The Wyoming Supreme Court has dismissed an appeal from Denbury Resources which has been ordered to pay APMTG Helium LLC over $35m in damages and interest for undelivered helium.
The Supreme Court dismissed the appeal which challenged a court order and Denbury must pay APMTG Helium LLC, a joint venture between Air Products and MATHESON, $35,199,276 after years of litigation.
In 2009, helium company APMTG entered into a helium feedgas agreement with Cimarex Energy Co. and Riley Ridge, LLC, which agreed to design, construct, and operate a natural gas processing plant in Big Piney, Wyoming, and to annually deliver specified quantities of helium to APMTG, according to court records.
The helium feedgas agreement required Cimarex and Riley Ridge to deliver 200 million standard cubic feet (mmscf) of helium to APMTG the first and second years of the contract and 400 mmscf per year thereafter, according to the appeal’s legal document. The liquidated damages were capped at $8m per year, and total liquidated damages for the life of the contract could not exceed APMTG’s final investment to construct its plant, which APMTG predicted would be $38.6-$42.9m, according to court records.
In 2010, Denbury purchased Riley Ridge’s interests in the Riley Ridge Plant and assumed all of its rights and obligations under the helium feedgas agreement. In 2011, Texas, US-based oil and natural gas company Denbury acquired Cimarex’s interests in the plant.
“Denbury failed to deliver the agreed-upon amounts but claimed its nonperformance was excused by two force majeure events - the failure of its contractor to complete its natural gas processing plant and the ongoing failure of its supply wells due to sulfur deposition plugging the wellbores,” the Supreme Court legal document said.
“After a bench trial, the district court found Denbury had failed to show its non-performance was excused by a force majeure event except for a period of 36 days. It awarded APMTG over $35m in damages and interest. Denbury appealed. We affirm.”
Denbury Inc has also announced it has entered into an agreement with a subsidiary of Devon Energy Corporation to acquire a nearly 100% working interest (approximately 83% net revenue interest) in the Big Sand Draw and Beaver Creek oil fields located in Freemont County, Wyoming for a cash purchase price of $12m. The purchase price includes associated surface facilities and the 46-mile carbon dioxide (CO2) transportation pipeline to the acquired fields.
Chris Kendall, Denbury’s President and CEO, said, “Big Sand Draw and Beaver Creek are exciting additions to Denbury’s Rocky Mountain region footprint, and we believe they are an ideal operational fit for Denbury’s differentiated CO2 EOR-focused strategy. Importantly, by utilising 100% industrial sourced CO2, these fields will increase Denbury’s use of industrial sourced CO2 by nearly 400,000 tonnes annually, further enhancing the low carbon footprint of Denbury’s oil production. We look forward to applying Denbury’s industry-leading EOR expertise to these fields, which hold meaningful potential for optimisation and future development.”