HEI Resources East OMG Joint Venture Awarded $8.73 Million in Oil & Gas Dispute

LAREDO, Texas, Feb. 18 /PRNewswire/ -- A federal judge in Laredo, Texas, has issued a final judgment ordering S. Lavon Evans Jr. and his companies to pay more than $8.73 million to the HEI Resources East OMG Joint Venture in connection with a failed oil & gas deal.

The final judgment was issued by Senior U.S. District Judge Joseph M. Hood, sitting by designation in the U.S. District Court for the Southern District of Texas. The award includes $2.7 million in actual damages, $5.4 million in exemplary damages, and more than $600,000 in interest, fees and expenses.

In the final judgment, the court ruled that Mr. Evans and his companies, S. Lavon Evans Jr. Operating Inc. and E&D Services Inc., violated the Texas Theft Liability Act and defrauded East OMG, a joint venture managed by HEI Resources Inc. and its president Reed Cagle, after failing to finalize an oil and gas drilling deal at the K2 Prospect in Colorado County, Texas.

In early 2007, Mr. Evans approached Mr. Cagle about drilling opportunities in the K2 Prospect, where Mr. Evans stated that his companies controlled the mineral rights. Acting on behalf of the East OMG Joint Venture, HEI Resources paid Mr. Evans $2.7 million to close the deal. The next day, Mr. Evans informed HEI Resources that the deal had fallen through.

"The East OMG Joint Venture, HEI Resources and Mr. Cagle did everything they could to make sure this drilling deal was done, including investing a significant amount of Joint Venture money in the designated drilling prospect," says Lori Hood, an attorney with Houston's Johnson, Trent, West & Taylor, L.L.P. who represented East OMG. "Unfortunately Mr. Evans had other plans, and we're pleased the court has decided to make him stand up and take responsibility."

Following the broken deal, the East OMG Joint Venture partners directed Mr. Cagle and HEI Resources to pursue legal action against Mr. Evans. In August 2009, East OMG's obtained summary judgment in the case, with the court finding that Mr. Evans and his companies had conspired and all were liable for fraud, theft, and unjust enrichment.

"When the East OMG partners asked Mr. Cagle and HEI Resources for help, they did everything in their power to right this wrong," says Mikel Bowers, an attorney with Dallas' Bell Nunnally & Martin LLP, counsel for Mr. Cagle and HEI Resources. "Mr. Cagle takes seriously his role as managing venturer, and protecting the joint venture and its partners is his number one concern."

The final judgment was issued Feb. 10, 2010. The case is HEI Resources East OMG Joint Venture v. S. Lavon Evans, Jr. Operating Co., Inc. et al., No. 5:07-CV-62.

For more information, contact Alan Bentrup at 800-559-4534 or [email protected].

SOURCE HEI Resources East OMG