Judge Awards Reed Petroleum $3 Million in Oil & Gas Dispute

LAREDO, Texas, Feb. 24 /PRNewswire/ -- A state district judge in Webb County, Texas, has ordered Lavon Evans and his companies to pay more than $3 million to Reed Petroleum, a Colorado Springs-based company owned by Reed Cagle.

Judge Raul Vasquez of the 111th District Court ruled that Mr. Evans' Evans Drilling Ventures violated an operating agreement signed with Reed Petroleum regarding joint ownership of a deep-well drilling rig.

In January 2006, Mr. Evans and Mr. Cagle formed Laredo Energy Holdings (LEH) to construct and own a deep-well drilling rig, with Evans Drilling Ventures supplying the components to construct the rig, and with Reed Petroleum obtaining a loan to finance construction. Evans Drilling Ventures was to maintain a 51 percent interest in LEH, with Reed Petroleum controlling the remaining 49 percent.

The court found that Mr. Evans wrongfully took sole control of the drilling rig in May 2007, preventing LEH from leasing the rig as intended in the operating agreement. Evidence at trial showed that if LEH had been allowed to lease the drilling rig, the company reasonably could have drilled 10 wells over the past two years.

As a result, the court ruled that LEH lost out on more than $3.8 million in potential profits, and that the operating agreement entitles Reed Petroleum to a payment of $1,847,275. Reed Petroleum also was awarded more than $490,000 to cover additional interest the company was forced to pay on the drilling rig loan due to Mr. Evans' actions, and more than $700,000 in pre-judgment interest, attorneys' fees and expenses. The court's ruling also denied Mr. Evans' counterclaims of fraud and theft of $3 million in partnership funds against HEI Resources Inc., completely clearing HEI of any wrongdoing in the matter.

Judge Vasquez issued the final ruling on February 23, 2010, following a weeklong bench trial held in August 2009. The case is Laredo Energy Holdings, et al. v. E&D Services, Inc., et al., No. 2007-CVQ-000903-D2.

LEH, Reed Petroleum, Mr. Cagle and HEI Resources were represented at trial by Mikel Bowers, a partner with Dallas' Bell Nunnally & Martin LLP, and firm associate Donnie W. Wisenbaker.

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

SOURCE Bell Nunnally & Martin LLP