Texas Business Court Decision – October 28, 2025

No. 25-BC11A-0013   Marathon Oil Co. v. Mercuria Energy America, LLC Third Division, Judge Andrews, sitting by assignment in the Eleventh Division)  25-bc11a-0013-marathon-oil-v-mercuria-energy-america-2025-tex-bus-40.pdf

Civil case -Damages. This dispute arises out of Marathon’s declaration of force majeure under its natural gas contract with Mercuria (see the court’s opinion of October 14, 2025). The parties’ contract is based on a form North American energy Standards Board Base Contract for Sale and Purchase of Natural gas. One provision of the form allows parties to choose between two alternative remedy provisions- “Cover Standard” or “Spot Price Standard”  -and the parties chose the Spot Price Standard. Under this standard, Mercuria asserts that if Marathon breached its delivery obligations, Mercuria’s sole and exclusive remedy is payment in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by the Seller for that day, multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price. The question presented is whether this clause is unenforceable because there is an “unbridgeable discrepancy” between the damages under this spot-price damages clause and Mercuria’s actual damages.

Held: At this point, neither party has conclusively proven the amount of either spot-price or actual damages, such that the court cannot decide as a matter of law whether this liquidated damages provision is unenforceable. However, the court holds that Mercuria’s cost-basis theory of actual damages is legally incorrect because it does not reflect the direct, actual economic harm to Mercuria at the time of the breach.