On October 1, 2018, the U.S. Supreme Court declined to review a Texas Supreme Court’s ruling finding Noble Energy Inc. (“Noble”) liable for cleanup costs paid by ConocoPhillips Co. (“ConocoPhillips”) to settle a separate Louisiana oilfield legacy case. The Texas Supreme Court ruled that Noble inherited the indemnity obligation to ConocoPhillips from its predecessor, which bought oil and gas assets from Alma Energy Corp. (“Alma”) at an auction sale through a Chapter 11 bankruptcy reorganization. Noble Energy, Inc. v. ConocoPhillips Co., 532 S.W.3d 771 (Tex. 2017). View the document here.
The underlying oilfield legacy case was filed in 2010 in the 38th Judicial District Court, Cameron Parish, Louisiana, by the State of Louisiana and the Cameron Parish School Board against ConocoPhillips and other oil and gas companies for environmental damage and contamination of the Johnson Bayou Oil and Gas Field.
Based on the indemnity language, ConocoPhillips made demands for defense and indemnity, but they were denied. ConocoPhillips filed suit in Harris County, TX district court in 2011 for breach of the defense and indemnity provisions, as well as the provisions concerning environmental cleanup.
While this matter had unique issues related to bankruptcy law, it is consistent with a growing trend of oil company defendants in Louisiana legacy cases making indemnity demands based upon provisions in purchase and sales agreements.