In a court judgment believed to be the largest ever involving the Eagle Ford Shale, Judge Amado Abascal of the 365th Judicial District Court in Zavala County has assigned all rights to approximately 46,000 leasehold acres, valued at more than $500 million, to Dallas-based Longview Energy Company.
In June, jurors in Longview Energy Company v. The Huff Energy Fund L.P., WRH Energy Partners, LLC, Riley-Huff Energy Group LLC, William R. "Bill" Huff and Rick D'Angelo found in favor of Longview Energy based on breach of fiduciary duty, and aiding and abetting claims.
The jury found that Longview Energy directors Bill Huff and Rick D'Angelo used The Huff Energy Fund portfolio company Riley-Huff Energy Group to breach their fiduciary duty in order to covertly secure 46,130 Eagle Ford leasehold acres that were being explored by Longview Energy.
"This case reaffirms the importance of corporate fidelity and the consequences of straying from your responsibilities," says Craig B. Florence of Gardere Wynne Sewell LLP, who represented Longview Energy at trial along with Gardere Partner Randy D. Gordon, and Mikal Watts and Frank Guerra of Watts Guerra Craft LLP. "As the court has affirmed, once you commit to a board and its shareholders, your loyalty cannot be compromised."
According to court records, Mr. Huff and Mr. D'Angelo encouraged Longview Energy to explore an investment in the Eagle Ford Shale. Shortly before the Longview Energy board was to make its final vote on the investment, Mr. Huff and Mr. D'Angelo directed The Huff Energy Fund portfolio company Riley-Huff Energy Group to begin purchasing the same leases. The Huff Energy Fund owns approximately 40 percent of Longview Energy and approximately 99 percent of Riley-Huff Energy Group.
The judgment orders Riley-Huff Energy Group to transfer title to the Eagle Ford leased acres and all related wells and production facilities to Longview Energy within 30 days. Additionally, Mr. Huff, Mr. D'Angelo, The Huff Energy Fund, WRH Energy Partners and Riley-Huff Energy Group are required to pay Longview Energy $95.5 million for past revenues, as well as all production proceeds earned from the leasehold acres since the June 2 jury verdict, an estimated $5 million a month. The judgment also carries an award of 5 percent annual post-judgment interest.