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Knox Energy, LLC v. Gasco Drilling, Inc.

United States District Court, W.D. Virginia, Abingdon Division

June 2, 2014

KNOX ENERGY, LLC, Plaintiff,
v.
GASCO DRILLING, INC., Defendant.

J. Scott Sexton, H. David Gibson, and Michael J. Finney, Gentry Locke Rakes & Moore, LLP, Roanoke, Virginia, for Plaintiff and Counterclaim Defendants.

Thomas R. Scott, Jr., and Benjamin A. Street, Street Law Firm, LLP, Grundy, Virginia, and C.R. Bolling, Bolling, Hearl & Ratliff, Richlands, Virginia, for Defendant and Counterclaim Plaintiff.

OPINION AND ORDER

JAMES P. JONES, District Judge.

Knox Energy, LLC, and Consol Energy, Inc. (collectively referred to as "Knox"), the counterclaim defendants in this diversity civil case, have filed a Motion for Judgment on the Pleadings to the Counterclaim of Gasco Drilling, Inc. ("Gasco"). The motion has been fully briefed and is ripe for decision. For the reasons stated, it will be denied.[1]

I

For the purposes of the present motion, I will accept the facts pleaded in the Counterclaim.

Knox and Gasco entered into a written agreement in 2008 by which Gasco provided drilling services to Knox (the "Drilling Contract"). Pursuant to the Drilling Contract, Gasco was engaged to drill horizontal wells for Knox at various undefined locations beginning July 7, 2008, at a prescribed rate per day for each drilling rig. The agreement also included a "standby time rate, " providing for payment to Gasco of $10, 800 per day when a drilling rig was shut down and awaiting orders from Knox.

The term of the Drilling Contract was stated to be until "drilling operations are completed..., or for a term of 2 years." (Countercl. Ex. A ยง 6.1, ECF No. 22-1.) Knox contends that the Drilling Contract terminated on July 24, 2010. On June 6, 2011, Knox sent Gasco a document (the "Addendum") which stated as follows:

Addendum to Contract Purchase Order

This addendum to contract purchase order ("addendum") is entered into effective this __ day of _______, 20__, by and between Consol Energy, Inc. and its affiliates ("company") and __________________ ("contractor").

Whereas, company and contractor are parties to a contract purchase order (PO No. _____________) (the "contract purchase order"); and
Whereas, company and contractor agree to modify the "term" provision of the contract purchase order as provided herein.
Therefore, intending to be legally bound, company and contractor agree as follows.
1. Company and contractor agree to modify the "term" provision of the contract purchase ...

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