Porter Hedges Secures International Arbitration Victory for Hupecol Operating in $30 Million Breach of Contract Dispute

Porter Hedges secured an international arbitration victory for Hupecol Operating Co. LLC (“Hupecol”) in a breach of contract dispute involving nearly $30 million in claimed damages. Following months of extensive discovery and a two-week evidentiary hearing under the rules of the International Center for Dispute Resolution (ICDR), the three-person arbitration panel found unanimously in favor of Hupecol, issuing an award of zero damages to the claimant and awarding Hupecol its costs.

At issue were claims for breach of contract brought by a Mississippi-based company alleging various breaches of a Farmout Agreement executed between Hupecol and the claimant in 2013 for the exploration and production of hydrocarbons in Colombia. Local opposition prevented the project from moving forward and raised novel questions concerning the defense of impossibility and the often-overlooked “social license to operate” in Colombia. The arbitration highlighted the difficulties operators often face in Colombia and provided Porter Hedges the opportunity to emphasize the nature and purpose of a Farmout Agreement and how it can be effectively used to mitigate the risks inherent to E&P operations in Latin America.

Headquartered in San Antonio with operations in Colombia since 1997, Hupecol is focused on oil and gas exploration and production.