AZA Defeats $123.7 Million Breach Claim in First Major Winter Storm Uri Natural Gas Jury Trial

AZA Defeats $123.7 Million Breach Claim in First Major Winter Storm Uri Natural Gas Trading Jury Trial 

May 6, 2025

HOUSTON – A federal court jury in Houston found in favor of Marathon Oil Company in a lawsuit against Koch Energy Services over the delivery of natural gas during the February 2021 Winter Storm Uri.

In the process, AZA’s client Marathon Oil prevailed on its declaratory judgment claim and defeated Koch’s $123.7 million counterclaim for breach of contract.

At issue was Marathon’s obligation to deliver natural gas in Oklahoma from February 15-20, 2021, when Winter Storm Uri caused havoc on natural gas production and caused prices for natural gas in Oklahoma to reach record highs.

The jury was tasked with deciding whether Marathon, which was acquired by ConocoPhillips in 2024, fully complied with the criteria in the contract to have a valid force majeure that excused the under deliveries to Koch, including using reasonable efforts to avoid the adverse impacts of the storm.

Throughout the trial, Koch’s attorneys, witnesses, and experts claimed, among other things, that under the contract Marathon was required to use reasonable efforts to purchase any available replacement gas during the storm and Marathon had failed to do so. On this basis, Koch claimed that Marathon had breached the contract and owed Koch $123.7 million for undelivered gas during the storm.

Marathon, however, established, through the jury verdict, that the contract only required a producer like Marathon to use reasonable efforts to keep its wells online and bring them back online as soon as possible, as opposed to buying replacement gas.

“After deliberating for less than three hours, the jury soundly rejected Koch’s view of the world,” said AZA partner Tim Shelby, the lead lawyer for Marathon.

“From an industry perspective, this jury verdict answers the fact question identified in the Fifth Circuit’s 2024 decision in Mieco v. Pioneer regarding reasonable efforts and replacement gas. It provides guidance to the industry about what producers like Marathon are reasonably expected to do during weather events and rejects the expectation of buying replacement gas in the middle of a weather event,” said Mr. Shelby.

He said this six-day jury trial appears to be the first jury trial in a major Winter Storm Uri natural gas trading case in which a seller has been required to prove that it fully complied with the force majeure provision to excuse performance. 

Before trial, Marathon prevailed on a partial summary judgment that required Koch to pay $9.8 million on Marathon’s breach of contract claim over Koch’s withholding of money owed to Marathon under the contract. After the jury verdict, the court explained that the net result of the trial is that Marathon prevailed on its declaration of force majeure, and judgment will be entered requiring Koch to pay Marathon $9.8 million, plus prejudgment and post-judgment interest.

The case was covered by Law 360 in “Texas Jury Clears Marathon Oil In $123M Force Majeure Case” (subscription required) and by Texas Lawbook in “Jury Sides With Marathon Oil, Rejects $123.7M Claim in Uri Natural Gas Delivery Trial” (subscription required), and Texas Lawyer in “Less Than 3 Hours: Houston Jury Quickly Sides With Marathon Oil” (subscription required).

Trying the case before U.S. District Judge Sim Lake with Mr. Shelby were AZA partner Sammy Ford IV, Of Counsel Paul Galante and associates Emily Adler, Michael Gorrell, and Ab Henry. Mark Trachtenberg and Ryan Pitts from Haynes and Boone were also on the Marathon team.

The case is Marathon Oil Company v. Koch Energy Service, LLC case number 4:21-cv-01262.

AZA, or Ahmad, Zavitsanos & Mensing, is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, healthcare, intellectual property and business dispute cases. AZA is recognized by Chambers USA 2024 as among the best in Texas in commercial law and intellectual property; has been listed by Best Lawyers’ Best Law Firms as one of the country’s best commercial litigation firms for 13 years; has been named Litigation Department of the Year by Texas Lawyer three times; and was previously dubbed a Texas Powerhouse law firm by Law360.