Background: A Winter Storm Uri Force Majeure Dispute

Marathon Oil and Mercuria Energy America entered into a natural gas sale contract based on the North American Energy Standards Board (NAESB) form, under which Marathon agreed to deliver gas daily in February 2021 at the EOIT West Pool. When Winter Storm Uri struck, Marathon declared force majeure and failed to deliver the full contracted volume. Mercuria disputed the declaration, arguing Marathon should have either purchased replacement gas on the spot market or bought back its delivery obligation. The parties' base contract included a critical modification to the force majeure clause: language stating "the party claiming excuse shall have no obligation to seek alternative Gas supplies in order to satisfy any obligation hereunder."

The Dispute: What Does "Reasonable Efforts" Require?

The core issue was whether Marathon's force majeure declaration was valid despite its failure to take affirmative steps to perform. Mercuria advanced two theories: first, that Marathon should have purchased spot-market gas at West Pool to cover its shortfall; second, that Marathon should have bought back its delivery obligation. Both arguments rested on either an interpretation that the "alternative Gas supplies" language applied only to gas at locations other than West Pool, or that the force majeure clause's "reasonable efforts" duty independently required such mitigation measures. The Business Court rejected both contentions.

The Court's Analysis: Plain Language Controls

The Court held that the contract unambiguously relieved Marathon of any duty to seek replacement gas. The "no obligation to seek alternative Gas supplies" language encompassed spot-market gas at any location, including West Pool. As the opinion states:

The Court holds that the parties' contract did not obligate the seller to take either action as a prerequisite or alternative to declaring force majeure or as a contractually required "reasonable efforts."

On the buyback issue, the Court reasoned that requiring a party to purchase back its delivery obligation would "render the clause ineffective." The force majeure provision is designed to excuse performance when extraordinary events occur; imposing a duty to buy back the obligation at potentially ruinous prices would eviscerate that protection.

Why It Matters for Texas Commercial Practice

This decision provides critical guidance for energy traders and their counsel drafting and interpreting force majeure clauses in natural gas contracts. The Court's holding makes clear that parties can contractually eliminate specific mitigation obligations—such as seeking alternative supplies—and that courts will enforce such negotiated terms according to their plain language. The decision also establishes that "reasonable efforts" duties under force majeure clauses do not encompass actions that would effectively nullify the clause's protective purpose. For parties using modified NAESB forms, the case underscores the importance of precise drafting: the specific language added to the force majeure clause proved dispositive in relieving Marathon of obligations that might otherwise have been implied.