Casillas Petroleum Resource Partners sued Continental Resources Inc, alleging the Oklahoma shale producer last month backed out of a $200 million oil and gas deal as prices crashed.
U.S. crude futures prices have tumbled, with coronavirus-related lockdowns and travel restrictions souring demand as OPEC and other producers waged a price war, sending oil to $13 a barrel this month from $61 at the start of the year.
On March 6, the day a supply pact by OPEC and allies collapsed, Continental agreed to buy oil and gas properties from Tulsa, Oklahoma-based Casillas. The deal was set to close roughly three weeks later, according to a lawsuit filed in Tulsa County District Court in Oklahoma.
But Continental got cold feet and proposed to postpone the closing due to “changes in the oil and gas markets,” and then terminated the agreement on March 24 citing title and other problems, the lawsuit alleged.
Continental Resources did not respond to a request for comment.
Casillas could not immediately be reached for comment on the suit, filed on April 15, which asks the court to order Continental to complete the purchase and pay Casillas attorneys’ fees and other costs.
Crashing oil prices have upset several deals in the process of closing. On Monday, BP agreed to restructure a $5.6 billion sale of Alaska oil properties to Hilcorp Energy. Shale producers Alta Mesa Holdings and Devon Energy accepted lower prices for pending asset deals.
Continental slammed the brakes on spending and oil production as prices nosedived. On March 19, it disclosed a 55% reduction in 2020 spending and three weeks later suspended its dividend and reduced output by 30% for April and May.
Founder Harold Hamm, an early supporter of U.S. President Donald Trump, has urged Washington to impose tariffs on foreign oil imports and pushed for federal support of the oil industry.
Last week, he called for futures market regulators to investigate potential market manipulation after oil futures turned negative for the first time. His firm recently declared force majeure on certain sales contracts.