Texas Business Court Decision – October 14, 2025
No. 25-BCA11A-0013 Marathon Oil Co. v. Mercuria Energy America, LLC (Eleventh Division, Judge Andrews) 25-bc11a-0013-marathon-oil-v-mercuria-energy-america-2025-tex-bus-39.pdf
Civil case – Contracts. Marathon Oil was required by the parties’ contract to deliver natural gas to Mercuria. In the wake of Winter Storm Uri, Marathon declared force majeure and did not deliver the full amount due for February, 2021. Mercuria disputed the declaration of force majeure, resulting in this suit. The court denied in part and granted in part both parties’ motions for partial summary judgment and has issued this written decision explaining the ruling, especially its holdings on replacement-gas and buyback issues in the case.
Held: The contract did not require Marathon to either purchase gas on the spot market to cover the shortfall or buy back its delivery obligation as a prerequisite or alternative to declaring force majeure or as a contractually required “reasonable effort” under the clause.
(1) Special Provision 5 of the parties’ contract, which stated a party claiming force majeure “shall have no obligation to seek alternative Gas supplies in order to satisfy any obligation” under the contract, relieved Marathon of any duty to buy spot-market gas, either at the West Pool or anywhere else, before it could invoke the force-majeure clause; under existing case law, the meaning of “Seller’s Gas supply” in the contract is gas Marathon had available to satisfy delivery obligations under the contract, and not spot-market gas it might be able to purchase to fulfill its original delivery obligation; spot-market gas is not part of Marathon’s gas supplies and is one of the “alternative Gas supplies” covered by Special Provision 5; thus Marathon had no duty to purchase spot-market gas before it invoked force majeure;
(2) Special Provision 5 also relieved Marathon of any obligation to obtain spot-market gas as a reasonable effort under Section 11.2 of the contract, which requires Marathon to make “reasonable efforts ” to avoid adverse impacts of a force majeure and to resolve the event or occurrence once it has occurred in order to resume performance; because Special Provision 5 relieves a party invoking force majeure “of any obligation to seek alternative Gas supplies in order to satisfy any obligation hereunder,” this provision relieved Marathon of the duty to obtain spot-market gas as “reasonable efforts” to fulfill the contract;
(3) Section 11.2 of the contract does not encompass a buyback of a delivery obligation; further, a buyback duty runs counter to the quintessential purpose of the force-majeure clause and would render it ineffective;
(4) Marathon was not required to buy back its delivery obligation as a reasonable effort to perform the contract.