HEI Resources East OMG Joint Venture Obtains Summary Judgment in $2.7 Million Oil and Gas Dispute

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A federal judge in Laredo, Texas, has ordered S. Lavon Evans Jr. to pay at least $2.7 million to the HEI Resources East OMG Joint Venture in connection with a failed oil and gas deal.

As managing venturer, Mr. Cagle and HEI Resources take seriously the duty to protect the East OMG Joint Venture and its partners

A federal judge in Laredo, Texas, has ordered S. Lavon Evans Jr. to pay at least $2.7 million to the HEI Resources East OMG Joint Venture in connection with a failed oil and gas deal.

The summary judgment was issued by Senior U.S. District Judge Joseph M. Hood, sitting by designation in the Southern District of Texas. The court ruled that Mr. Evans and his companies, S. Lavon Evans Jr. Operating Inc. and E&D Services Inc., defrauded East OMG, a joint venture managed by HEI Resources Inc. and its president Reed Cagle. The court also found that Mr. Evans violated the Texas Theft Liability Act after failing to finalize an oil and gas drilling deal at the K2 Prospect in Colorado County, Texas. (Case 5:07-cv-62 TXSD Laredo Division 8/24/09)

In early 2007, Mr. Evans approached Mr. Cagle about drilling opportunities in the K2 Prospect, where Mr. Evans stated that his companies controlled the mineral rights. Acting on behalf of the East OMG Joint Venture, HEI Resources paid Mr. Evans $2.7 million to close the deal on April 26, 2007. The next day, Mr. Evans informed HEI Resources that the deal had fallen through.

"The East OMG Joint Venture and HEI Resources went out of their way to help complete this deal, with reassurances from Mr. Evans that it was done," says Lori Hood, an attorney with Houston's Johnson Spalding Doyle West & Trent LLP who represented East OMG. "As it turns out, Mr. Evans was less than truthful throughout the process, and had every intention of keeping the $2.7 million for himself."

Following the broken deal, the East OMG Joint Venture partners directed Mr. Cagle and HEI Resources to pursue legal action against Mr. Evans.

"As managing venturer, Mr. Cagle and HEI Resources take seriously the duty to protect the East OMG Joint Venture and its partners," said Mikel Bowers, an attorney with Dallas' Bell Nunnally & Martin LLP, counsel for Mr. Cagle and HEI Resources. "When the partners voted to pursue Mr. Evans and directed HEI Resources to lead the charge, Mr. Cagle and HEI did everything within their power to get justice for East OMG."

In granting East OMG's motion for summary judgment, the court ordered Mr. Evans to repay at a minimum the $2.7 million from the failed K2 Prospect. The court also found that Mr. Evans and his companies had conspired and all were liable for fraud, theft, and unjust enrichment.

Attorneys for East OMG, HEI Resources, and Mr. Cagle will now request that the court issue a final judgment in the case.

For more information, contact Alan Bentrup at 800-559-4534 (office), 713-553-3358 (cell).

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Steve Land
HEI Resources
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