Caerus Oil and Gas, LLC Caerus Operation, LLC v. Terra Energy Partners, LLC and TEP Rocky Mountain, LLC

Opinion issued February 23, 2023

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-22-00191-CV
———————————
CAERUS OIL AND GAS, LLC AND CAERUS OPERATING, LLC,
Appellants
V.
TERRA ENERGY PARTNERS, LLC AND TEP ROCKY MOUNTAIN,
LLC, Appellees

On Appeal from the 113th District Court
Harris County, Texas
Trial Court Case No. 2021-17993

MEMORANDUM OPINION
In this interlocutory appeal,1 appellants, Caerus Oil and Gas, LLC and Caerus

Operating, LLC (collectively, “Caerus”), challenge the trial court’s order denying

their second amended special appearance in favor of appellees, Terra Energy

Partners, LLC and TEP Rocky Mountain, LLC (collectively, “Terra”), in Terra’s suit

against Caerus for breach of contract and breach of fiduciary duty. In its sole issue,2

Caerus contends that the trial court erred in denying its second amended special

appearance.

We reverse and render.

Background

In its third amended petition, Terra alleges that it owns certain oil and gas

wells in the Piceance Basin of Colorado. According to Terra, the wells that it owns

are subject to Joint Operating Agreements (the “JOAs”). Caerus is the operator for

the wells and “market[s] [the] natural gas production from the wells owned” by

Terra.

Terra alleges that under a letter, dated August 19, 2010 and titled Gas

Marketing Election Agreement, Noble Energy, Inc. (“Noble”) expressly agreed to

1
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7).
2
Caerus lists four issues in the “Issues Presented” section of its appellant’s brief, but
all relate to the core issue in this appeal—whether the trial court erred in denying
Caerus’s second amended special appearance. For ease, we will refer to the core
issue—whether the trial court erred in denying Caerus’s second amended special
appearance—as Caerus’s “sole issue” on appeal, while still addressing the
arguments raised in Caerus’s briefing.

2
act as the “agent in marketing” the “share of natural gas production” of Williams

Production RMT Company (“Williams”). Terra is a successor entity to Williams,

and Caerus is a successor entity to Noble.

On December 1, 2012, Noble entered into a revised agreement with a natural

gas importer, Williams Field Services, which “provide[d] for a fee per thousand

cubic feet . . . for natural gas transported and contain[ed] minimum volume

requirements” (the “Gathering Agreement”). The Gathering Agreement also stated

that if Noble “fail[ed] to . . . transport[] a certain minimum volume of gas, it [was]

to pay an additional amount as a penalty for the under-delivery of gas under the

Gathering Agreement.” According to Terra, when Caerus, as the successor entity to

Noble, failed to deliver the minimum volume of gas required by the Gathering

Agreement and paid the under-delivery penalty, Caerus charged Terra a portion of

the under-delivery penalty and deducted that amount from the payment it tendered

to Terra from the sale of Terra’s gas. Terra alleges that Caerus improperly deducted

about $550,000 from the amount it tendered to Terra from the sale of Terra’s gas.

Terra also alleges that Caerus operates a road—the Garden Gulch Road—

which is used for the operation of certain jointly owned wells in Colorado. A Road

Construction and Maintenance Agreement governed the construction and operation

of the Garden Gulch Road. An exhibit to the Road Construction and Maintenance

Agreement provided the “[c]harges for the maintenance and operation of the road.”

3
According to Terra, without authority, Caerus charged Terra a fixed fee of $15,000

per month “as a management fee to cover its . . . ‘administrative and overhead costs’

in [its] operati[on] and maint[enance] [of] the Garden Gulch Road.”

Further, Terra alleges that the JOAs “contain[ed] a [Council of Petroleum

Accountants Societies] Model Form Accounting Procedure . . . that provide[d] for

what charges an [o]perator [could] [charge] to [a] non-operator[]” (the “Accounting

Procedure”). The Accounting Procedure permitted an operator, like Caerus, to

charge direct expenses in fifteen “separate categories and to charge a monthly fee

for overhead” to a non-operator. The overhead fee was a fixed monthly fee and was

meant to “compensate for administrative, supervision, office services[,] and

warehousing costs” incurred by the operator. (Internal quotations omitted.) Yet,

Terra asserts that Caerus improperly charged Terra, in addition to the amount

allowed by the Accounting Procedure, $15,000 per month for the operation and

maintenance of the Garden Gulch Road, which was not authorized by the

Accounting Procedure. Although Terra notified Caerus of the overcharge, Caerus

“refused to refund the [improper charges] and continue[d] to” overcharge Terra. In

response, Caerus asserted its right to make such deductions under the JOAs and the

Accounting Procedure.

Terra brings claims for breach of contract and breach of fiduciary duty against

Caerus. As to its breach-of-contract claim, Terra alleges that Terra’s wells are

4
operated pursuant to “a number of JOAs,” which are contracts between Terra and

Caerus. The JOAs contained the Accounting Procedure, which “specifie[d] what

charge[s]” an operator, like Caerus, could “charge” a non-operator, like Terra. The

JOAs also contained a Gas Balancing Agreement “that provide[d] for the marketing

of natural gas production from the wells.” The JOAs did not allow Caerus to impose

“an overhead charge for operating” the Garden Gulch Road, and the Road

Construction and Maintenance Agreement did not allow for an overhead charge.

Instead, the Accounting Procedure and the Road Construction and Maintenance

Agreement governed “what c[ould] be charged to Terra” by Caerus for the operation

and maintenance of the Garden Gulch Road. The Accounting Procedure provided

for a fixed monthly overhead fee, but it “d[id] not permit an[y] additional overhead

or administrative fee” such as the one that Caerus had been charging for the

operation and maintenance of the Garden Gulch Road. Further, neither the

Gathering Agreement nor any other agreement between Terra and Caerus allowed

Caerus to charge Terra an under-delivery penalty because Caerus had not met the

“minimum volume obligation to the natural gas gatherer” required under the

Gathering Agreement.

As to its breach-of-fiduciary-duty claim, Terra alleges that Caerus agreed to

act as Terra’s agent for the marketing of the natural gas that Terra produced. The

Gathering Agreement required Caerus (previously Noble) to deliver a specific

5
minimum volume of natural gas per year or to pay an under-delivery penalty. But

neither the Gathering Agreement nor any other agreement between Terra and Caerus

allowed Caerus to deduct an under-delivery penalty from the amount Caerus

tendered to Terra from the sale of Terra’s gas. Terra was not a party to the Gathering

Agreement. The deduction by Caerus of the under-delivery penalty constituted a

breach of its fiduciary duty to Terra. And Caerus wrongfully benefitted from its

improper deductions. Terra seeks actual damages, attorney’s fees, and costs.

As to personal jurisdiction, Terra alleges that Texas has personal jurisdiction

over Caerus because “an agreement between [Caerus] and Terra obligated Caerus to

remit the proceeds of [the] sale of Terra’s natural gas to Terra in Texas.” Further,

Terra alleges that Caerus committed a tort, which was the subject of Terra’s suit, in

whole or in part in Texas because Caerus “breached [its] fiduciary dut[y] to Terra

by making improper deductions from the proceeds of the sale [of Terra’s gas] which

[Caerus sent] to Terra in Texas.” And Caerus breached its contract with Terra by

“submitt[ing] invoices to Terra, in Texas, for charges that exceeded the amount

permitted by the contracts” between Terra and Caerus. The Gas Marketing and

Election Agreement permitted Caerus “to make a deduction for post-production

expenses charged or deducted by the entities purchasing or transporting the gas and

a marketing fee.” And the Gas Marketing and Election Agreement contained a

Texas choice-of-law provision. Caerus tendered payments to Terra, but with

6
unauthorized deductions, which breached the fiduciary duty owed to Terra by

Caerus. According to Terra, the assumption of personal jurisdiction over Caerus

would not offend traditional notions of fair play and substantial justice and the

exercise of jurisdiction was “consistent with federal and state due-process

guarantees.”

Caerus filed a second amended special appearance, asserting that Terra had

failed to plead, in its third amended petition, jurisdictional facts that showed any

connection between Caerus and Texas that could satisfy specific or general

jurisdiction. Caerus asserted that it was a Delaware limited liability company, with

its principal place of business in Colorado. Caerus was not a resident of Texas, did

not maintain an office or other place of business in Texas, was not registered to do

business in Texas, did not have a registered agent in Texas, did not have any

operations in Texas, did not pay taxes in Texas, and had never owned or leased land,

offices, or facilities in Texas. Caerus did not maintain bank accounts in Texas and

did not have employees in Texas.

Caerus explained that Terra had alleged breach-of-contract and

breach-of-fiduciary-duty claims against Caerus for “purported[ly] improper charges

and deductions” that Caerus had made from the proceeds of the sale of Terra’s gas.

The purportedly improper charges and deductions related to two assets located in

Colorado: (1) “a set of 69 oil and gas wells in the Piceance Basin of Colorado in

7
which Terra ha[d] a working interest” and (2) “a road called the Garden Gulch Road,

also located in Colorado.” As to Terra’s “oil and gas wells,” which were located and

operated in Colorado, Caerus noted that they were governed by the JOAs which, in

turn, were governed by Colorado law. The JOAs were originally between Williams

and Noble, but in 2014, Caerus acquired Noble’s share of the sixty-nine oil and gas

wells and inherited the JOAs and other contracts related to the wells. Caerus, which

operates exclusively in Colorado, also took over as operator of the sixty-nine oil and

gas wells.

In 2016, Terra entered into a transaction whereby it became the successor by

merger to Williams, and it took over Williams’s assets and contracts related to the

sixty-nine wells in the Piceance Basin of Colorado. Williams’s ownership of the

wells predated Caerus’s ownership of the wells. Caerus did not “solicit Terra as a

working interest owner” and did not have “any say in whether [Williams] elected to

merge with Terra, a Texas company.” Terra, through its merger with Williams,

acquired substantial assets in Colorado.

As to the Garden Gulch Road, which is located and operated in Colorado,

Caerus explained that the road’s operation and maintenance was governed by a Road

Construction and Maintenance Agreement, not by the JOAs. Various parties,

including Williams, originally entered into the Road Construction and Maintenance

Agreement on November 1, 2005. The Road Construction and Maintenance

8
Agreement “set[] forth the rights and obligations of the participants and operators

with regard to the construction and maintenance of the Garden Gulch Road.” The

Road Construction and Maintenance Agreement was governed by Colorado law, and

each party to the Road Construction and Maintenance Agreement expressly

consented to personal jurisdiction in Colorado for any suit filed arising under the

Road Construction and Maintenance Agreement.

In 2013, Caerus acquired the Garden Gulch Road and the entity that operated

the Garden Gulch Road. Terra acquired its rights to the Garden Gulch Road in its

2016 merger with Williams. Caerus did not “solicit[] Terra’s involvement in the

Garden Gulch Road,” and Caerus “never took any action to encourage Terra’s

involvement” in the road. Terra made a unilateral choice to transact with Williams

which resulted in Terra’s involvement in the Garden Gulch Road.

Caerus further explained, as to Terra’s breach-of-contract and

breach-of-fiduciary duty claims, that Terra had alleged that Caerus had agreed to act

as Terra’s agent for the marketing of its natural gas production and because Caerus

made deductions and charges that Terra asserted should not have been charged under

the JOAs, the Road Construction Agreement, and the Gathering Agreement, Caerus

breached a contract and breached a fiduciary duty to Terra.

According to Caerus, Terra had not met its burden of pleading allegations in

its third amended petition that brought Caerus within the Texas long-arm statute

9
because Terra only alleged that it, and not Caerus, was a resident of Texas, certain

agreements obligated Caerus to remit proceeds from the sale of Terra’s gas to Terra

in Texas, Caerus made payments with improper deductions and sent invoices with

improper charges to Terra in Texas, and the predecessor entities to Terra and Caerus

were parties to a Gas Marketing Election Agreement that had a Texas choice-of-law

provision, but did not have a venue provision or a forum-selection clause for Texas.

Terra’s allegation that Caerus remitted payment and invoices to Terra in Texas did

not support the exercise of personal jurisdiction because a contract was not

performed in whole or in part in Texas and a tort had not been committed in Texas.

The actual contracts at issue in Terra’s suit—the JOAs and the Road Construction

and Maintenance Agreement, which Terra had alleged did not allow Caerus to make

certain charges to Terra—were not performed in Texas, but instead in Colorado.

And any activity supporting Terra’s breach-of-fiduciary-duty claim could not have

occurred in Texas because Caerus conducted its business in Colorado and did not

have any officers or employees in Texas. Because Terra failed to plead allegations

to bring Caerus within reach of the Texas long-arm statute, Caerus asserted that it

needed only to prove that it did not reside in Texas to negate jurisdiction, and it was

undisputed that Caerus did not reside in Texas.

Caerus further asserted that, even if Terra had satisfied its pleading burden,

no specific jurisdiction existed over Caerus in Texas because Caerus lacked

10
sufficient minimum contacts with Texas to satisfy due process requirements. A

nonresident defendant has sufficient minimum contacts with Texas only if (1) the

nonresident defendant purposefully availed itself of the privilege of conducting

activities in the forum state and (2) there is a substantial connection between the

contacts and the operative facts of the litigation.

According to Caerus, merely contracting with a Texas resident and initiating

contract discussions with a Texas resident was not sufficient for jurisdiction.

Further, making a payment in Texas was insufficient when the entire substance of

the contract was performed outside of the state, and when a “contract require[d] the

payment of money but d[id] not specify where payment [was] to be made, the place

of payment [was] the domicile of the payor . . . regardless of where the payment

[was] finally received.” (Fifth alteration in original.) (Internal quotations omitted.)

Although Terra alleged, as to its breach-of-contract and breach-of-fiduciary-duty

claims, that Caerus had contracted with a Texas resident and had committed a tort

in Texas, Terra solely relied on Caerus making payments and sending invoices to

Texas. But the JOAs and the Road Construction and Maintenance Agreement were

wholly to be performed in Colorado, where the assets and operations were located.

And both contracts were expressly governed by Colorado law; the JOAs and Road

Construction and Maintenance Agreement did not state that payments should be

directed to Texas. Additionally, as to the breach-of-fiduciary-duty claim, in which

11
Terra alleged that Caerus made improper charges and deductions under the terms of

the JOAs and the Road Construction and Maintenance Agreement, the relevant

assets for Terra’s claim were located in Colorado, the assets were operated and

maintained in Colorado, Caerus’s offices and billing processes were in Colorado,

and Caerus did not have any employees in Texas. To the extent that any of Caerus’s

conduct constituted breaches of its fiduciary duty, that conduct could only have

occurred in Colorado. Further, Caerus noted that, although Terra and Caerus were

both successor entities to the parties who entered into the JOAs and the Road

Construction and Maintenance Agreement, Caerus took over as the operator of the

oil and gas wells and acquired the Garden Gulch Road in 2013 and 2014. Only after

Caerus became a successor entity did Terra, through a unilateral act, merge with

Williams. That unilateral act by Terra was the reason for the contractual relationship

between Terra and Caerus about which Terra complained. According to Caerus,

Terra could not satisfy the purposeful availment requirement when any contacts

Caerus had with Texas were the result of Terra’s unilateral activity.

Caerus also asserted that Texas law was clear that there was no specific

jurisdiction over a nonresident defendant unless a cause of action arises from or is

related to an activity conducted within the forum and the focus is on the relationship

among the nonresident defendant, the forum, and the litigation. “The ‘arises from

or is related to’ requirement of specific jurisdiction requires a ‘substantial

12
connection’ between the [nonresident] defendant’s contacts and the ‘operative facts

of the litigation.’” (Emphasis omitted.) And contracts with third parties that are

unrelated to the litigation will not provide specific jurisdiction.

Here, Terra alleged that Caerus personally “traveled to Texas over the last five

years to market [its] ‘activities in other states’” during a “networking expo for energy

professionals.” And that “Caerus . . . promoted its activities to Texas companies

virtually and its personnel traveled to Texas to promote Caerus exploration

activities[,] [similar to] the one Terra [was] involved in, to Texas companies.”

(Internal quotations omitted.) But those contacts did not satisfy the purposeful

availment requirement because they related to the sale of assets owned by a

subsidiary of Caerus, and not Caerus itself. And Terra failed to tie Caerus’s few

alleged Texas contacts to the claims alleged in Terra’s suit.

To the extent that Terra relied on the Gas Marketing Election Agreement,

which contained “a Texas choice[-]of[-]law clause,” to support the exercise of

specific jurisdiction over Caerus, Caerus asserted that the Gas Marketing Election

Agreement did not actually govern Terra’s breach-of-contract and

breach-of-fiduciary-duty claims. The Gas Marketing Election Agreement, by its

own terms, concerned solely the issue of whether Williams (now Terra) elected to

take gas in-kind or elected for Noble (now Caerus) to market the gas for Williams

(now Terra). The question of what Terra’s appropriate share of the gas was—the

13
disputed issue in Terra’s suit—was controlled by the JOAs, which were governed

by Colorado law. Further, even if the Gas and Marketing Election Agreement was

applicable, it did not contain a forum-selection clause or a venue provision, and there

was no suggestion in the Gas and Marketing Election Agreement that the parties to

the agreement agreed to subject themselves to personal jurisdiction in Texas. A

choice-of-law provision, such as the one found in the Gas Marketing Election

Agreement, could not give rise to personal jurisdiction in Texas.

Caerus further argued that the exercise of jurisdiction over it in Texas would

offend traditional notions of fair play and substantial justice because Caerus had

extremely limited contacts with Texas over the last decade and none of those

contacts related to the issues in Terra’s suit. The contracts at issue in Terra’s suit

were not connected to Texas.

Additionally, Caerus asserted that the burden on Caerus to litigate in Texas

would be significant. The assets at issue in Terra’s suit were located in Colorado,

and the operation and maintenance of those assets took place in Colorado. The

witnesses and any of Caerus’s relevant documents were located in Colorado; Caerus

did not have any employees or operations in Texas. And Terra regularly did business

in Colorado, had an office and employees there, and held itself to be “the largest

operator in the Piceance Basin” of Colorado. (Internal quotations omitted.) Terra’s

oil and gas assets appeared to be solely located in Colorado, and it would not be

14
burdensome on Terra to litigate in Colorado. Colorado, and not Texas, had a strong

interest in adjudicating the dispute, and Colorado law governed the JOAs and the

Road Construction and Maintenance Agreement.

Caerus attached to its second amended special appearance the affidavit of

Aubree Besant, the Managing Director of Land and Minerals for Caerus. In her

affidavit, Besant testified that she had been employed by Caerus since 2010. Caerus

was a Delaware limited liability company, with its principal place of business in

Colorado. Caerus was a nonresident of Texas, did not maintain an office or other

place of business in Texas, was not registered to do business in Texas, did not have

a registered agent in Texas, did not have any operations in Texas, did not pay taxes

in Texas, did not and had never owned or leased any land, offices, or facilities in

Texas, did not maintain bank accounts in Texas, and did not have any employees in

Texas.

According to Besant, in 2013, Caerus entered into a transaction to acquire

certain assets from PDC Energy, Inc. (“PDC”), including the Garden Gulch Road,

which is located in Colorado, and Garden Gulch LLC, a wholly owned subsidiary of

PDC and the operator of the Garden Gulch Road. As a result of the transaction,

Garden Gulch LLC became a Caerus entity and operated the Garden Gulch Road

pursuant to the terms of the Road Construction and Maintenance Agreement—an

agreement that Caerus inherited from PDC. Williams was also a party to the Road

15
Construction and Maintenance Agreement before, and when, Caerus entered into the

transaction with PDC in 2013.

In 2014, Caerus entered into a transaction to acquire certain oil and gas wells

owned and operated by Noble that were located in the Piceance Basin of Colorado.

As a result of the transaction, Caerus inherited the JOAs and other agreements that

were already in place for the Colorado oil and gas wells, and Caerus took over as

operator for the wells. Williams also owned an interest in the Piceance Basin oil and

gas wells, before and at the time that, Caerus entered into the 2014 transaction with

Noble.

Caerus operates over 3,000 wells in the Piceance Basin, but only sixty-nine

wells were related to Terra’s suit. Caerus did not market, advertise, or sell any

interest in any of the oil and gas wells related to the suit. Caerus also never marketed

or sold any interest in the Garden Gulch Road after acquiring the road in 2013.

Caerus did not market, advertise, or engage in sale activities in Texas related to the

assets at issue in Terra’s suit—the sixty-nine jointly owned oil and gas wells and the

Garden Gulch Road.

Caerus also attached to its second amended special appearance a copy of a

printout from Terra’s website, stating as to Terra’s assets:

Terra . . . is the largest operator in the Piceance Basin. With roughly
370,000 net acres and 5,300 operated wells across the basin, Terra
produces an average of 500 million cubic feet of gas per day. The
Piceance Basin is an important source of natural gas for the State of
16
Colorado, and the United States. . . . Terra is committed to operating
effectively and efficiently in Colorado . . . .

The printout also noted that Terra had a field office in Colorado.

Further, Caerus attached a copy of a JOA, dated May 25, 2005, between

Noble, as operator, and Williams, as non-operator, stating that it was governed by

Colorado law. Specifically, the JOA stated:

This agreement and all matters pertaining hereto, including but not
limited to matters of performance, non-performance, breach, remedies,
procedures, rights, duties, and interpretation and construction, shall be
governed and determined by the law of the state to which the Contract
Area is located [in Colorado]. If the Contract Area is in two or more
states, the law of the state of Colorado shall govern.

Attached as an exhibit to the JOA was an “Accounting Procedure,” stating that the

operator “shall bill [n]on-[o]perators on or before the last day of each month for their

proportionate share of the Joint Account for the preceding month.” “Such bills

w[ould] be accompanied by statements which identif[ied] the authority for

expenditure, lease or facility, and all charges and credits summarized by appropriate

classifications of investment and expense . . . .” The “Joint Account” was “the

account showing the charges paid and credits received in the conduct of the Joint

Operations and which [were] to be shared by the [p]arties.” (Internal quotations

omitted.) Also attached as an exhibit to the JOA was the Gas Balancing Agreement,

dated May 25, 2005, between Noble, as operator, and Williams, as non-operator.

17
Additionally, Caerus attached to its second amended special appearance a

copy of the Road Construction and Maintenance Agreement, dated November 1,

2005, between various participants, including PDC and Williams. Garden Gulch,

LLC was listed as the operator under the agreement. The Road Construction and

Maintenance Agreement stated that it set forth the rights and obligations of the

operator and the participants with regard to the construction and maintenance of the

Garden Gulch Road, which was located in Garfield County, Colorado. The Garden

Gulch Road provided the agreement’s participants with “access to and egress from

certain wells, gas pipelines and gathering systems, water pipelines, tanks,

compressors and other similar oil and gas exploration, production, gathering and

transportation equipment and facilities on the lands located in [certain portions of]

Colorado.” The operator was responsible for the operation and maintenance of the

Garden Gulch Road, and the agreement’s participants were responsible for “the costs

and expenses necessary to construct, operate, and maintain the [r]oad.” The Road

Construction and Maintenance Agreement stated that it was governed by Colorado

law and each participant in the agreement “expressly consent[ed] to personal

jurisdiction of the state and federal courts located in Denver, Colorado, for any

lawsuit filed against it arising under the [a]greement.” The Road Construction and

Maintenance Agreement was binding on the participants to the agreement and “their

respective successors and assigns.”

18
In its response to Caerus’s second amended special appearance, Terra asserted

that Caerus was subject to specific jurisdiction in Texas.3 Caerus’s sale of Terra’s

natural gas production was governed by the Gas Marketing Election Agreement, and

“Texas ha[d] jurisdiction over Caerus[’s] actions under the Gas Marketing [Election]

Agreement.” According to Terra, the Gas Marketing and Election Agreement

“provide[d] that Caerus [was] Terra’s agent” and “provide[d] for what c[ould] be

deducted from Terra’s share of revenue.” And Terra had alleged that Caerus made

improper deductions from the amount it tendered to Terra from the sale of Terra’s

gas. According to Terra, the Gas Marketing and Election Agreement “provide[d]

for Texas law to apply” to disputes under the agreement, and the Gas Marketing and

Election Agreement “supersede[d] the JOAs and the Gas Balancing Agreement.”

As to Terra’s complaints about the Garden Gulch Road, it stated that its claim

“deal[t] strictly with the charges Caerus levie[d] for its handling of the road.” And

according to Terra, “jurisdiction exist[ed] in Texas over the charges made by Caerus

for ‘overhead’ in its operation of the road.”

Terra attached to its response a letter, dated August 19, 2010 and titled “Gas

Marketing Election Agreement.” The Gas Marketing Election Agreement was

between Williams and Noble and concerned whether Williams elected to take gas

in-kind and market the gas itself or whether Williams elected for Noble to market its

3
Terra did not assert that Caerus was subject to general jurisdiction in Texas.

19
gas on its behalf. The agreement stated: “If you elect to participate in the drilling

and completion of the above referenced well(s) pursuant to the governing [JOA],

you must elect either to take your share of natural gas in-kind or market your share

of natural gas . . . with Noble.” The Gas Marketing Election Agreement provided

that the “drilling and completion” of wells was “govern[ed]” by the JOAs and

Terra’s “share of gas production w[ould] . . . be accounted for in accordance with

the terms of the governing Gas Balancing Agreement,” an exhibit to the JOAs. The

Gas Marketing Election Agreement stated that it was “governed by the laws

of . . . Texas.”

The trial court denied Caerus’s second amended special appearance.

Standard of Review

The existence of personal jurisdiction is a question of law, which must

sometimes be preceded by the resolution of underlying factual disputes. BMC

Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Paul Gillrie

Inst., Inc. v. Universal Comput. Consulting, Ltd., 183 S.W.3d 755, 759 (Tex. App.—

Houston [1st Dist.] 2005, no pet.). When the underlying facts are undisputed or

otherwise established, we review a trial court’s denial of a special appearance de

novo. Paul Gillrie Inst., 183 S.W.3d at 759. Where, as here, a trial court does not

issue findings of fact or conclusions of law with its special-appearance ruling, all

fact findings necessary to support the judgment and that are supported by the

20
evidence are implied. Marchand, 83 S.W.3d at 795; Paul Gillrie Inst., 183 S.W.3d

at 759.

A trial court determines a “special appearance on the basis of the pleadings,

any stipulations made by and between the parties, such affidavits and attachments as

may be filed by the parties, the results of discovery processes, and any oral

testimony.” TEX. R. CIV. P. 120a(3). A single basis for personal jurisdiction is

sufficient to confer jurisdiction over a nonresident defendant. See Citrin Holdings,

LLC v. Minnis, 305 S.W.3d 269, 279 (Tex. App.—Houston [14th Dist.] 2009, no

pet.). Thus, if a nonresident defendant is subject to specific jurisdiction, this is

sufficient. See Am. Express Centurion Bank v. Haryanto, 491 S.W.3d 337, 346 n.8

(Tex. App.—Beaumont 2016, no pet.); Minnis, 305 S.W.3d at 279; see also TEX. R.

APP. P. 47.1.

The plaintiff bears the initial burden of pleading allegations sufficient to bring

a nonresident defendant within the provisions of the Texas long-arm statute. Am.

Type Culture Collection v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002); Paul Gillrie

Inst., 183 S.W.3d at 759. The burden of proof then shifts to the nonresident

defendant to negate all the bases of jurisdiction alleged by the plaintiff. Kawasaki

Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985); see also Kelly v. Gen.

Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010) (“Because the plaintiff

21
defines the scope and nature of the lawsuit, the defendant’s corresponding burden to

negate jurisdiction is tied to the allegations in the plaintiff’s pleading.”).

The nonresident defendant can negate jurisdiction on either a factual or a legal

basis. Kelly, 301 S.W.3d at 659. Factually, the nonresident defendant can present

evidence that it had no contacts with Texas, “effectively disproving the plaintiff’s

allegations.” Id. The plaintiff can then respond with its own evidence affirming its

allegations, and if it does not present evidence establishing personal jurisdiction, it

risks dismissal of its suit. Id. Legally, the nonresident defendant can show that,

even if the plaintiff’s alleged facts are true, the evidence is legally insufficient to

establish jurisdiction; the nonresident defendant’s contacts with Texas do not

constitute purposeful availment for specific jurisdiction; the claims do not arise from

the contacts with Texas; or the exercise of jurisdiction offends traditional notions of

fair play and substantial justice. Id.

A court need not assess the nonresident defendant’s contacts on a

claim-by-claim basis where, as here, all claims essentially arise from the same forum

contacts. See Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 150–51

(Tex. 2013); Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 537 (Tex. App.—

Houston [1st Dist.] 2015, no pet.). If a case involves more than one nonresident

defendant, the plaintiff must specify, and the court must examine, “each

[nonresident] defendant’s actions and contacts with the forum”; the defendants’

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contacts cannot be aggregated. See Morris v. Kohls-York, 164 S.W.3d 686, 693

(Tex. App.—Austin 2005, pet. dism’d); see also Loya v. Taylor, No.

01-14-01014-CV, 2016 WL 6962312, at *3 (Tex. App.—Houston [1st Dist.] Nov.

29, 2016, pet. denied) (mem. op.).

Personal Jurisdiction

In its sole issue, Caerus argues that the trial court erred in denying its second

amended special appearance and concluding that Texas has personal jurisdiction

over it because Terra failed to allege sufficient jurisdictional facts against Caerus,

there is no specific jurisdiction over Caerus in Texas, and exercising personal

jurisdiction would offend principles of fair play and substantial justice.

A court may assert personal jurisdiction over a nonresident defendant only if

the requirements of both the Fourteenth Amendment’s due process clause and the

Texas long-arm statute are satisfied. See U.S. CONST. amend. XIV, § 1; TEX. CIV.

PRAC. & REM. CODE ANN. § 17.042; Guardian Royal Exch. Assurance, Ltd. v.

English China Clays, P.L.C., 815 S.W.2d 223, 226–27 (Tex. 1991). The Texas

long-arm statute allows a court to exercise personal jurisdiction over a nonresident

defendant who does business in Texas. TEX. CIV. PRAC. & REM. CODE ANN.

§ 17.042. The nonresident defendant “does business” in Texas if it “contracts by

mail or otherwise with a Texas resident and either party is to perform the contract in

whole or in part” in Texas, it “commits a tort in whole or in part” in Texas, or it

23
“recruits Texas residents, directly or through an intermediary located in [Texas], for

employment inside or outside the state.” Id. The Texas Supreme Court has

consistently interpreted this statutory language “to reach as far as the federal

constitutional requirements of due process will allow.” Guardian Royal, 815

S.W.2d at 226. Therefore, the requirements of the Texas long-arm statute are

satisfied if the exercise of personal jurisdiction comports with federal due process

limitations. Id.

The United States Constitution permits a state to assert personal jurisdiction

over a nonresident defendant only if it has some minimum, purposeful contacts with

the state and if the exercise of jurisdiction will not offend traditional notions of fair

play and substantial justice. Dawson-Austin v. Austin, 968 S.W.2d 319, 326 (Tex.

1998). A nonresident defendant that has purposefully availed itself of the privileges

and benefits of conducting business in the state has sufficient contacts with the state

to confer personal jurisdiction. See Guardian Royal, 815 S.W.2d at 226.

The “purposeful availment” requirement has been characterized by the Texas

Supreme Court as the “touchstone of jurisdictional due process.” Michiana Easy

Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). In Michiana, the

supreme court articulated three important aspects of the purposeful availment

inquiry. Id. at 785. First, only the nonresident defendant’s contacts with the forum

count. Id. This ensures that the nonresident defendant is not haled into a jurisdiction

24
solely by the unilateral activities of a third party. Id. (citing Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475 (1985)). Second, the acts relied on must be

purposeful; the nonresident defendant may not be haled into a jurisdiction solely

based on contacts that are “random, isolated, or fortuitous.” Id. (quoting Keeton v.

Hustler Mag., Inc., 465 U.S. 770, 774 (1984)). Third, the nonresident defendant

“must seek some benefit, advantage, or profit by ‘availing’ itself of the jurisdiction”

because “[j]urisdiction is premised on notions of implied consent” and by “invoking

the benefits and protections of a forum’s laws, . . . [the] nonresident consents to suit

there.” Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297

(1980)).

The nonresident defendant’s contacts with a forum can give rise to either

general or specific jurisdiction. Marchand, 83 S.W.3d at 795. Specific jurisdiction

is established if the nonresident defendant’s alleged liability arises from or relates to

an activity conducted within the forum. Id. at 796. When specific jurisdiction is

asserted, the minimum contacts analysis focuses on the relationship between the

nonresident defendant, the forum, and the litigation. Moki Mac River Expeditions v.

Drugg, 221 S.W.3d 569, 575–76 (Tex. 2007).

Foreseeability is an important consideration in deciding whether the

nonresident defendant has purposefully established minimum contacts with the

forum state. Burger King Corp., 471 U.S. at 474; Guardian Royal, 815 S.W.2d at

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227. The concept of foreseeability is implicit in the requirement that there be a

substantial connection between the nonresident defendant and Texas, arising from

actions or conduct of the nonresident defendant purposefully directed toward Texas.

Guardian Royal, 815 S.W.2d at 227.

In a portion of its sole issue, Caerus argues that the trial court erred in

concluding that Texas has specific jurisdiction over it because Caerus “[d]id [n]ot

[p]urposely [a]vail [itself] of the Texas [f]orum” and the “[p]urported Texas

[c]ontacts [i]dentified by Terra [were] [n]ot [sufficient to establish specific

jurisdiction where] Caerus[’s] [a]lleged [l]iability d[id] [n]ot ‘[a]rise [f]rom or

[r]elate to’ [t]he[] [a]ctivities.”

For a court to exercise specific jurisdiction over a nonresident defendant, two

requirements must be met: (1) the nonresident defendant’s contacts with Texas must

be purposeful and (2) the cause of action must arise from or relate to those contacts.

Coleman, 83 S.W.3d at 806; see also Moki Mac, 221 S.W.3d at 576, 579.

In its third amended petition, Terra alleges that it owns certain oil and gas

wells in the Piceance Basin of Colorado. According to Terra, the wells it owns are

subject to JOAs. Caerus is the operator for the wells and markets Terra’s natural gas

production.

Terra alleges that in a letter, dated August 19, 2010 and titled Gas Marketing

Election Agreement, Noble—Caerus’s predecessor entity—agreed to act as the

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“agent in marketing” the “share of natural gas production” of Williams—Terra’s

predecessor entity.

On December 1, 2012, Noble entered into a Gathering Agreement with

Williams, which “provide[d] for a fee per thousand cubic feet . . . for natural gas

transported and contain[ed] minimum volume requirements.” The Gathering

Agreement also stated that if Noble “fail[ed] to . . . transport[] a certain minimum

volume of gas, it [was] to pay an additional amount as a penalty for the

under-delivery of gas under the Gathering Agreement.” According to Terra, when

Caerus, as the successor entity to Noble, failed to deliver the minimum volume of

gas required by the Gathering Agreement and paid the under-delivery penalty,

Caerus charged Terra a portion of the under-delivery penalty and deducted that

amount from the payment it tendered to Terra from the sale of Terra’s gas. Terra

alleges that Caerus improperly deducted about $550,000 from the amount it tendered

to Terra for the sale of Terra’s gas.

Terra also alleges that Caerus operates a road—the Garden Gulch Road—

which is used for the operation of Terra’s jointly owned wells. A Road Construction

and Maintenance Agreement governed the construction and operation of the Garden

Gulch Road. An exhibit to the Road Construction and Maintenance Agreement

provided the “[c]harges for the maintenance and operation of the road.” According

to Terra, without authority, Caerus improperly charged Terra a fixed fee of $15,000

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per month “as a management fee to cover its . . . ‘administrative and overhead costs’

in [its] operati[on] and maint[enance] [of] the Garden Gulch Road.”

Further, Terra alleges that the relevant JOAs contain an Accounting Procedure

which “provide[d] [the] charges an [o]perator,” like Caerus, could charge to a

non-operator, like Terra. The Accounting Procedure permitted an operator to charge

direct expenses in fifteen “separate categories and to charge a monthly fee for

overhead” to a non-operator. The overhead fee was a fixed monthly fee and was

meant to “compensate for administrative, supervision, office services[,] and

warehousing costs” incurred by the operator. (Internal quotations omitted.) But

Caerus improperly charged Terra, in addition to the amount provided for in the

Accounting Procedure, $15,000 per month related to the Garden Gulch Road.

Although Terra notified Caerus of the overcharge, Caerus “refused to refund the

[improper charges] and continue[d] to” overcharge Terra. In response, Caerus

asserted its right to make such deductions under the JOAs and the Accounting

Procedure.

Terra brings claims for breach of contract and breach of fiduciary duty against

Caerus. As to its breach-of-contract claim, Terra alleges that Terra’s wells are

operated pursuant to “a number of JOAs,” which were contracts between Terra and

Caerus. The JOAs contained the Accounting Procedure, which “specifie[d] what

charge[s]” an operator, like Caerus could “charge” a non-operator, like Terra. The

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JOAs also contained a Gas Balancing Agreement “that provide[d] for the marketing

of natural gas production from the wells.” The JOAs did not “permit an overhead

charge for” Caerus’s operation of the Garden Gulch Road, and the Road

Construction and Maintenance Agreement did not allow for such an overhead

charge. Instead, the Accounting Procedure and the Road Construction and

Maintenance Agreement governed “what c[ould] be charged to Terra” by Caerus for

the operation and maintenance of the Garden Gulch Road. The Accounting

Procedure provided for a fixed monthly overhead fee, but “d[id] not permit an[y]

additional overhead or administrative fee” such as the one that Caerus had been

charging for the operation and maintenance of the Garden Gulch Road. Further,

neither the Gathering Agreement nor any other agreement between Terra and Caerus

allowed Caerus to charge Terra an under-delivery penalty because Caerus had not

met the “minimum volume obligation to the natural gas gatherer” as required by the

Gathering Agreement.

As to its breach-of-fiduciary-duty claim, Terra alleges that Caerus agreed to

act as Terra’s agent for the marketing of its natural gas production. The Gathering

Agreement required Caerus (previously Noble) to deliver a specific minimum

volume of natural gas per year or to pay an under-delivery penalty. But neither the

Gathering Agreement nor any other agreement between Terra and Caerus allowed

Caerus to deduct an under-delivery penalty from the amount tendered to Terra from

29
the sale of Terra’s gas, and Terra was not a party to the Gathering Agreement. The

deduction of the under-delivery penalty constituted a breach of Caerus’s fiduciary

duty to Terra. And Caerus wrongfully benefitted from its improper deductions.

As to personal jurisdiction, in its third amended petition, Terra alleges that

Texas has personal jurisdiction over Caerus because “an agreement between

[Caerus] and Terra obligated Caerus to remit the proceeds of [the] sale of Terra’s

natural gas to Terra in Texas.” Further, Caerus committed a tort, which was the

subject of Terra’s suit, in whole or in part in Texas because Caerus “breached [its]

fiduciary dut[y] to Terra by making improper deductions from the proceeds of the

sale [of Terra’s gas] which [Caerus sent] to Terra in Texas.” And Caerus breached

its contract with Terra by “submitt[ing] invoices to Terra, in Texas, for charges that

exceeded the amount permitted by the contracts” between Terra and Caerus. The

Gas Marketing and Election Agreement permitted Caerus “to make a deduction for

post-production expenses charged or deducted by the entities purchasing or

transporting the gas and a marketing fee.” And the Gas Marketing and Election

Agreement contained a Texas choice-of-law provision. Caerus tendered payments

to Terra, but with unauthorized deductions, which breached the fiduciary duty owed

to Terra by Caerus.

In its response to Caerus’s second amended special appearance, Terra asserted

that Caerus was subject to specific jurisdiction in Texas because Caerus’s sale of

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Terra’s natural gas production was governed by the Gas Marketing Election

Agreement, and “Texas ha[d] jurisdiction over Caerus[’s] actions under the Gas

Marketing [Election] Agreement.” According to Terra, the Gas Marketing and

Election Agreement “provide[d] that Caerus [was] Terra’s agent” and “provide[d]

for what c[ould] be deducted from Terra’s share of revenue.” And Terra had alleged

that Caerus made improper deductions from the amount it tendered to Terra from

the sale of Terra’s gas. The Gas Marketing and Election Agreement “provide[d] for

Texas law to apply” to disputes under the agreement, and the Gas Marketing and

Election Agreement “supersede[d] the JOAs and the Gas Balancing Agreement.”

As to Terra’s complaints about the Garden Gulch Road, it stated that its claim

“deal[t] strictly with the charges Caerus levie[d] for its handling of the road.” And

Terra asserted, without detail, that “jurisdiction exist[ed] in Texas over the charges

made by Caerus for ‘overhead’ in its operation of the road.”

Terra attached to its response a letter, dated August 19, 2010 and titled “Gas

Marketing Election Agreement.” The Gas Marketing Election Agreement was

between Williams and Noble and concerned whether Williams elected to take gas

in-kind and market the gas itself or whether Williams elected for Noble to market its

gas on its behalf. The Gas Marketing Election Agreement provided that the “drilling

and completion” of wells was “govern[ed]” by the JOAs and Terra’s “share of gas

production w[ould] . . . be accounted for in accordance with the terms of the

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governing Gas Balancing Agreement,” an exhibit to the JOAs. The Gas Marketing

Election Agreement stated that it was “governed by the laws of . . . Texas.”

Caerus, in its second amended special appearance, explained that Terra had

alleged breach-of-contract and breach-of-fiduciary-duty claims against Caerus for

“purported[ly] improper charges and deductions” that Caerus had made from the

amount tendered to Terra from the sale of Terra’s gas. The purportedly improper

charges and deductions related to two assets located in Colorado: (1) “a set of 69 oil

and gas wells in the Piceance Basin of Colorado in which Terra ha[d] a working

interest” and (2) “a road called the Garden Gulch Road, also located in Colorado.”

As to Terra’s “oil and gas wells,” which were located and operated in Colorado,

Caerus explained that they were governed by the JOAs. The JOAs were governed

by Colorado law. The JOAs were originally between Williams and Noble, but in

2014, Caerus acquired Noble’s share of the sixty-nine oil and gas wells and inherited

the JOAs and other contracts related to the wells. Caerus, which operated

exclusively in Colorado, also took over as operator of the sixty-nine oil and gas

wells.

In 2016, Terra entered into a transaction whereby it became the successor by

merger to Williams, and it took over Williams’s assets and contracts related to the

sixty-nine wells in the Piceance Basin of Colorado. Williams’s ownership of the

wells predated Caerus’s ownership of the wells. Caerus did not “solicit Terra as a

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working interest owner” and did not have “any say in whether [Williams] elected to

merge with Terra, a Texas company.” But Terra, through its merger with Williams,

chose to acquire substantial assets in Colorado.

As to the Garden Gulch Road, which is located and operated in Colorado,

Caerus explained that the road’s operation and maintenance was governed by a Road

Construction and Maintenance Agreement, rather than the JOAs. Various parties,

including Williams, originally entered into the Road Construction and Maintenance

Agreement on November 1, 2005. The Road Construction and Maintenance

Agreement “set[] forth the rights and obligations of the participants and operators

with regard to the construction and maintenance of the Garden Gulch Road.” The

Road Construction and Maintenance Agreement was governed by Colorado law, and

each party to the Road Construction and Maintenance Agreement expressly

consented to personal jurisdiction in Colorado for any suit filed arising under the

Road Construction and Maintenance Agreement.

In 2013, Caerus acquired the Garden Gulch Road and the entity that operated

the Garden Gulch Road. Terra acquired its rights to the Garden Gulch Road in its

2016 merger with Williams. Caerus did not “solicit[] Terra’s involvement in the

Garden Gulch Road,” and Caerus “never took any action to encourage Terra’s

involvement” in the road. Terra made a unilateral choice to transact with Williams,

which resulted in Terra’s involvement in the Garden Gulch Road.

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According to Caerus, Terra’s breach-of-contract and breach-of-fiduciary duty

claims were based on its assertion that Caerus had agreed to act as Terra’s agent for

the marketing of natural gas production and because Caerus made deductions and

charges that Terra asserted should not have been charged under the JOAs, the Road

Construction Agreement, and the Gathering Agreement, Caerus breached a contract

and breached a fiduciary duty to Terra.

As a basis for specific jurisdiction, Terra had alleged, related to its

breach-of-contract and breach-of-fiduciary-duty claims, that Caerus had contracted

with a Texas resident and had committed a tort in Texas; but in doing so, Terra solely

relied on Caerus making payments and sending invoices to Texas. Notably, the

JOAs and the Road Construction and Maintenance Agreement were to be wholly

performed in Colorado, where the assets and operations were located. And both

contracts were expressly governed by Colorado law; the JOAs and Road

Construction and Maintenance Agreement did not state that payments should be

directed to Texas. Additionally, as to the breach-of-fiduciary-duty claim, under

which Terra had alleged that Caerus made improper charges and deductions under

the terms of the JOAs and the Road Construction and Maintenance Agreement, the

relevant assets for Terra’s claim were located in Colorado, the assets were operated

and maintained in Colorado, Caerus’s offices and billing processes were in

Colorado, and Caerus did not have any employees in Texas. If any of Caerus’s

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conduct constituted breaches of its fiduciary duty that conduct could only have

occurred in Colorado.

Caerus also noted that, although Terra relied on the Gas Marketing Election

Agreement, which contained “a Texas choice[-]of[-]law clause,” to support the

exercise of personal jurisdiction over Caerus, the Gas Marketing Election

Agreement did not actually govern Terra’s breach-of-contract and

breach-of-fiduciary-duty claims. The Gas Marketing Election Agreement, by its

own terms, concerned solely the issue of whether Williams (now Terra) elected to

take gas in-kind or elected for Noble (now Caerus) to market the gas for Williams

(now Terra). The question of what Terra’s appropriate share of the gas was—the

disputed issue in Terra’s suit—was controlled by the JOAs, which were governed

by Colorado law. Further, even if the Gas and Marketing Election Agreement was

applicable, it did not contain a forum-selection clause or a venue provision, and there

was no suggestion in the Gas and Marketing Election Agreement that the parties to

the agreement agreed to subject themselves to personal jurisdiction in Texas. A

choice-of-law provision, such as the one found in the Gas Marketing Election

Agreement, could not give rise to personal jurisdiction in Texas.

Caerus attached to its second amended special appearance the affidavit of

Besant, the Managing Director of Land and Minerals for Caerus. In her affidavit,

Besant testified that she had been employed by Caerus since 2010. Caerus was a

35
Delaware limited liability company, with its principal place of business in Colorado.

Caerus was a nonresident of Texas, did not maintain an office or other place of

business in Texas, was not registered to do business in Texas, did not have a

registered agent in Texas, did not have any operations in Texas, did not pay taxes in

Texas, did not and had never owned or leased any land, offices, or facilities in Texas,

did not maintain bank accounts in Texas, and did not have any employees in Texas.

According to Besant, in 2013, Caerus entered into a transaction to acquire

certain assets from PDC, including the Garden Gulch Road, which was located in

Colorado, and Garden Gulch LLC, a wholly owned subsidiary of PDC and the

operator of the Garden Gulch Road. As a result of the transaction, Garden Gulch

LLC became a Caerus entity and operated the Garden Gulch Road pursuant to the

terms of the Road Construction and Maintenance Agreement—an agreement which

Caerus inherited from PDC. Williams was also a party to the Road Construction and

Maintenance Agreement before, and when, Caerus entered into the transaction with

PDC in 2013.

In 2014, Caerus entered into a transaction to acquire certain oil and gas wells

owned and operated by Noble that were located in the Piceance Basin of Colorado.

As a result of the transaction, Caerus inherited the JOAs and other agreements that

were already in place for the Colorado oil and gas wells, and Caerus took over as

operator for the wells. Williams also owned an interest in the Piceance Basin oil and

36
gas wells, before and at the time that Caerus entered into the 2014 transaction with

Noble.

Caerus operates over 3,000 wells in the Piceance Basin of Colorado, but only

sixty-nine wells were related to Terra’s suit. Caerus did not market, advertise, or

sell any interest in any of the oil and gas wells related to the suit. Caerus also never

marketed or sold any interest in the Garden Gulch Road after acquiring the road in

2013. Caerus did not market, advertise, or engage in sale activities in Texas related

to the assets at issue in Terra’s suit—the sixty-nine jointly owned oil and gas wells

and the Garden Gulch Road.

Caerus also attached to its second amended special appearance a copy of a

printout from Terra’s website, stating as to Terra’s assets:

Terra . . . is the largest operator in the Piceance Basin. With roughly
370,000 net acres and 5,300 operated wells across the basin, Terra
produces an average of 500 million cubic feet of gas per day. The
Piceance Basin is an important source of natural gas for the State of
Colorado, and the United States. . . . Terra is committed to operating
effectively and efficiently in Colorado . . . .

The printout also noted that Terra had a field office in Colorado.

Further, Caerus attached a copy of a JOA, dated May 25, 2005, between

Noble, as operator, and Williams, as non-operator, stating that it was governed by

Colorado law. Specifically, the JOA stated:

This agreement and all matters pertaining hereto, including but not
limited to matters of performance, non-performance, breach, remedies,
procedures, rights, duties, and interpretation and construction, shall be
37
governed and determined by the law of the state to which the Contract
Area is located [in Colorado]. If the Contract Area is in two or more
states, the law of the state of Colorado shall govern.