Texas Keystone Prevails Against Claim Brought By Excalibur Ventures

Friday, September 20, 2013 - 12:42

Jones Day has successfully defended Texas Keystone Inc., a U.S. oil and gas company based in Pittsburgh, Pennsylvania, against Excalibur Ventures' ("Excalibur") $1.6 billion claim for an interest in various petroleum fields in Iraqi Kurdistan. The 57-day trial was the longest and one of the most complex held in London’s Commercial Court this judicial year. 

The case was tried in the English Commercial Court between October 8, 2012 and March 1, 2013. On September 10, 2013 the Court handed down its judgment dismissing all claims against Texas Keystone and the other defendants (Gulf Keystone Petroleum Limited, Gulf Keystone Petroleum International Limited, and Gulf Keystone Petroleum (UK) Limited) and decided all issues in favor of the defendants. 

In addition to handling the English proceeding, Jones Day also acted for Texas Keystone in the related ICC arbitration in New York and in three separate district court proceedings across the U.S. 

Robert Kozel, board member and former president and CEO of Texas Keystone, said: "We have had to endure more than two-and-a-half years of litigation and a 57-day trial, but we never doubted for a moment that we would be vindicated. We are extraordinarily happy with the outcome, but always believed that the legal system would conclude that Texas Keystone and Gulf Keystone acted ethically and properly in all respects in connection with the Shaikan oil concession and in its dealings with Excalibur. In truth, this is a claim that should never have been brought, and we were determined to fight it. We are grateful for the support of all of the employees of Texas Keystone and our lawyers at Jones Day who served us well throughout. I believe Jones Day’s depth on both sides of the Atlantic and its ability to act as one firm worldwide made a tremendous difference to the outcome."

Throughout the case, Jones Day successfully assisted Texas Keystone with a number of pivotal developments. The firm successfully argued that Excalibur should not be granted a stay of the Commercial Court proceedings in London in favor of the ICC arbitration in New York since it had submitted to the English jurisdiction on more than just a protective basis. Excalibur issued two actions in the U.K. and sought a variety of ancillary orders including a failed request for a worldwide freezing injunction. Excalibur subsequently terminated the parallel ICC proceedings it had commenced in New York. 

In December 2011, Texas Keystone and the Gulf defendants successfully applied for security for their costs of the Commercial Court proceedings. 

In June 2012, Texas Keystone and the Gulf defendants successfully applied for specific disclosure from Excalibur of documents primarily bearing upon Excalibur's ability to raise funds for both the concession rights and to pursue this litigation. This included detail of its financial capability to participate in the oil concession and third-party funding arrangements for the litigation. 

At the same time, Texas Keystone also gathered key evidence about Excalibur and its principals from third parties in the U.S., utilizing procedures available under U.S. law. This involved initiating proceedings in Connecticut, Washington DC, and Texas, all of which were heavily contested. 

In January 2013, Texas Keystone and the Gulf defendants successfully applied for additional security for their costs of the Commercial Court proceedings. 

While the trial eventually took place in the Commercial Court in London, the claims were principally governed by New York law. Further, the Collaboration Agreement was in part to be operated in accordance with Kurdish law. Additionally, Texas Keystone is based in Pittsburgh and incorporated in Texas; Excalibur is based in Delaware; and Gulf Keystone (one of the Gulf defendants) is based in Bermuda. 

The transatlantic Jones Day team on this matter was led by partners Stephen Pearson (London/New York) and Roy Powell (Pittsburgh) and included partners Peter Laun (Pittsburgh) and Lee DeJulius (Pittsburgh), as well as associates Daniel Travers (London), Lisa Allenden (London), Elizabeth Smith (London), Julia Carson (London), Katelyn Matscherz (Pittsburgh), Anderson Bailey (Pittsburgh), Ira Karoll (Pittsburgh), Benjamin Verney (Pittsburgh) and Nina Yadava (New York). Other attorneys in Jones Day's Pittsburgh, New York, Washington D.C., and Houston offices were also involved throughout the case.

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Jones Day advised Sprint Corporation in connection with its $6.5 billion Rule 144A/Regulation S offering consisting of $2.25 billion aggregate principal amount of 7.250% Notes due 2021 and $4.25 billion aggregate principal amount of 7.875 % Notes due 2023. This transaction marks the largest-ever high-yield debt offering by a company (Source: WSJ).

The offering represents the first financing transaction by Sprint since its acquisition of 100% of the outstanding stock of Clearwire Corporation and the acquisition by Softbank Corp. of a controlling equity interest in Sprint, each of which occurred in July 2013. The issuer, Sprint Corporation, is a newly formed holding company established to effect the Softbank transaction. The Notes are guaranteed on a senior unsecured basis by Sprint Corporation's wholly owned subsidiary Sprint Communications, Inc. (formerly known as Sprint Nextel Corporation). J.P. Morgan and Deutsche Bank Securities acted as joint book-running managers for the transaction.