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Branta, LLC v. Newfield Production Co.

United States District Court, D. Colorado

April 12, 2018

BRANTA, LLC, a Delaware limited liability company; BRANTA EXPLORATION & PRODUCTION COMPANY, LLC, a Delaware limited liability company; HARVEST U.S. HOLDINGS, INC., a Delaware corporation; and HARVEST NATURAL RESOURCES, INC., a Delaware corporation, Plaintiffs,
v.
NEWFIELD PRODUCTION COMPANY, a Texas corporation, Defendant.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          WILEY Y. DANIEL, SENIOR UNITED STATES DISTRICT JUDGE

         FINDINGS OF FACT

         I. STIPULATED JOINT FACTS[1]

         A. PROCEDURAL BACKGROUND

         1. On February 27, 2015, Plaintiffs Branta, LLC (“Branta”), Branta Exploration & Production Company, LLC (“Branta E&P”), Harvest (US) Holdings, Inc. (“Harvest”), and Harvest Natural Resources, Inc. (“HNR”) filed a Complaint against Defendant Newfield Production Company (“Newfield”). (ECF No. 1.)

         2. Newfield answered Plaintiffs' complaint on May 18, 2015. (ECF No. 13.)

         3. On September 9, 2015, Plaintiffs filed their First Amended Complaint and Jury Demand, adding new defendants Crescent Point Energy Corporation and Ute Energy, LLC (“Ute Energy”). (ECF No. 35.)

         4. On August 19, 2016, Plaintiffs filed a Motion for Partial Summary Judgment on Liability. (ECF No. 142.)

         5. On December 12, 2016, Newfield filed a Motion for Summary Judgment. (ECF No. 235.)

         6. Plaintiffs moved to amend their Complaint a second time and their Second Amended Complaint and Jury Demand was entered on the docket on February 1, 2017. (ECF No. 258.)

         7. The Court denied both summary judgment motions on June 21, 2017. (ECF No. 415.)

         8. A 10-day trial to the Court commenced on September 11, 2017.

         B. PARTIES AND BACKGROUND FACTS

         9. Branta is a privately held company that develops oil and natural gas resources. (ECF No. 258 ¶ 1.)

         10. Branta is the parent company of Branta E&P, a privately held oil and natural gas exploration and production company. (ECF No. 258 ¶¶ 1-2.) Branta E&P is a wholly-owned subsidiary of Branta. (Id. at ¶ 2.)

         11. HNR was a publicly traded company and the parent of Harvest, which invested in, acquired, and developed oil and gas assets. (ECF No. 258 ¶¶ 3-4; Nesselrode Trial Test., Vol. IV, 724:10-11.) Harvest is a wholly-owned subsidiary of HNR. (ECF No. 258 ¶ 4.)

         12. In 2009, Branta E&P and Harvest owned oil and gas assets in the Uintah Basin in the State of Utah; Branta E&P own 40% of the Uinta Basin assets and Harvest owned the remaining 60%. (Edmiston Trial Test., Vol. IV, 804:24-805:3.)

         13. Newfield is an oil and gas exploration and production company with operations throughout the United States and internationally, including in the Uintah Basin. (2015 Newfield Form 10-K at 3, available at http://phx.corporate-ir.net/phoenix.zhtml?c=63798&p=irol- reportsannual.)

         14. In January 2011, Plaintiffs decided to conduct an auction for the sale of their Uinta Basin assets. (ECF No. 258 ¶ 15.)

         15. In advance of the auction, Bank of America Merrill Lynch (“BAML”), which had been engaged to provide financial advice and assistance to Plaintiffs in connection with the auction, prepared a contact list that tracked entities Plaintiffs and/or BAML thought might be interested in the Uintah Basin assets and recorded contacts with those entities. (Trial Ex. 18.)

         16. Newfield was on BAML's contact list. (Trial Ex. 18 at Bof A000023.)

         17. Throughout 2010 and 2011, Ute Energy was an oil and gas exploration and production company operating in the Uinta Basin. (Jaggers Trial Test., Vol. I, 78:1-2, 78:17-24.)

         18. In early 2011, Ute Energy was interested in acquiring assets in the Uintah Basin. (Jaggers Trial Test., Vol. I, 116:9-11.)

         19. The Bridgeland Exploration and Development Agreement (“Bridgeland EDA”) created an Area of Mutual Interest (“AMI”). (Trial Ex. 25 at Art. XX.)

         C. NEWFIELD'S CONFIDENTIALITY AGREEMENT WITH BRANTA

         20. In February 2010, Branta notified Newfield of its plan to sell some of Branta E&P's share of the Uinta Basin assets. (Trial Ex. 33.)

         21. To facilitate discussions of a potential sale of the Branta E&P assets to Newfield, on February 22, 2010, Branta and Newfield executed a confidentiality agreement (the “Branta Confidentiality Agreement”) with respect to a potential acquisition by Newfield of Branta E&P's assets. (Trial Ex. 27.) The original term of the Branta CA was eighteen (18) months. (Id. at ¶ 8.)

         22. Under the Branta Confidentiality Agreement, Branta agreed to share confidential and proprietary information with Newfield related to their Uintah Basin assets. (Trial Ex. 27.)

         23. The Branta Confidentiality Agreement states that Newfield agreed “[t]o keep the [proprietary and confidential information (“PCI”)] confidential and not to disclose the PCI to any entity or person except to [Newfield]'s and its affiliates' respective employees, officers, directors, counsel, accountants or consultants . . . on a need to know basis as is necessary to evaluate [Branta] or [various oil and gas exploration prospects].” (Id. at ¶ 3(a).)

         24. The Branta Confidentiality Agreement also contains a “Non-Circumvention” clause:

Each party hereby agrees that neither it nor its representatives will contact (whether by telephone, email, in-person meeting or otherwise) any of the other party's or its subsidiary's [sic] of affiliate's lenders, equity owners, co-working interest owners, joint exploration and development partners or other persons having existing or prospective business relations with the other party or its subsidiaries without the other party's prior express written consent obtained at least 48 hours in advance of such proposed contact, which consent may be withheld in the applicable party's sole discretion, and no such contacts may be conducted unless a representative of the other party is present throughout any such contacts.

(Id. at ¶ 4.)

         25. The Branta Confidentiality Agreement states that it is governed by Texas law. (Id. at ¶ 12(a).)

         26. The Branta Confidentiality Agreement applied to Branta and its affiliates, including Branta E&P. (Trial Ex. 27.)

         27. On September 29, 2010, Newfield proposed to purchase Branta E&P's 30% interest in the Uinta Basin assets for $77 million. Newfield's proposal was rejected. (Trial Exs. 47, A35.)

         28. On February 18, 2011, Newfield and Branta executed a letter that amended the Branta Confidentiality Agreement (the “Amendment Letter”). (Trial Ex. 31.)

         29. The Amendment Letter applied to Branta and its affiliates, including Branta E&P. (Id. at 1.)

         30. The Amendment Letter amended the Branta Confidentiality Agreement's Non-Circumvention provision to allow the parties to: (i) have contact with Harvest and its investment banker Merrill Lynch Securities in regards to Harvest's assets in the Uintah Basin; (ii) waive any prior breaches of the Branta CA arising out of any prior contacts with Harvest or Merrill Lynch Securities; and (iii) agree that the Branta CA was never intended to preclude either party “from contacting Harvest in respect of their respective relationships with Harvest that existed on the date of the [Branta] CA, including relationships as co-working interest owners or exploration and development partners in Uintah and Duchesne Counties, Utah.” (Id. at 1.)

         D. NEWFIELD'S CONFIDENTIALITY AGREEMENT WITH HNR

         31. On February 17, 2011, HNR entered into a confidentiality agreement (the “Harvest Confidentiality Agreement”) with Newfield. (Trial Ex. 32.)

         32. The Harvest Confidentiality Agreement applied to HNR's subsidiaries, including Harvest. (Id. at 1 & ¶ 1.)

         33. Under the Harvest Confidentiality Agreement, HNR and Harvest agreed to share “Evaluation Material” with Newfield. (Id. at 1 & ¶ 3.)

         34. The Harvest Confidentiality Agreement stated that, without Harvest's prior written consent, Newfield “shall not disclose to or discuss with any third person, ” other than “the parent companies, subsidiaries and affiliates of the Parties . . . and each of their directors, officers, employees, agents, financial advisors or lenders, contractors, and consultants, ” “either the fact that discussions or negotiations are taking place concerning [‘a strategic transaction involving Harvest's assets in the United States located in the Uintah Basin, State of Utah (a “Transaction”)'] or any of the terms, conditions, or other facts with respect to any such Transaction, including the status thereof.” (Id. at 1 & ¶ 6.)

         35. The Harvest Confidentiality Agreement states that it is governed by Texas law. (Id. at ¶ 16.)

         36. Harvest shared Evaluation Material with Newfield as provided for by the Harvest Confidentiality Agreement. (Trial Exs. 91, 92; Nesselrode Trial Test., Vol. IV, 751:19-23.)

         E. COMMUNICATIONS BETWEEN NEWFIELD AND UTE ENERGY

         37. Newfield did not have Plaintiffs' consent to contact Ute Energy about the auction. (Trial Exs. 57, 91.)

         38. On May 18, 2011, Howard and Jaggers had a lunch meeting, and afterwards, Jaggers was disappointed. (Jaggers Trial Test., Vol. I, 156:25-157:4; Howard Trial Test., Vol. II, 332:1-3, 438:24-439:1.)

         39. On May 20, 2011, Jaggers sent a letter to Howard. (Trial Ex. 1.)

         F. BIDS FOR PLAINTIFFS' ASSETS

         40. Before Newfield's initial March 7, 2011 bid, its technical team performed detailed economic analyses of Plaintiffs' assets. (Trial Exs. 110, 116-119, 122, 124.)

         41. On March 7, 2011, Newfield submitted a bid of $196, 988, 000 for Harvest's assets and a bid of $90, 587, 000 for Branta E&P's assets, for a total bid of $287, 575, 000. (Trial Exs. 127, 128.)

         42. On March 10, 2011, Bill Barrett Corporation (“BBC”) submitted a bid that totaled $180, 000, 000 for just a portion of Plaintiffs' assets. (Trial Exs. 135, 136.)

         43. Ute Energy did not bid on Plaintiffs' assets during the auction. (Tresca Trial Test., Vol. III, 599:10-12.)

         G. NEWFIELD'S PURCHASE OF PLAINTIFFS' ASSETS

         44. Newfield submitted the highest bid in the auction and was awarded the opportunity to buy the Uintah Basin assets. (Trial Ex. 142.)

         45. HNR publicly announced Newfield's acquisition of Harvest's Uinta Basin assets on March 22, 2011, including the amount to be paid for the assets. (Trial Ex. B69.)

         46. The sale of the Uintah Basin assets to Newfield closed on May 17, 2011. (Trial Ex. C46.)

         47. After the close of the transaction, Newfield offered Ute Energy an option pursuant to the Bridgeland AMI to purchase the portion of the acquired assets located within the Bridgeland EDA, and Ute Energy exercised the option and paid approximately $12.1 million to acquire the offered assets. (Trial Exs. C11, C13.)

         II. ASSET OWNERSHIP INTERESTS

         1. Throughout 2010 and until March 21, 2011, Harvest (US) Holdings, Inc. (“Harvest (US)”) and Brant Exploration & Production Company, LLC (“Branta E&P”) owned a combined 100% working interest in approximately 69, 399 net acres of mineral assets in the Uinta Basin (the “Uinta Basin Assets”). [Trial Ex. C49 at ¶ 490002, C490009, C490014, ¶¶ 2, 4, 30, 50; Nesselrode Testimony (Vol. IV - 738:16-18)]

         2. Harvest Natural Resources, Inc. (“HNR”) and Branta, LLC (“Branta”) did not own any of the Uinta Basin Assets, except through their subsidiaries Harvest (US) and Branta E&P. [Trial Ex. C49 at ¶ 490002, C490009, C490014, ¶¶ 1, 3, 30, 50]

         III. UTE ENERGY AND ITS AGREEMENTS WITH NEWFIELD

         3. The Ute Indian Tribe owned 51% of Ute Energy, LLC (“Ute Energy”), and Quantum Energy Partners (“Quantum”) owned 49%, though employees owned a part of the company, so it was not exactly 51/49. [Jaggers Testimony (Vol. I - 71:5-18; Vol. XI - 2045:19- 2047:3)] Nevertheless, at all relevant times, the Ute Indian Tribe was the majority owner of Ute Energy, LLC (“Ute Energy”). [Jaggers Testimony (Vol. I - 71:5-15)]

         4. Newfield had existing business relations with Ute Energy throughout 2010 and 2011, including as co-working interest owners and exploration and development partners in the Uinta Basin. [Trial Exs. 25, 28, 29, C38 at ¶ 380021-22 (Request for Admission # 20)]

         5. Ute Energy and the Ute Indian Tribe were partners with Newfield under several exploration and development agreements (“EDAs”) in the Uinta Basin. The relevant agreements were the Monument Butte Exploration and Development Agreement between the Ute Indian Tribe and Newfield executed on December 22, 2006, which the Ute Indian Tribe assigned to Ute Energy in 2007 (the “Monument Butte EDA”), the Bridgeland Exploration and Development Agreement between Ute Energy and Newfield executed on May 19, 2008 (the “Bridgeland EDA”), and the Rocky Point Exploration and Development Agreement and Area of Mutual Interest Agreement (the “Rocky Point EDA”) executed on September 27, 2010 between Ute Energy and Newfield. [Trial Exs. 25, 28, 29]

         6. EDAs are commonly used in the industry and by the Ute Indian Tribe to facilitate the exploration and development of hydrocarbons. Based on the testimony of Newfield's expert, Bruce Kramer, EDAs, like those entered into by Ute Energy and Newfield, provide procompetitive benefits to the mineral owners, operators, and other working interest owners through risk- and cost-sharing, and through the ability to obtain substantial efficiencies and prevention of waste by allowing the development of large sections of land as a single lease. [Kramer Testimony (Vol. VII - 1346:14-1351:4, 1365:15-1367:15, 1367:23-1370:10, 1371:1- 1372:10)]

         7. EDAs and their associated joint operating agreements (“JOAs”) often contain or are accompanied by an area of mutual interest agreement or “AMI.” An area of mutual interest agreement is “an agreement between or among parties to an oil and gas farmout agreement, joint operating agreement or other agreement by which the parties describe a geographical area within which they agree to share certain additional leases or other interests acquired by any of them in the future.” 8 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law 56 (2015). [Kramer Testimony (Vol. VII - 1350:10-1353:16, 1372:11-1374:14, 1375:6-10, 1375:13- 1376:13)]

         8. The purpose of a JOA is to share risks and costs, as well as information. JOAs allow for the exploration and development of oil and gas that otherwise might not get explored and developed, leading to greater production. [Tresca Testimony (Vol. III - 616:5-6, 616:12- 617:23); Kramer Testimony (Vol. VII - 1343:12-1344:7)]

         9. EDAs and AMIs promote risk-sharing. [Tresca Testimony (Vol. III - 616:12-617:23); Schulman Testimony (Vol. VI - 1130:11-22); Burtis Testimony (Vol. X - 1938:3-24)]

         10. Without the EDAs at issue in this case, the minerals would likely have remained in the ground. [Kramer Testimony (Vol. VII - 1348:22-1349:12)]. Due to the Ute Tribe's lack of money and experience, and Newfield's lack of access to the tribal lands, the EDAs provided a mutually beneficial arrangement between the Ute Tribe and Newfield to develop the assets. It is unlikely that either party could have developed the assets solo. [Schulman Testimony (Vol. VI - 1173:19-1174:2); Howard Testimony (Vol. II - 282:12-16); Packer Testimony (Vol. VII - 1422:22-1423:9)]

         11. Harvest (US) and Branta E&P were parties to an AMI agreement that covered the Uinta Basin Assets. [Trial Ex. A76 at ¶ 760022; Tresca Testimony (Vol. III - 617:25-618:8); Edmiston Testimony (Vol. IV - 866:23-24)]

         12. The Bridgeland EDA that Newfield entered into with Ute Energy contained an AMI. There was no AMI included in the Monument Butte EDA because, at the time it was executed, the Ute Tribe did not have an operating company or operating capabilities. [Packer Testimony (Vol. VII - 1421:9-13)] There was also a Rocky Point AMI between Newfield and Ute Energy. [Trial Ex. 29]

         13. Pursuant to the AMI contained in the Bridgeland EDA, Ute Energy and Newfield agreed that they would offer to each the option to purchase additional leases acquired within the area of mutual interest pursuant to agreed-upon terms. [Trial Ex. 25 at §§ 1.10, 20.1]

         14. Pursuant to the AMI associated with the Rocky Point area, which was in the form of a December 20, 2010 amendment to a preexisting AMI covering the Rocky Point area, Ute Energy and Newfield agreed to offer to each other the option to purchase assets acquired within the area of mutual interest pursuant to agreed-upon terms. In particular, Ute Energy and Newfield agreed that they would offer to each other leases acquired “through their own leasing activity [but this was] not intended to apply to acquisitions of interests by any means other than new leasing.” [Trial Ex. 29 at 129-004 ¶ 1, 029-002 ¶ 5; Jaggers Testimony (Vol. I - 108:9-17)]

         15. The Ute Tribe was unwilling to enter into the Bridgeland EDA without the included AMI [Packer Testimony (Vol. VII - 1424:11-25)], thus the AMI was necessary to allow the Tribe to share in additional acreage opportunities that would be developed within the Uintah Basin.

         16. It is the EDAs with its leasing and joint operating agreement aspects that create the precompetitive benefits, not the existence or nonexistence of the AMIs. [Kramer Testimony (Vol. VII - 1385:14-1386:11)] EDAs and, when included, AMIs, are negotiated provisions between the parties under the particular circumstances of each agreement, but are part of the joint collaboration to increase output of oil and gas at lower costs. [Kramer Testimony (Vol. VII - 1354:8-1356:1)]

         IV. THE BRANTA CONFIDENTIALITY AGREEMENT

         17. In 2010, the Branta Entities explored raising additional capital for Branta E&P, or alternatively selling Branta E&P's share of the Uinta Basin Assets. [Tresca Testimony (Vol. III - 552:22-553:4, 553:14-20, 554:10-15, 554:24-555:11)]

         18. Energy Capital Solutions (“ECS”) was an investment banking firm engaged by Branta in 2010 and 2011. Scott Trulock was the ECS principal with whom Branta worked. Mr. Trulock was retained to assist in identifying a financial partner to invest in Branta. [Tresca Testimony (Vol. III - 554:16-555:3, 601:15-602:3, 646:20-647:7)]

         19. As part of the effort to sell its assets or finance its operations, Branta established a data room for prospective buyers or investors, and required any data room visitor to execute a confidentiality agreement (“CA”). [Tresca Testimony (Vol. III - 558:18-559:2, 560:22-561:4, 600:24-601:14)]

         20. The Branta CA was drafted by the Branta Entities. [Tresca Testimony (Vol. III - 621:18-25)]

         21. Paragraph 4 of the Branta CA, the non-circumvention provision, was a reciprocal provision intended to prevent each party from communicating with the other party's partners. [Tresca Testimony (Vol. III - 560:12-21, 623:22-624:6); Donohoue Testimony (Vol. V - 1068:24-1069:4, 1080:14-1081:20); Howard Testimony (Vol. II - 396:1-3); Trial Ex. 27 at 27-001, ¶ 4] For example, Branta could not communicate with Newfield's partners to transact business that cut out Newfield. But Branta could communicate with its own partners. Similarly, Newfield could not communicate with Branta's partners to transact business that cut out Branta. But Newfield was free to communicate with its own partners. [Howard Testimony (Vol. II - 397:12-21); Tresca Testimony (Vol. III - 623:22-625:1, 626:4-20)]

         22. Because, at the time the Branta CA was executed, Newfield and Ute Energy were partners under the three EDAs, the Branta CA did not prohibit Newfield from communicating with its partner, Ute Energy. [Howard Testimony (Vol. II - 396:4-20)]

         23. The Branta Entities had no existing or prospective business relations with Ute Energy at the time the Branta CA was executed. [Tresca Testimony (Vol. III - 627:2-4, 627:11-18); Howard Testimony (Vol. II - 397:24-398:4)] There was no evidence presented that Harvest had an existing or prospective business relationship with Ute Energy at that time either.

         24. Thus, the Branta CA prohibited Branta from communicating with Ute Energy without Newfield's prior written consent.

         25. On September 29, 2010, the same day Newfield made its $77 million offer for Branta's interests, Branta E&P's manager, Fred Tresca, instructed Scott Trulock of ECS to set up a meeting with Ute Energy. [Trial Ex. A31; Trial Ex. A33; Tresca Testimony (Vol. III - 628:25-630:4)] At the time, Ute Energy was Newfield's working interest partner and exploration and development partner in the Bridgeland, Monument Butte and Rocky Point EDAs. [FF # 4-5, 12-14]

         26. On September 30, 2010, Mr. Trulock emailed the CEO of Ute Energy, Joseph Jaggers, asking for a meeting with Branta and Ute Energy to “see if there are any opportunities to work together.” [Trial Exs. A31, A32, A33; Tresca Testimony (Vol. III - 630:5-19); Jaggers Testimony (Vol. I - 218:24-219:24)]

         27. Mr. Jaggers agreed to a call, and, on October 4, 2010, Mr. Tresca and other representatives of the Branta Entities spoke with Ute Energy. [Trial Ex. A34; Jaggers Testimony (Vol. I - 219:25-220:7)]

         28. Branta did not seek or obtain Newfield's consent prior to its September 30, 2010 outreach and October 4, 2010 conversation with Ute Energy. [Howard Testimony (Vol. II - 398:5-18)]

         V. THE AUCTION

         29. HNR was motivated to sell Harvest (US)'s share of the Uinta Basin Assets in part because it needed to raise funds to cover debts coming due in the second quarter of 2011 after unsuccessful attempts to market certain other assets in Venezuela in 2010, and intended to sell only 100% - not a part - of its interest. [Head Testimony (Vol. VIII - 1728:18-22); Edmiston Testimony (Vol. IV - 797:25-800:6, 813:10-20, 816:21-817:14, 847:12-848:5, 849:16-23, 849:11-850:24); Trial Ex. A73; Trial Ex. B15]

         30. In the auction, the selling parties, here Harvest (US) and Branta E&P, controlled the auction's rules for bidding and the identities and number of competitors allowed to participate in the auction. The sellers and their banker (Bank of America Merrill Lynch (“BAML”)) controlled the market of participating competitors by choosing whom to invite into the process, including sending the initial “teaser” and making follow-up calls to generate interest in the auction, offering confidentiality agreements and allowing access to the sellers' “data room, ” and sending bid guidelines describing the terms of bids. A party not invited to participate or barred from participation by the sellers was not a competitor in the auction. [Nesselrode Testimony (Vol. IV - 737:17-19, 743:1-5, 789:9-21, 780:12-15); Edmiston Testimony (Vol. IV - 817:15-819:15, 825:18-827:10, 839:25-840:9, 849:16-23, 851:9-22, 862:19-24); Sooby Testimony (Video Depo. - 118:6-119:4); Tresca Testimony (Vol. III - 583:7-11, 583:16-19, 667:10-20); Trial Ex. 5; Trial Ex. 7; Trial Ex. B15 at ¶ 150003, 0005]

         31. Branta agreed in early January 2011 to participate as a seller with the Harvest Entities, agreed that HNR could act as a representative for both Branta Entities in the auction, and agreed to BAML's participation on behalf of the Branta Entities in the auction process. [Tresca Testimony (Vol. III - 575:9-576:5, 583:2-19, 644:21-645:7); Trial Ex. 30; Trial Ex. 52]

         32. Plaintiffs expected that Newfield, Shell or El Paso would be the primary competitors in the auction. [Tresca Testimony (Vol. III - 601:1-4, 604:17-605:1, 676:24-677:6); Head Testimony (Vol. VIII - 1732:14-1733:5); Trial Ex. 77] They expected El Paso to be the most logical company to make a strong bid. [Trial Ex. K] Branta was aware, however, that Ute Energy could not afford to purchase the Uinta Basin Assets in their entirety. [Trial Exs. Q, T]

         a. Plaintiffs Barred Newfield and Ute Energy From The Auction

         33. On January 6, 2011, HNR's CEO, James Edmiston, informed Branta's Fred Tresca that Ute Energy and Newfield would be excluded from the auction process, at least until a later point in the process. [Trial Ex. A43 at ¶ 43003]

         34. On January 7, 2011, Edmiston instructed BAML that Ute Energy and Newfield would not be permitted to participate in the auction unless and until he instructed BAML otherwise. [Trial Ex. 18 at 18-024; Sooby Testimony (Video Depo. - 60:24-62:18, 70:22-71:8, 72:7-15); Edmiston Testimony (Vol. IV - 853:14-855:18)] Mr. Edmiston instructed BAML to move Newfield and Ute Energy to the “B-List.” [Trial Ex. 18 at 18-024] BAML understood Mr. Edmiston's instructions to bar Ute Energy and Newfield from participating in the auction unless and until Plaintiffs affirmatively lifted their respective bars. [Sooby Testimony (Video Depo. - 67:12-69:12, 70:22-71:8, 74:2-11, 77:01-12, 92:14-94:22, 97:19-98:4)]

         35. On January 10, 2011, BAML began a calling program contacting potential buyers about the auction. [Trial Ex. 18] Potential buyers were also sent “teasers” that described the assets to be sold as well as the next steps in the sale process, which involved the execution of a confidentiality agreement, access to an online data room, and management presentations in Houston covering Land, Geology, Geophysics, Reservoir Engineering and Economics, Operations, and Facilities and Marketing. [Id.; Trial Ex. A76]

         36. BAML's Contact List records that BAML contacted 47 different companies in its calling program and sent Teasers to 45 companies. [Trial Ex. 18] The Contact List shows that BAML never sent a Teaser to Newfield or Ute Energy, and never contacted Ute Energy in its calling program. [Id.]

         37. On January 13, 2011, Mr. Jaggers called HNR's vice president, Karl Nesselrode, to express interest in the Uinta Basin Assets. [Jaggers Testimony (Vol. I - 99:21-100:14, 132:2-5)] Mr. Nesselrode testified that Mr. Jaggers expressed interest in participating in the process and that he told Mr. Jaggers that if Ute Energy were interested it needed to contact BAML. [Nesselrode Testimony (Vol. IV - 752:10-16, 754:7-22, 755:14-756:9, 793:3-11)]

         38. However, in an email sent at 11:15 p.m. on the same day that Mr. Nesselrode spoke to Mr. Jaggers and reported his conversation with Mr. Jaggers to Mr. Edmiston, Mr. Edmiston reiterated his instruction to Mr. Nesselrode and BAML that “Ute Energy and Newfield are barred from the early rounds of our process due to competitive reasons.” Mr. Edmiston stated “[i]f I think we need to, we will bring them in at the end . . . .” [Trial Ex. 57; Nesselrode Testimony (Vol. IV - 746:5-748:5)]

         39. Mr. Nesselrode testified that, later in January 2011, he received two other calls from Mr. Jaggers expressing Ute Energy's interest in being part of the process relating to the Uinta Basin Assets and seeking information regarding the status of the data room. [Nesselrode Testimony (Vol. III - 696:17-697:1, 697:18-25; Vol. IV - 753:20-23, 758:14-759:8)]

         40. Mr. Nesselrode indicated that he and Mr. Jaggers did not discuss bidding on any of the January phone calls regarding Ute Energy's interest in participating in the process relating to the Uinta Basin Assets because it was too early in the process to talk about bidding. [Nesselrode Testimony (Vol. IV - 758:1-13)]

         b. Plaintiffs Lifted The Bar On Newfield's Participation In the Auction On February 15, 2011 But Never Lifted The Bar On Ute Energy's Participation

         41. On February 15, 2011, just three weeks before the auction, Mr. Edmiston decided to allow Newfield to participate in the auction and instructed BAML to invite Newfield to participate. However, Mr. Edmiston never lifted the bar on Ute Energy's participation in the auction and never instructed BAML to contact Ute Energy about participating in the auction. [Sooby Testimony (Video Depo. - 74:2-76:1, 77:1-18, 78:6-10, 79:22-80:10, 80:20-81:1, 94:17-22); Trial Ex. 90; Tresca Testimony (Vol. III - 668:13-669:21, 670:9-15); Edmiston Testimony (Vol. IV - 857:6-19, 857:24-858:4, 858:25-859:8); Head Testimony (Vol. VIII - 1738:10-19)]

         42. Harvest also barred Morgan Stanley from the auction process. [Trial Ex. B12]

         43. BAML invited Newfield into the process on February 15, 2011 by contacting Newfield's CFO, Terry Rathert, and sending a confidentiality agreement for Newfield to execute, and by inviting Newfield to schedule a visit to the data room. [Trial Exs. A95, A98, 91-92; Edmiston Testimony (Vol. IV - 856:11-14, 856:22-24)]

         44. Plaintiffs did not expect companies to bid without first executing a confidentiality agreement, accessing the data room, and receiving bid procedures. Ute Energy would not have bid in the auction without first accessing the data room. [Jaggers Testimony (Vol. I - 199:1-13, 201:11-14); Jaggers Testimony (Vol. II - 257:19-258:1, 261:10-13); Nesselrode Testimony (Vol. IV - 709:13-21, 711:7-14, 758:3-10, 780:8-15); Edmiston Testimony (Vol. IV - 851:9-852:5); Sooby Testimony (Video Depo. - 21:12-19, 22:08-19, 68:9-20); Tresca Testimony (Vol. III - 667:25-668:12); Head Testimony (Vol. VIII - 1732:24-1733:6)]

         45. BAML's Contact List reflects that BAML sent confidentiality agreements to 21 companies, and hosted 10 data room presentations. [Trial Ex. 18] The Contact List identifies the companies visiting the data room as El Paso, Devon, Shell, Endeavour, Bill Barrett Corporation (“BBC”), Newfield, ExxonMobil, Enduring Resources, ConocoPhillips, and Berry Petroleum. [Id.]

         46. Plaintiffs never sent Ute Energy a confidentiality agreement and never invited Ute Energy to the data room, which contained proprietary information from which potential bidders could evaluate the Uinta Basin Assets. [Edmiston Testimony (Vol. IV - 851:9-853:6, 855:3-856:4, 857:8-11, 857:24-858:5, 858:25-859:3); Head Testimony (Vol. VIII - 1730:13-1731:2, 1731:16-1732:5); Nesselrode Testimony (Vol. IV - 751:24-752:9, 752:20-753:18); Trial Ex. C38 at ¶ 380021-22, at Request for Admission # 5; Trial Ex. 18; Sooby Testimony (Video Depo. - 77:1-18, 77:23-78:10, 78:15-17, 78:19)]

         47. Neither Plaintiffs nor BAML ever contacted Ute Energy after Mr. Edmiston sent his January 13, 2011 email reiterating that Ute Energy was barred from participating in the auction. [Trial Ex. 18; Nesselrode Testimony (Vol. IV - 751:24-752:9, 752:20-753:18); Sooby Testimony (Video Depo. - 79:5-8, 79:10-80:10, 82:4-10, 83:6-23, 92:14-93:14, 93:17-94:4, 94:12-22)]

         48. There is no evidence that anyone from HNR, Branta, or BAML expressed surprise that Ute Energy was not in the process or asked why Ute Energy was not involved. Instead, they reported that the data room attendees included “everyone you would expect.” [Trial Ex. A96] There is no evidence Plaintiffs or their bankers expected Ute Energy to participate in the auction process.

         c. Newfield Executed A Confidentiality Agreement With HNR And Entered Into An Amendment To The Branta CA

         49. On February 17, 2011, Newfield and HNR entered into a confidentiality agreement (the “Harvest Confidentiality Agreement” or “Harvest CA”), so that Newfield could access the data room and gather information to prepare a bid for Harvest (US)'s share of the Uinta Basin Assets. [Trial Ex. 32]

         VI. NEWFIELD DEVELOPS ITS BID PRESUMING ROBUST COMPETITION

         50. The auction for the Uinta Basin Assets was a sealed bid process, in which bidders did not know the identities or bid amounts of other bidders, or the number of other bidders. [Schulman Testimony (Vol. VI - 1142:22-1143:12); Burtis Testimony (Vol. X -1921:1-21)]

         51. Newfield did not know the number or identities of the potential bidders contacted by BAML. Newfield believed, however, that there would be robust competition in the auction from numerous bidders. [Trial Ex. 9 at 9-065; Packer Testimony (Vol. VII - 1416:7-21, 1467:13-1469:12, 1495:24-1496:22, 1534:17-20, 1543:24-1544:9); Massaro Testimony (Vol. VIII - 1567:5-14, 1574:9-18, 1604:1-6, 1629:20-24); Jergensen Testimony (Vol. V - 1020:20-24, 1027:13-24, 1029:24-1030:20); Rathert Testimony (Vol. IX - 1774:3-1775:7); Boothby Testimony (Vol. VIII - 1688:5-1690:5); Howard Testimony (Vol. II - 384:12-385:5]

         52. For example, Newfield's Decision Review document that was presented internally to Newfield's senior management identified El Paso, Shell, Oxy, Noble and Samson as “well- capitalized-could move the needle” potential bidders. Ute Energy, along with BBC, Berry, and QEP, was identified in this document in the list of potential bidders that were “also active in the basin” but from which Newfield “expected lower level activity, ” along with Crescent Point Energy, a Canadian company that ultimately purchased Ute Energy's upstream business. [Trial Ex. 9 at 9-065; Jaggers Testimony (Vol. I - 191:14-16); Howard Testimony (Vol. II - 425:17-20); Massaro Testimony (Vol. VIII - 1567:5-14, 1574:9-18, 1581:20-1582:15)]

         53. Bigger players such as El Paso were considered the primary competitors Newfield thought it would need to beat to win the auction. [Trial Exs. 112, 117, 118, 120, 124; Howard Testimony (Vol. II - 368:11-15, 384:15-385:5, 421:7-19); Packer Testimony (Vol. VII - 1468:3-8, 1468:25-1469:12); Massaro Testimony (Vol. VIII - 1567:10-14, 1574:9-16, 1577:18-23, 1582:12-15, 1604:1-6); Boothby Testimony (Vol. VIII - 1689:5-13, 1732:14-19); Rathert Testimony (Vol. IX - 1774:25-1775:7)]

         54. Though Newfield identified Ute Energy as a potential competitor, Newfield never thought Ute Energy was the primary competitor it would have to beat to win the auction. [Howard Testimony (Vol. II - 421:7-19)] This is because it was widely known that Ute Energy had limitations on its ability to fund a transaction, as evidenced by discussions Ute Energy had had with Newfield as to whether it could keep up with Newfield's drilling capital campaigns. [Packer Testimony (Vol. VII - 1469:22-24); Jergensen Testimony (Vol. V - 1027:13-1028:12); Jaggers Testimony (Vol. I - 136:9-13)]

         55. According to Ute Energy's CEO, Mr. Jaggers, Ute Energy was not a natural buyer for the Uinta Basin Assets because the only way Ute Energy could participate was if Newfield acquired the assets and then shared them with Ute Energy. [Jaggers Testimony (Vol. I - 203:5- 14); Tresca Testimony (Vol. III - 608:8-15)]

         56. The Decision Review document presented to Newfield's senior management recommended a bid of $220 million. [Trial Ex. 9 at 9-064; Howard Testimony (Vol. II - 374:4-13)] Newfield's initial bid was approximately $67.5 million higher than the recommended bid because Newfield anticipated robust competition. [Massaro Testimony (Vol. VIII - 1593:20-1596:12); Packer Testimony (Vol. VII - 1473:21-1475:16, 1525:7-1526:11, 1543:24-1544:9)]

         VII. NEWFIELD IS THE SUCCESSFUL BIDDER

         57. On March 1, 2011, BAML sent bid procedures to Newfield and eight other potential bidders for the purchase of Harvest (US)'s share of the Uinta Basin Assets and for the purchase of Branta E&P's share of the Uinta Basin Assets. [Trial Ex. 18; Trial Ex. B15] No bid procedures were sent to Ute Energy. [See id.]

         58. The bid procedures instructed the bidders to submit their proposals “in conformity with the guidelines” set forth in the procedures. The guidelines required that any bid be for all of Harvest (US)'s and Branta E&P's Uinta Basin Assets, respectively. [Trial Ex. B15 at ¶ 150004, B150008]

         59. Plaintiffs always intended to sell 100% of the Uinta Basin Assets, not portions thereof, if possible. [Tresca Testimony (Vol. III - 644:7-20); Edmiston Testimony (Vol. IV - 816:21-817:14, 847:12-848:5, 848:16-24, 849:11-20, 850:10-24); Sooby Testimony (Video Depo.-- 47:19-48:1; Trial Exs. A73, 104] In fact, Harvest (US), through Mr. Edmiston, was contacted by several smaller companies regarding partial bids, but Mr. Edmiston rejected their overtures, wanting 100% of the assets to be available in the auction. [Edmiston Testimony (Vol. IV - 848:16-24); Trial Ex. A73] And, in the end, Plaintiffs rejected BBC's partial bid at $180 million. [Trial Ex. 13] Harvest never told its bankers, BAML, that they would entertain partial bids, and never invited partial bids. [Nesselrode Testimony (Vol. IV - 735:2-12, 735:23-736:7)]

         60. Ute Energy understood that Plaintiffs were interested only in selling the entirety of their Uinta Basin Assets, but Ute lacked the financial ability to compete for those assets. [Jaggers Testimony (Vol. I - 189:2-7)]

         61. Plaintiffs' position was that selling the whole portion of the assets would maximize the value or price they could receive-the whole being greater than the sum of the parts-and therefore that they wanted to sell the entirety of the Uinta Basin Assets together at the auction. [Tresca Testimony (Vol. III - 644:17-20)]

         62. At trial, Mr. Jaggers testified that he might have approached Harvest (US) outside the auction process regarding a partial bid since Ute Energy could not compete for the entirety of the assets in the auction. [Jaggers Testimony (Vol. I - 114:18-20, 189:2-13)] But there was no evidence of what portion Ute Energy would have bid on, nor the price it would have paid, nor any other details. Therefore, Mr. Jaggers' testimony was speculative. Moreover, based on the evidence that Mr. Edmiston rejected all expressions of interest in partial offers made outside the auction process, I find no reason to believe that an overture from Ute Energy expressing interest in making a partial offer prior to the auction would have been more positively received. And because the nature of such a partial offer was never considered by Ute Energy, it would also be speculative to predict even what that offer would have been.

         63. The Decision Review document recommending a $220 million bid was prepared by Newfield's Rocky Mountain business unit, for presentation to Newfield's senior management, which was responsible for discussing bids for significant acquisitions and the amounts of such bids, with final decisions made by Newfield's CEO, Lee K. Boothby. [Boothby Testimony (Vol. VIII - 1672:23-1673:11, 1675:8-1676:8, 1684:2-1685:22); Howard Testimony (Vol. II - 277:10-278:3, 342:16-343:6, 374:4-13, 383:25-384:9); Massaro Testimony (Vol. VIII - 1592:19-1596:12)]

         64. The Newfield bid of approximately $287.5 million was decided by Mr. Boothby, based on his determination that the maximum amount he was willing to pay for the Uinta Basin Assets was $300 million, and he wanted to submit a bid somewhat below the maximum to leave room for possible further negotiations. [Boothby Testimony (Vol. VIII - 1684:21-1686:13); Massaro Testimony (Vol. VIII - 1593:20-1596:12)]

         65. On March 7, 2011, the bid deadline, Newfield submitted a bid for more than $196 million for Harvest (US)'s share of the Uinta Basin Assets and a bid for more than $90 million for Branta E&P's share of the Uinta Basin Assets, for a total bid of $287, 575, 000. [Trial Ex. 127; Trial Ex. 128].

         66. BBC initially submitted a bid for $120 million for a portion of Harvest (US)'s share of the Uinta Basin Assets. [Nesselrode Testimony ...


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