Apache Corp. v. Castex Offshore, Inc.

Opinion

In this breach of contract case between oil and gas companies, the main question presented is whether the non-operator produced sufficient evidence that its damages resulted from the operator's willful misconduct. To answer that question, we must first determine the meaning of "willful misconduct." We hold that willful misconduct means deliberate mismanagement committed without regard for the consequences. We further conclude that there is sufficient evidence that the operator engaged in such willful misconduct with respect to one of the non-operator's counterclaims, but not both of them.

As for the remaining questions presented, we conclude that the trial court did not abuse its discretion by awarding prejudgment interest on a recovery of attorney's fees, and that the operator did [*2]  not establish that it is entitled to a new trial on its separate claims for relief against the non-operator.

I. BACKGROUND

The disputes in this case arise out of several joint operating agreements between Apache Corporation and Castex Energy Partners, LLC, f/k/a Castex Energy Partners, L.P. One of the agreements involved the expansion of a natural gas processing facility known as Belle Isle. Another agreement involved the drilling of a well under a lease known as Potomac. And the remaining agreements, which the parties collectively dubbed the "Apache Contracts," involved unrelated projects from the same region in southern Louisiana where Belle Isle and Potomac are both located. In all of these various agreements, Apache was the operator and Castex was the non-operator.

Apache sued Castex, alleging breaches of the Potomac agreement and the Apache Contracts. These claims were based on Castex's alleged failure to pay its proportionate share under the agreements.

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