2/26/2021 9:53 AM

Velva L. Price
District Clerk
Travis County
CAUSE NO. D-1-GN-21-000859
___________________ D-1-GN-21-000859
Victoria Benavides

XTO ENERGY INC., § IN THE DISTRICT COURT OF

§
Plaintiff, §
§
v. § TRAVIS COUNTY, TEXAS
§
MACQUARIE ENERGY LLC, §
§
Defendants § 98TH
_____ JUDICIAL DISTRICT COURT

XTO ENERGY INC.’S ORIGINAL PETITION

FOR DECLARATORY RELIEF

XTO Energy Inc. (“XTO”) files this its Original Petition for Declaratory Relief against

Macquarie Energy LLC (“Defendant”) pursuant to Section 37.001, et seq. of the TEXAS CIVIL

PRACTICE & REMEDIES CODE. In support, XTO shows the Court as follows:

I.
DISCOVERY CONTROL PLAN

1. Pursuant to Texas Rule of Civil Procedure 190.4, XTO intends to conduct discovery

under Level III.

II.
PARTIES

2. XTO is a Delaware Corporation whose principal place of business is in Spring,

Texas.

3. Defendant is a Limited Liability Company incorporated in Delaware that has its

principal place of business in New York, New York. Defendant may be served with process by

serving its registered agent Corporation Service Company d/b/a CSC-Lawyers Incorporating

Service Company, 211 E. 7th Street, Suite 620, Austin, Texas 78701.
 III.
JURISDICTION AND STANDING

4. The Court has general personal jurisdiction over Defendant because it engages in

substantial business in Texas. The Court has subject matter jurisdiction over this action pursuant

to Sections 24.007 and 24.008 of the TEXAS GOVT. CODE.

IV.
VENUE

5. Because the parties expressly agreed that venue of any disputes under their contract

will be in Travis County, Texas, venue is proper and mandatory in Travis County, Texas pursuant

to Section 15.020 of the TEXAS CIVIL PRAC. & REM. CODE.

V.
FACTS

6. XTO is a producer and seller of oil and natural gas. Defendant is a commodities

broker and trader of natural gas. As a natural gas trader, Defendant purchases natural gas and

resells it.

7. The State of Texas experienced an extreme and unprecedented winter storm event

in February of 2021. As of the date of the filing of this Petition, the consequences and

repercussions of that winter storm are still being felt by natural gas consumers.

8. Defendant was engaged in the business of brokering and reselling natural gas

between in February of 2021. More specifically, during the February 2021 winter storm,

Defendant’s energy business unit reportedly netted Defendant a profit of approximately

$317,000,000 according to industry analysts1. Bank of America securities analysts reportedly

increased their earnings forecasts for Defendant as a result of Defendant’s natural gas trades during

1
The Wall Street Journal reports that Defendant’s increase in net profits after tax was increased
approximately $215,000,000 from the winter storm event.

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the February 2021 winter storm event, stating that Defendant “. . . appears to be capitalizing well

on volatility and financial market dislocation.” In its own February 22, 2021 press release,

Defendant stated that it expects its fiscal 2021 profits to jump by as much as 10% after the February

2021 winter storm, and this was after Defendant warned just two weeks earlier that earnings would

be “slightly down” for the year. In other words, the profits from Defendant’s trading operations

during the February 2021 winter storm event single-handedly changed Defendant’s financial

outlook for the year from a year-on-year loss to a profit of over 5%.

9. On December 11, 2014, XTO and Defendant entered into a base contract for the

purchase and sale of natural gas (the “Contract”). Section 11 of the Contract contains a force

majeure provision providing that XTO’s performance under the Contract will be excused if XTO

experiences an applicable force majeure event. Beginning on February 12, 2021 and continuing

thereafter, XTO experienced an extraordinary and unprecedented winter weather storm event that

affected supply, demand, transportation, processing, and delivery of gas across the south, including

Texas, New Mexico, Oklahoma, Louisiana, Arkansas, Mississippi, and Alabama. This weather

event caused freezing, failures, interruption of operations and repairs, and the shut in of wells,

fields, gathering lines, plants, and pipelines. The State of Texas also experienced widespread

power failures and rolling blackouts that significantly affected natural gas production and

transportation facilities. There continue to be ongoing interruptions and curtailments of gathering,

processing, transportation and deliveries by third parties. These extreme and unprecedented

operational issues caused by the February 2021 winter storm impacted XTO’s ability to deliver

and supply gas to Defendant under the Contract and thus qualify as a force majeure event under

Section 11 of the Contract.

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 10. In addition to the extreme and unprecedented effect of the winter storm on supply,

transportation, processing, and delivery operations, there are emergency governmental orders from

the Railroad Commission of Texas and the Louisiana Department of Natural Resources’ Office of

Conservation that set priorities for deliveries of gas in response to the winter storm. These

regulatory orders impacted the availability of gas and severely impacted XTO’s ability to supply

gas to Defendant under the Contract and thus also qualify as a force majeure event under Section

11 of the Contract.

11. Other than the force majeure delivery and supply issues addressed above that were

directly caused by the February 2021 winter storm event, XTO has substantially and materially

complied with all of its obligations under the Contract.

12. On February 12, 2021, XTO gave Defendant verbal notice that XTO was

experiencing a force majeure event and that deliveries under the Contract would be impacted. On

February 17, 2021, XTO gave formal written notice to Defendant that XTO was experiencing a

force majeure event and that the supply of natural gas under the Contract was adversely impacted.

In response to the written notice, Defendant notified XTO that it did not believe the winter storm

event qualified as a force majeure event and that it did not believe that XTO was relieved of its

delivery and supply obligations under the Contract. Defendant also took the position in its response

that XTO owes Defendant cover damages in the amount of $11,702,120 because of the delivery

and supply issues caused by the winter storm.

13. Notwithstanding its own demands, on February 19, 2021, Defendant notified XTO

of a force majeure for gas it contracted to sell to XTO at another point of sale in Texas, based upon

the same winter freeze event.

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 14. Based on the positions taken by the parties, there is a present and existing dispute

between XTO and Defendant regarding whether: (1) the February 2021 winter storm event

qualifies as a force majeure event under the Contract and as a result XTO’s supply obligations

under the Contract are excused by force majeure; and (2) whether XTO owes Defendant to cover

damages caused by the delivery and supply issues triggered by the winter storm.

VI.
DECLARATORY JUDGMENT

15. Pursuant to Chapter 37 of the Texas Civil Practice & Remedies Code, XTO seeks

a judicial declaration that: (1) the winter storm event in February of 2021 qualifies as a force

majeure event under the Contract: (2) XTO is excused from the delivery and supply obligations

under the Contract that were impacted by the winter storm of February 2021; and (3) Defendant is

not entitled to cover damages from XTO for any supply or delivery issues caused by the February

2021 winter storm event.

VII.
ATTORNEYS’ FEES

16. XTO has retained the undersigned counsel to represent them in this matter.

Pursuant to TEX. CIV. PRAC. & REM. CODE § 37.009, XTO is entitled to recover its costs and

reasonable and necessary attorneys’ fees as are equitable and just.

VIII.
CONDITIONS PRECEDENT

17. All conditions precedent to XTO’s claims for relief have been performed or have

occurred.

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 IX.
PRAYER

XTO respectfully requests that this Court judicially declare the interests, rights, and

obligations of the parties under the Contract as set forth above and enter a judgment:

1) declaring that the February 2021 winter storm was a force majeure event as it relates to

XTO’s supply and delivery of natural gas to Defendant;

2) declaring that XTO was excused from its supply and delivery obligations under the

Contract by reason of the force majeure winter storm event;

3) that Defendant is not entitled to cover damages against XTO relating to any issues

associated with XTO’s supply and delivery of natural gas to Defendant during the 2021 winter

storm event;

4) awarding XTO its costs and reasonable and necessary attorney’s fees; and

5) awarding XTO such other and further relief to which it is legally and equitably entitled.

Respectfully submitted,

MCGINNIS LOCHRIDGE LLP

Travis C. Barton (SBN 00790276)
tcbarton@mcginnislaw.com
Sky Andrew Scherer (SBN 24037443)
sscherer@mcginnislaw.com
600 Congress, Suite 2100
Austin, Texas 78701
(512) 495-6000
(512) 505-6341 Fax

By:
Travis C. Barton

ATTORNEYS FOR XTO ENERGY INC.