Background

The Claimant was the operator of a natural gas and crude oil gathering system initiated arbitration proceedings to collect a balloon payment in excess of $200 million, even though the contract did not contain the concept of a balloon payment.

Our Role

Secretariat professionals were appointed to provide expert testimony on behalf of the non-operator on industry custom and practice related to negotiation of gathering and processing fees, methodologies related to the calculation of such fees and to provide an opinion of whether the methodology described in the gathering agreement was being followed.

Outcome

The client relied on our long term industry experience to educate and provide insights into the importance of having clear documentation in gathering contracts, and to follow the terms as they are written. The panel agreed with the expert testimony, quoting the expert in the award, stating “we have expert testimony indicating that the rate language of a gathering agreement is the most intensely negotiated language.” The panel rendered a unanimous “take nothing” decision on behalf of our client.