Background and Parties

OWL AssetCo 1, LLC and EOG Resources, Inc., both oil and gas industry operators, entered into an agreement on December 31, 2019, governing the delivery and disposal of produced water and their respective responsibilities. After incurring what OWL characterized as "millions of dollars" and "significant costs" remediating three separate produced water spills over a three-year period—the Fruit State, Cigarillo, and Bon Bon spills—OWL sued EOG for breach of contract in the 152nd Judicial District Court of Harris County, Texas on April 9, 2025. OWL alleged EOG breached provisions obligating it to deliver produced water meeting certain specifications and to reimburse and indemnify OWL for injuries caused by EOG's failure to meet those specifications. OWL sought compensatory damages exceeding the district court's jurisdictional minimum, which was at the very least monetary relief of more than $1 million.

EOG's Answer, Counterclaims, and Removal

On May 12, 2025, EOG answered and countersued for breach of contract and declaratory judgment, asserting that the district court had jurisdiction because the amount in controversy exceeded $10 million. EOG contended the amount in controversy encompassed the indeterminate millions of compensatory damages pleaded by OWL and the specific monetary relief sought by EOG in its breach-of-contract claim. In its breach-of-contract counterclaim, EOG alleged that because OWL breached the contract by failing to take dedicated volumes of produced water, EOG was owed liquidated damages worth approximately $929,192 in credits. EOG further alleged that "over the life of the [a]greement, if [OWL] does not cure its breach, EOG is owed approximately $6,453,000 in credits." For its declaratory judgment claim, EOG did not seek a specific monetary amount but rather a declaration that EOG was neither responsible nor liable for the spills and their remediation costs.

Later that same day, EOG removed the action to the Business Court of Texas without OWL's agreement. EOG asserted the Court had jurisdiction under two statutory grounds: Sections 25A.004(d)(1) and (e) of the Texas Government Code. EOG contended the Court had jurisdiction under subsection (d)(1) because the action arose out of a qualified transaction and the amount in controversy exceeded $10 million, citing OWL's millions in compensatory damages and EOG's millions in credits owed. EOG also asserted jurisdiction under subsection (e) because it sought a declaratory judgment concerning its rights under the parties' agreement.

OWL's Motion to Remand

OWL moved to remand on June 9, 2025. The motion was submitted for consideration without oral argument on July 17, 2025, and the Court granted the motion on July 25, 2025, with a written opinion to follow explaining its ruling in further detail.

Implications for Practitioners

This decision underscores the importance of establishing the amount in controversy when removing cases to the Business Court of Texas under Section 25A.004(d)(1). Where a plaintiff pleads indeterminate damages exceeding a lower threshold, defendants seeking removal must be prepared to demonstrate that the amount in controversy meets the $10 million jurisdictional requirement. The case also illustrates that a defendant's counterclaims—even when aggregated with the plaintiff's claims—may be insufficient to establish jurisdiction if the combined amount falls short of the statutory threshold.