2 million would fairly compensate Apache for W&T’s failure to pay its share, but in light of the jury’s finding against Apache, the jury determined $17 million should be deducted from the total.

Apache, operator of the three wells, owned a 51 percent interest in the venture and alleged that its minority partner W&T Offshore refused to authorize the cost of plugging the wells over a dispute about the type of drilling rig to use. Apache wanted to use the rigs that it had under contract, while W&T preferred a less expensive option, according to Apache’s lawyer, Geoffrey Harrison.

Apache sued W&T Offshore for breach of contract in 2014.

David Beck, the Houston lawyer representing W&T Offshore, likened the jury’s $17 million offset to a car wreck in which a damage award is reduced based on proportional negligence of the parties. “It’s pretty clear the jury was intending to subtract $17 million,” he said.

The ultimate decision will be up to the trial judge U.S. District Judge David Hittner, said Beck. A hearing has not yet been set.

Harrison said that from his interpretation of Louisiana law, which prevails in the case, the jury’s bad-faith finding will have no legal consequence. He said he believes the $43.2 million verdict will stand.