A Texas jury has recently rendered a verdict in a case against a subsidiary of SouthWestern Energy Co. relating to a 2005 confidentiality agreement it had entered with two oil and gas consultants. The case of Tovah Energy LLC and Toby Berry-Helfand v. David Michael Grimes et al was heard in the 273rd District Court in Shelby, Texas.
The Shelby County jury sided with the plaintiffs, who claimed that SouthWestern Energy Production Co. (SEPCO) stole their trade secrets and profited from them. The jury awarded the plaintiffs $11.4 million in compensatory damages, finding that SEPCO had violated the Texas Theft Liability Act by misappropriating trade secrets and had committed fraud related to a confidentiality agreement in 2005 pertaining to two oil and gas prospects in East Texas.
In addition, the jury found that, for purposes of disgorgement, SEPCO’s profits were $381.5 million, which the court may or may not order SEPCO to pay to the plaintiffs as part of any judgment.
The history of this dispute goes way back to the late ’90s, when Berry-Helfand and Muncey developed an allegedly exclusive method for gathering and analyzing data from many wells in the region, estimated to be over 100. The two and another geologist and defendant, Leon Wells, devised a method that could allegedly determine the prime locations for booming horizontal gas well drilling.
The attorney who represented the plaintiffs in the case, said “In a nutshell, they came up with a very sound method to determine the actual [well] locations, called the sweet spots, of where you would want to drill horizontal gas wells in this formation.”
An amended petition filed by SEPCO alleged that the defendants violated the law and breached their fiduciary duty along with breaking confidential relationships with SEPCO relating to the two prospects in the Texas James Lime formation.
SouthWestern has indicated it will consider appealing any judgment from the 273rd District Court. In the past six months, SouthWestern has lost approximately 17 percent of their market value.