By Natalie Posgate of The Texas Lawbook
PECOS –Two Midland oil companies and Dallas-based J. Cleo Thompson intentionally failed to meet their end of an agreement with Dallas oil mogul T. Boone Pickens to acquire and drill more than 160 oil wells in Reeves and Pecos counties, a West Texas jury ruled Wednesday.
After about three hours of deliberation over the course of two days, the Reeves County jury of five women and seven men awarded Pickens’ Mesa Petroleum Partners up to $146 million in damages against the three defendants combined.
Lawyers and officials with the defendants told Wednesday that the verdict is not supported by the evidence and they plan to appeal.
The verdict follows a three-week trial in a decade-old business dispute in which Pickens claims J. Cleo Thompson, Baytech and Delaware Basin Resources improperly cut Mesa out of a lucrative deal in the Red Bull region of the Permian Basin.
“We have maintained from the beginning that Mesa’s oil and gas interests were taken from it illegally,” said Chrysta Castañeda, who represented Pickens in the litigation. “The Red Bull is part of what is now one of the biggest resource plays in the world, and we are hopeful that the jury’s decision here will mean that the long history of fair dealings in the oil industry continues.”
The jury hit Baytech and Delaware Basin with a $130 million judgment, plus legal fees, and J. Cleo Thompson with damages of more than $12 million, plus attorneys’ fees, according to lawyers for Pickens.
Houston attorney Stuart Hollimon, who represents Baytech and DBR, said his clients disagreed with the verdict returned by the jury.
“We are, of course, disappointed and will be reviewing the record of the case and consulting with our clients to determine what our course of action will be at this point,” said Hollimon, a partner at Andrews Kurth in Houston.
In a written statement, J. Cleo Thompson chief financial officer Paul Rudnicki said the company is pleased that the jury rejected the initial $1 billion that Pickens demanded.
The jury’s award against J. Cleo Thompson ” is a fraction of what Mr. Pickens and his lawyers originally sought,” Rudnicki said. “We believe the evidence does not support the verdict that J. Cleo Thompson breached the joint operating agreement.”
Lawyers for Pickens argued that J. Cleo Thompson, another legendary name in the industry, conspired with Baytech and DBR to steal Mesa’s 15 percent interest in the Red Bull project.
Defense attorneys told jurors that their clients did nothing wrong and that Pickens willingly opted out of the deal. Lawyers for J. Cleo Thompson and the two exploration and production companies argued that Pickens only brought the lawsuit to repair his own ego and shift the blame from himself for cashing out of a deal that in 2014 became very lucrative.
“[Pickens] told you from the stand himself, ‘I’m dealing with crooks.’ So instead of taking responsibility for the decision… he’s calling these people crooks,” Tim McConn, a lawyer for Baytech and DBR, told jurors. “They’re not crooks. They’re good people.”
Defense lawyers told jurors that Pickens called J. Cleo “Jimmie” Thompson, who died in 2010, and J. Cleo’s chief financial officer, Cliff Milford, to say he was “out” of the Red Bull project – a phone call Pickens denies he ever made.
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