Southwestern Energy Announces Adverse Jury Verdict Against Its Subsidiary
HOUSTON, Dec. 14, 2010 /PRNewswire/ -- Southwestern Energy Company (NYSE: SWN) announced that yesterday a jury in the 273rd District Court in Shelby County, Texas, returned a verdict against one of its subsidiaries, Southwestern Energy Production Company ("SEPCO"), in the matter of Tovah Energy, LLC and Toby Berry-Helfand v. David Michael Grimes, et, al. As previously disclosed by the company, in a sixth amended petition filed in July 2010, plaintiffs alleged various statutory and common law claims, including misappropriation of trade secrets, violation of the Texas Theft Liability Act, breach of fiduciary duty and confidential relationships, fraud and breach of contract, against SEPCO arising from alleged proprietary data provided under a 2005 confidentiality agreement concerning two prospects in the James Lime formation.
In the July 2010 petition, plaintiffs sought actual damages of over $55 million as well as other remedies, including special damages and punitive damages of four times the amount of actual damages established at trial. However, immediately before the commencement of the trial, plaintiffs were permitted, over SEPCO's objections, to file a seventh amended petition claiming actual damages of approximately $46 million and also seeking the equitable remedy of disgorgement of all profits for the misappropriation of trade secrets and the breach of fiduciary duty claims. The jury found in favor of the plaintiffs with respect to all of the statutory and common law claims and awarded approximately $11.4 million in compensatory damages. The jury did not, however, award plaintiffs any special, punitive or other damages. In addition, the jury separately determined that SEPCO's profits for purposes of disgorgement were $381.5 million. The profit determination does not constitute a judgment or an award. The plaintiffs' entitlement to disgorgement of profits as an equitable remedy will be determined by the judge, likely within the next 30 days, and it is within the judge's discretion to award none, some or all the amount of profit to the plaintiffs. The company will be opposing entry of judgment on this basis as the company believes such a remedy is not supportable under the applicable law and further based upon the fact that no punitive damages were awarded by the jury. In addition, the company will be taking immediate steps to pursue all available options, including other post-trial motions and appeal, to overturn the approximately $11.4 million verdict.
Southwestern Energy Company is an integrated company whose wholly-owned subsidiaries are engaged in oil and gas exploration and production, natural gas gathering and marketing. Additional information on the company can be found on the Internet at http://www.swn.com .
All statements, other than historical financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements that address activities, outcomes and other matters that should or may occur in the future, including, without limitation, statements regarding the financial position, business strategy, production and reserve growth and other plans and objectives for the company's future operations, are forward-looking statements. Although the company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The company has no obligation and makes no undertaking to publicly update or revise any forward-looking statements. You should not place undue reliance on forward-looking statements. They are subject to known and unknown risks, uncertainties and other factors that may affect the company's operations, markets, products, services and prices and cause its actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with forward-looking statements, risks, uncertainties and factors that could cause the company's actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas and oil (including regional basis differentials); the company's ability to fund the company's planned capital investments; the company's ability to transport its production to the most favorable markets or at all; the timing and extent of the company's success in discovering, developing, producing and estimating reserves; the economic viability of, and the company's success in drilling, the company's large acreage position in the Fayetteville Shale play, overall as well as relative to other productive shale gas plays; the impact of federal, state and local government regulation, including any legislation relating to hydraulic fracturing, the climate or over the counter derivatives; the company's ability to determine the most effective and economic fracture stimulation for the Fayetteville Shale formation; the company's future property acquisition or divestiture activities; the impact of the adverse outcome of any material litigation; the costs and availability of oil field personnel, services, drilling supplies, raw materials, and equipment; increased competition; the financial impact of accounting regulations and critical accounting policies; the comparative cost of alternative fuels; conditions in capital markets, changes in interest rates and the ability of the company's lenders to provide it with funds as agreed; credit risk relating to the risk of loss as a result of non-performance by the company's counterparties and any other factors listed in the reports the company has filed and may file with the Securities and Exchange Commission (SEC). For additional information with respect to certain of these and other factors, see the reports filed by the company with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.SOURCE Southwestern Energy Company
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