Case Overview

BP America faced two challenging lease termination cases in the Texas Panhandle: BP America v. Laddex, filed in 2007, and BP America v. Red Deer, filed in 2012. Both were tried to juries in summer of 2013, eventually worked their way to the Texas Supreme Court, and Laddex returned to the Panhandle for a second trial. In 2017, SCOTX issued opinions in both cases, breaking its 65-year long silence on the now-hot topic of “production in paying quantities” (PPQ). VHH partners Rob Vartabedian, Alix Allison, and Conrad Hester helped guide BP throughout this years-long fight to protect their property.

Challenges

In Red Deer, a rival claimant to BP’s Lipscomb County, Texas lease argued that (1) BP’s lease failed to PPQ and (2) BP’s shut in of the last producing well on the lease failed to preserve the lease. Rob and Conrad assisted at trial where BP secured a jury finding defeating Red Deer’s PPQ claim. However, the jury sided with Red Deer on questions about the shut-in. SCOTX ultimately ruled that the shut-in questions were not material, that the PPQ questions answered in BP’s favor were material, and therefore rendered judgement in favor of BP.

Outcome

Laddex sued BP in Roberts County, Texas, claiming that the last well on the lease, the Mahler D-2, failed to PPQ causing BP to lose its lease. BP relied on different counsel for its 2013 trial. The jury unanimously sided with Laddex on all questions, finding the lease terminated for failure to PPQ. Rob and Conrad were hired to assist with the appeals and BP successfully argued that the trial court improperly limited the length of time the jury could consider in determining profitability. On remand to the trial court in April of 2019, with Rob as lead counsel and Alix as second chair, BP secured a unanimous jury verdict with the jury finding that there was no failure of PPQ, and BP’s lease should remain in force.

Red Deer and Laddex have become two of the most often-cited PPQ cases in the country as PPQ has emerged as a contentious issue in the oil patch. Since these two SCOTX decisions, through a series of major wins representing both plaintiffs and defendants, VHH attorneys have cemented their reputation as the go-to firm for litigating high-stakes PPQ disputes. *VHH attorneys Rob Vartabedian, Conrad Hester, and Alix Allison were at prior firms during these matters.

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