Wyoming Court Awards $35.19 Million to Helium Supplier Over Denbury Contract Breach

In 2009, Cimarex Energy Co. and Riley Ridge LLC signed a helium supply contract with APMTG Helium, LLC. Under the agreement, APMTG would purchase 200 million cubic feet of helium annually for the first two years and 400 million cubic feet per year after that, all flowing from a processing plant at the Riley Ridge Unit in Sublette County, Wyoming.

Denbury Resources acquired Riley Ridge LLC's interest in 2010 and Cimarex's interest in 2011, stepping into the seller's shoes. Deliveries were supposed to begin by December 1, 2010, with a one-year grace period for delays not caused by force majeure. They never came. Denbury pointed to two problems: a contractor's failure to complete the processing plant and supply well failures caused by sulfur deposition. The company argued both were force majeure events outside its control.

APMTG filed suit in the Ninth Judicial District Court of Sublette County in November 2014. Jason A. Neville of The Spence Law Firm, along with co-counsel from Williams, Porter, Day and Neville in Casper, tried the case over a seven-day bench trial before District Court Judge Marvin Tyler.

Judge Tyler rejected Denbury's force majeure defense in full. He found that the contractor failure and the sulfur deposition problems were both foreseeable and that Denbury had assumed control of the plant completion without exercising reasonable care and diligence. On that basis, he credited Denbury with only 36 days of excused non-performance and held the company liable for the rest.

In April 2019, Judge Tyler ordered Denbury Onshore, LLC and Denbury Resources, Inc. to pay APMTG $35,199,276.79 in damages and interest. Denbury appealed. The company filed for Chapter 11 bankruptcy during the appeal proceedings, emerging as Denbury Inc. in September 2020.

On December 4, 2020, the Wyoming Supreme Court affirmed. Justice Keith Kautz, writing for the court, agreed that the force majeure events were foreseeable and that the contract itself contemplated them. The full award of $35,199,276.79 stood.