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Shell Rocky Mountain Prod., LLC v. Ultra Resources, Inc.

United States Court of Appeals for the Tenth Circuit
415 F.3d 1158 (10th Cir. 2005)


Shell Rocky Mountain Production, LLC (Shell) (plaintiff) and Ultra Resources, Inc. (Ultra) (defendant) operated oil and gas leases on jointly owned property. The parties had entered into a settlement agreement that contained, among other things, an exculpatory clause and an excessive cost clause. The exculpatory clause stated that Shell “shall conduct all . . . operations in a good and workmanlike manner, but it shall have no liability as Operator to the other parties for losses sustained or liabilities incurred, except such as may result from gross negligence or willful misconduct.” The excessive costs clause stated that the Shell was required to incur costs commensurate with other operators and to complete the well at prevailing rates in the area. Shell brought suit for breach of the settlement agreement. Ultra counterclaimed that Shell breached the settlement agreement by charging excessive drilling and operation costs. Shell argued that the exculpatory clause absolved it of any excessive cost liability because its charges did not amount to gross negligence or willful misconduct. The trial court granted Shell summary judgment. Ultra appealed.

Rule of Law


Holding and Reasoning (Seymour, J.)

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