Title: Bowers Oil & Gas, Inc. v. DCP Douglas, LLC

State: wyoming

Issuer: Wyoming Supreme Court

Document:

BOWERS OIL AND GAS, INC., a Colorado corporation v. DCP DOUGLAS, LLC, a Colorado limited liability company; and KINDER MORGAN OPERATING, L.P. "A", a Delaware limited partnership2012 WY 103Case Number: S-11-0233Decided: 07/31/2012This opinion is subject to formal revision before publication in Pacific Reporter Third.  Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.  
APRIL 
TERM, A.D. 2012
 
BOWERS 
OIL AND GAS, INC., a Colorado 
corporation,Appellant(Plaintiff),v.DCP DOUGLAS, LLC, 
a Colorado limited liability company; and KINDER MORGAN OPERATING, L.P. “A”, a 
Delaware limited 
partnership,Appellees(Defendants).
 
Appeal 
from the District Court of Converse County
The 
Honorable John C. Brooks, Judge 
 
Representing 
Appellant:
Loyd 
E. Smith of Murane & Bostwick, LLC, Cheyenne, Wyoming
 
Representing 
Appellees:
James 
R. Belcher of Belcher & Boomgaarden, LLP, Cheyenne, 
Wyoming
 
Before 
KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.
 
GOLDEN, 
Justice.
 
[¶1]      Bowers Oil and 
Gas, Inc. (BOG) entered into a Gas Purchase Contract with Kinder Morgan 
Operating, L.P. (Kinder Morgan), pursuant to which Kinder Morgan agreed to 
purchase coal bed methane gas from certain of BOG’s wells.  Kinder Morgan transferred its interest 
in the Contract, and Kinder Morgan’s successor eventually terminated the 
Contract pursuant to a provision that allowed either party to terminate if in 
the terminating party’s sole opinion, the sale or purchase of the gas became 
unprofitable or uneconomical.  BOG 
thereafter filed a complaint in district court asserting claims for breach of 
contract and breach of the covenant of good faith and fair dealing.  Following a bench trial, the district 
court found no contract breach or covenant breach and ruled in favor of Kinder 
Morgan and its successor.  We 
affirm.
 
ISSUES
 
[¶2]      BOG presents the 
following issues on appeal:
 
1.         
Whether the trial court erred in ruling that Appellees did not breach the 
Gas Purchase Contract?
 
            
A)        
Whether the trial court erred in ruling that Appellees were excused from 
performance of the Gas Purchase Contract on the basis that the Contract became 
uneconomical pursuant to paragraph 4 of the Contract?
 
2.         
Whether the trial court erred in ruling that the Appellees did not breach 
the covenant of good faith and fair dealing.
 
FACTS
 
[¶3]      BOG is an oil and 
gas developer with interests in a number of states, which interests include coal 
bed methane wells in Wyoming’s Powder River Basin.  On May 1, 2004, BOG entered into a Gas 
Purchase Contract with Kinder Morgan.  
Kinder Morgan is a provider of midstream services, including the 
gathering of gas from producers, and the processing and transporting of that gas 
to market.  In 2004, Kinder Morgan 
owned the Douglas Gathering System, which is a system of collecting lines and 
main lines that runs from the Gillette area to a processing plant near Douglas, 
Wyoming.  It was through a line 
connected to the Douglas Gathering System that Kinder Morgan was to accept BOG’s 
coal bed methane gas.  

 
[¶4]      Pursuant to the 
Gas Purchase Contract, BOG agreed to sell gas produced from certain of its 
wells, and Kinder Morgan agreed to purchase the gas.  The Contract made the parties’ 
obligations subject to a number of conditions, including the 
following:
 
4.         
ECONOMIC CONDITIONS:  In the 
event the gas delivered hereunder at any point or points becomes insufficient in 
volume, quality, pressure or for any reason becomes, in the sole opinion of 
Buyer or Seller, unprofitable or uneconomical for Buyer to purchase or for 
Seller to sell, then Buyer or Seller shall have the right to terminate this 
Contract upon thirty (30) days written notice to the other party as to any or as 
to all such points.
 
* 
* * * 
 
7.         
QUANTITY OF GAS:
 
            
7.1.  Buyer will purchase and 
take Seller’s gas, subject to the demands of Buyer’s resale purchaser(s) and the 
operating conditions and capacity of Buyer’s facilities.  It is understood that Buyer cannot 
guarantee the purchase of any particular quantity of Seller’s gas which is 
available for sale.  Buyer shall, 
however, endeavor to purchase gas from the lands covered by this Contract 
ratably with its purchases of similar gas under other contracts covering gas 
delivered to Buyer’s facilities.  

 
            
7.2.  Seller shall have the 
right to dispose of any gas not taken by Buyer, subject to Buyer’s right to 
resume purchase at any subsequent time upon thirty (30) days 
notice.
 
            
7.3. Seller shall have agents or employees available at all reasonable 
times to receive from Buyer’s dispatchers advice and requests for changes in the 
rates of delivery of gas hereunder as required by Buyer from time to 
time.
 
* 
* * * 
 
10.       
RESERVATIONS OF SELLER:  
Seller hereby expressly reserves unto itself, its successors and assigns, 
the following rights with respect to its interests in the gas properties 
committed by Seller to Buyer hereunder together with sufficient gas produced to 
satisfy such rights:
 
            
10.1.  To operate Seller’s 
gas properties free from any control by Buyer in such manner as Seller, in 
Seller’s sole discretion, may deem advisable, including, without limitation the 
right, but never the obligation, to drill new wells, shut in wells, to repair 
and rework old wells, renew or extend, in whole or in part, any lease covering, 
in whole or in part, the gas properties and to abandon any well or surrender any 
such lease, in whole or in part, when no longer deemed by Seller to be capable 
of producing gas in paying quantities under normal methods of 
operation.
 
            
10.2.  To use gas produced 
from the gas properties for developing and operating Seller’s gas properties 
committed hereto in the field in which the gas is produced, for the operation of 
Seller’s pipelines, water stations, camps and other miscellaneous uses incident 
to the operation of such leases, for reinjection, and to fulfill obligations to 
Seller’s Lessors therein.
 
[¶5]      All but one of 
BOG’s wells were located on surface lands owned by the Antelope Coal Company 
(ACC), which operates the Antelope Coal Mine.  Before entering into the Gas Purchase 
Contract with Kinder Morgan, BOG, on September 11, 2003, entered into a Surface 
Use Agreement with ACC.  The 
Agreement contemplated ACC’s planned expansion of its coal mine, which 
neighbored BOG’s coal bed methane wells.  
To accommodate the eventual coal mine expansion, the Surface Use 
Agreement contained provisions requiring BOG to shut in and abandon any well 
when ACC’s surface disturbance approached within five hundred feet of that 
well.  Specifically, the Agreement 
provided:
 
13.)     Mining 
Notice:  As to each well drilled 
and related flow lines pursuant to this Agreement. 
 
            
a.)        OWNER 
shall give notice in writing to OPERATOR not less than ninety (90) days prior to 
the anticipated date by which OWNER’S coal surface mining or related operations 
shall be within One Thousand (1000) feet of an oil and/or gas well drilled by 
OPERATOR on the Surface Lands.
 
            
b.)        
OPERATOR agrees, at each such time as OWNER shall have mined and/or 
removed topsoil within Five Hundred (500) feet of such well site location, or to 
such other distance as may be permitted under the applicable regulations of 
governmental authorities having jurisdiction over the premises, but in no event 
later than such time as OWNER shall have mined with[in] Five Hundred (500) feet 
of such well site location, to suspend operations and to shut-in such well at 
OPERATOR’S expense and in connection therewith, to:
 
            
1.)        
Remove any and all of OPERATOR’S surface facilities, including pipelines, 
power lines and gathering lines located on Surface Lands at OPERATOR’S 
expense.  In the event that OPERATOR 
is required to shut-in a well and remove surface facilities, OPERATOR shall not 
have the right to require OWNER to purchase from the OPERATOR, the subject well, 
facilities and remaining recoverable oil, gas or coal bed methane 
reserves.
 
            
2.)        Plug 
and abandon all wells to a depth below the coal seam being mined by 
OWNER.
 
            
3.)        OWNER 
shall not be responsible for any loss of oil, coal bed methane or gas reserves 
due to mining operations by OWNER.
 
            
4.)        Upon 
completion of such operations, OPERATOR shall give OWNER written notice 
thereof.
 
[¶6]      The Kinder Morgan 
pipeline that serviced BOG’s wells was a ten-inch line that also ran through ACC 
lands.  Kinder Morgan held an 
easement for its pipeline known as the Litton Easement, which easement was 
granted and recorded earlier in time than ACC’s coal leases on the same 
lands.  Kinder Morgan’s sixteen-inch 
main line also ran through ACC lands.  

 
[¶7]      In November 2004, 
BOG began producing and selling gas to Kinder Morgan.  In April 2006, Kinder Morgan sold its 
gas gathering and pipeline system to MEG Wyoming Gas Service, LLC (MEG) and 
assigned the BOG Gas Purchase Contract to MEG as part of that transaction.  BOG’s last delivery of gas pursuant to 
the Contract occurred in July 2006.  
In October 2006, BOG shut in its wells because ACC had obtained approval 
to expand its coal mine and needed to perform work to divert the creek into 
which BOG was discharging water.  

 
[¶8]      During this same 
timeframe, ACC and MEG entered into negotiations for the relocation and 
decommissioning of portions of MEG’s gathering lines and related facilities that 
were in the path of ACC’s coal mine expansion.  On September 25, 2006, ACC and MEG 
executed an agreement pursuant to which ACC agreed to pay MEG $10,640,163 for 
the relocation of its main sixteen-inch pipeline.  In lieu of payment for relocating MEG’s 
six-inch and ten-inch pipelines, MEG accepted a payment of $955,971 to remove 
those lines altogether.  

 
[¶9]      The removal of 
the ten-inch and six-inch pipelines cost MEG the ability to accept gas from 
certain producers in the area, including BOG.  In a memorandum outlining the negotiated 
deal between MEG and ACC to MEG’s management committee, MEG’s vice president, 
Steven Huckaby, wrote, in part:
 
Most 
of the oil and gas leases in the new coal development areas and the associated 
pipeline rights-of-way predate coal leases and have precedent.  In general, law supports the efficient 
and economic development of all resources of the country.  While precedence is recognized, when 
push comes to shove the industries must work together.  In the case of this specific project, 
MEG’s rights-of-way are superior to the coal leases and if Kennecott wants to 
develop its lease, it must pay us to move our pipelines.  We can’t say no and expect to prevail if 
the mine challenges us.
 
* 
* * * 
 
This 
project contemplates that MEG will relocate our 16" mainline and will remove 
various sections of 6" and 10" low pressure gathering system on a cost plus 
basis.
 
The 
6" and 10" gathering lines gather approximately 280 mcfd of conventional and 170 
mcfd of CBM gas adjacent to or located in the mine expansion.  The gross margin value of this lost gas 
would be approximately $0.4 million.  
The cost to replace the 6" and 10" gathering pipe would be $2.06 
million.  In lieu of replacing the 
gathering lines MEG will accept a $0.956 million payment, saving Kennecott $1.10 
million.  Net profit to MEG will be 
$0.556 million.
 
* 
* * * 
 
All 
of the contracts for gas that would be affected by MEG’s decision to take a 
payment in lieu of replacing the gathering lines have “gather’s sole opinion” 
outs for uneconomic operations.  
When the contract with Kennecott is executed we will notify the producers 
that we intend to terminate their gathering contracts.  We will give them the option to pay to 
have gathering lines or compression added to facilitate the reconnection of 
their gas.  This may result in 
renegotiating contracts to include more favorable terms to the producer, but 
would also result in the recovery of a portion of MEG’s lost 
income.
 
[¶10]   Steven Huckaby testified that 
negotiations with ACC regarding the relocation and removal of its gathering 
lines were not easy, and he did not feel certain that MEG ultimately would have 
been able to negotiate full payment of the two million dollars required to 
relocate the six and ten-inch lines.  
Regarding the ability of MEG to insist that ACC pay to relocate the lines 
to which BOG was connected, Mr. Huckaby testified:
 
Q.        If 
MEG’s rights-of-way, as you state, were superior to the mine’s leases, MEG would 
have had the right to insist that the mine pay the full price of relocating the 
feeder lines, correct?
 
A.        They 
were responsible for paying to move our lines; that’s 
right.
 
Q.        . . . 
Had MEG insisted that Antelope Coal Mine pay the full cost of relocating those 
gathering lines, MEG would not have realized the .556 million profit that was 
anticipated in this deal, correct?
 
A.        I 
would say that is not correct.  The 
deal with Kennecott, the mine, was a negotiation.  It was a process.  We – we developed alternatives for 
moving that line.  Some they liked; 
some they didn’t.  The concept of 
not replacing those lines with ten-inch and 6-inch, which were clearly way too 
large for the gas volume out there, didn’t make sense to them or 
us.
 
Q.        I 
don’t think that answered my question.  
My questions was:  If MEG, in 
the course of this agreement, had insisted that Antelope Coal Mine pay the cost 
of relocating those ten-inch and six-inch gathering lines, then MEG would not 
have realized the $.556 million profit?
 
A.        I 
think we could insist, but it was a negotiation.  We would get pushed 
back.
 
Q.        You 
didn’t answer my question.  If you 
had insisted, you would have lost the profit, correct?
 
A.        I 
might have lost the argument.
 
Q.        If 
the coal mine had agreed to relocate the six-inch and ten-inch feeder lines 
instead of paying MEG in lieu of doing that, MEG would have lost the profit it 
got out of the deal?
 
A.        
Yes.
 
[¶11]   Steven Huckaby also provided 
testimony concerning the economic justification for the line removal referenced 
in his memorandum to MEG’s management committee.  He testified:
 
Q.        (By 
Mr. Belcher)  So for the court’s 
benefit, explain the economic decision you made that refers to the economic opt 
out [th]at your memo, which I think Exhibit 29 [is] 
discussing.
 
A.        To do 
that, you would go to section four of the economic conditions, and, you know, we 
looked at the economics of spending the $2 million versus a $400,000 loss of the 
gross margin on that, and it – as it says, in our opinion, we did not find that 
to be economic.
 
Q.        Just 
in simple terms, explain to the court what you looked at to make that 
determination.
 
A.        Had 
we done that deal, spent $2 million putting that pipeline in, all we could 
expect is to recover $400,000 over time.  
If all things stayed equal, if those wells continued to produce, or we 
had the opportunity here to capture $956,000 immediately.  So, a really big bird in the hand 
versus, you know, taking that economic risk over time.  I mean, it was a slam-dunk economic 
decision.
 
Q.        And 
what was the economic decision?
 
A.        To 
take the 956,000 today versus the 400,000 tomorrow.  And at the time we did the deal, you 
know, I really felt like we would find that solution to recover some of the 
400,000 that we were foregoing, which would have just been gravy on top of the 
deal.
 
[¶12]   In early 2007, ACC notified BOG 
that it had completed its diversion work.  
In the spring of 2007, BOG contacted MEG and informed it that BOG’s wells 
were back on line and requested that it be reconnected to MEG’s lines.  MEG then informed BOG that the lines had 
been decommissioned and would not be available to BOG.  Steven Huckaby testified that MEG was 
surprised to hear from BOG because it had assumed BOG’s wells were permanently 
shut-in because of the coal mine expansion.  Mr. Huckaby testified that in response 
to the contact from BOG, MEG began exploring options for reconnecting 
BOG.
 
Q.        Now, 
there has been a lot of discussion about what MEG did or didn’t do to try and 
reconnect the Bowers wells.  What 
was the economic incentive of MEG or another company in the midstream business 
to connect a gas producer?
 
A.        We 
are still in the business.  We don’t 
make a living off of moving lines.  
We make a living using those lines to gather gas.  And when we determined in March of Mr. 
Bowers’ notice that they were coming back up, we got busy in earnest trying to 
figure out how to do that.  I always 
felt there was an answer out there, and engineering started working on it.  Now, this project had to stand in a cue 
of priorities by engineering, so it might have taken a little longer to get that 
out of engineering than some of the higher priority projects they were working 
on, but it was being worked on.  And 
then the transaction between MEG and DCP started to occur, and we got wrapped up 
in that.  And I – I was quite 
involved in that, so I didn’t – we didn’t get to complete with Mr. Bowers.  It was handed over to DCP in the 
transition.
 
[¶13]   On August 8, 2007, BOG sent a 
letter to MEG demanding that it be reconnected to MEG’s gathering system.  The letter stated:
 
In 
April, 2007 Momentum Energy Group removed a segment of the pipeline which 
transported natural gas from the wells covered by the above captioned 
contract.
 
Since 
that time we have contacted Momentum personnel on many occasions in an effort to 
connect the wells to another pipeline.  
Momentum consistently informed us we would be “connected soon”, however, 
to date we continue to be shut-in.
This 
letter is intended to provide you notice that if we aren’t connected to the line 
whereby we can resume production within two weeks we will consider you in breach 
of this contract.
 
[¶14]   On August 29, 2007, MEG was 
acquired by DCP Midstream, LLC and was renamed DCP Douglas, LLC (DCP).  DCP’s managing director Tim Christensen 
testified that after DCP acquired MEG, he was assigned responsibility for what 
he termed the “stranded gas” issue, referring to the task of finding a way to 
reconnect producers with whom MEG, and then DCP, had gas purchase 
contracts.  Between September 2007 
and the spring of 2008, DCP researched and ran calculations trying to find an 
economical way to make the connections.  
In the spring of 2008, DCP ran some tests on its main line and suffered a 
rupture in the line.  Diagnostics 
and repairs of the main line continued into March 2009.  
 
[¶15]   On August 7, 2008, BOG, through its 
attorney, sent a letter to DCP and Kinder Morgan demanding damages for breach of 
contract in the amount of $1,736,157.  
On November 19, 2008, DCP notified BOG that DCP was terminating its Gas 
Purchase Contract with BOG.  The 
letter stated, in part:
 
DCP 
Douglas, which became the owner of the gathering system in August 2007, has 
since concluded that economic conditions and the quality of gas produced from 
Bowers Oil & Gas wells make it uneconomical for DCP Douglas to resume 
purchasing gas from those wells.  
Consequently, this letter constitutes notice of termination, effective 
December 17, 2008, pursuant to Paragraph 4 of the May 1, 2004 Gas Purchase 
Contract (“Contract”) between Bowers Oil and Gas, Inc. and Kinder Morgan 
Operating L.P., the original party from which DCP Douglas’ interest in the 
contract was derived.
 
[¶16]   Tim Christensen testified that DCP 
spent approximately fifteen to twenty million dollars repairing its main line 
and approximately $50,000 pursuing a right-of-way and obtaining cost estimates 
for reconnection to the producers.  
 Concerning DCP’s decision to 
abandon its efforts to capture the stranded gas and to terminate the BOG 
Contract, Mr. Christensen testified:
 
Q.        If 
you can, would you talk about where the stranded gas project was during this 
period from the spring of 2008 until you terminated the 
contract?
 
A.        Yeah, 
we basically didn’t work on it a whole lot once the pipeline failure 
happened.  I will say, you know, I 
talked to a couple of the producers that were affected, but I never talked to 
Mr. Bowers until he sent his demand letter in – I believe it was August 
2008.  I never had talked to the 
Bowers’ entity at all prior to that.
 
* 
* * * 
 
Q.        Okay, 
so let’s go back now to your considering what I’m going to call option two.  What was the result of those 
efforts?
 
A.        It 
was in the fall of 2008, we had actually reached agreement with EOG to connect 
one of their wells, and we made that agreement contingent upon working out a 
deal with the stranded gas producers, particularly the 
Bowers.
 
At 
that point in time, I called Mr. Bowers to see if he would consider releasing 
the claims he had against us, if we were to reconnect his gas, and he told me 
that it was in the hands of the attorneys.  
So I took that as a no, and we then actually went back to EOG and 
released the well we had contingently put – put – reached a deal on.  We went back to them and released the 
well.  We did not connect that well. 

 
Q.        What 
did you end up doing as it relates to the wells after 
that?
 
A.        The 
fact that he said he wouldn’t release the claims, I saw no possible economic way 
to connect them, if you consider that we had the claims in addition to the 
connection costs.  So we ceased 
working on the stranded gas at that time.
 
Q.        And 
what did you do with respect to the Bowers wells?
 
A.        After 
my conversation with Mr. Bowers, I prepared a termination letter and sent it 
out.
 
[¶17]   On June 1, 2009, BOG filed a 
Complaint against DCP and Kinder Morgan, alleging claims for breach of contract 
and breach of the covenant of good faith and fair dealing.  The case was tried to the district court 
without a jury on January 24, 2011, to January 26, 2011, and on April 15, 2011, 
the district court issued its decision.  
The district court ruled that DCP had legally terminated the Contract 
and, on the question of the covenant of good faith and fair dealing, 
ruled:
 
Since 
DCP acted in accordance with the contract and made good faith efforts to look 
for alternatives to continue to purchase BOG gas, I can not find a breach of the 
covenant of good faith.  Let me 
reiterate that I believe that all parties were subject to the actions of the 
mine.  Given that circumstance, it 
is difficult to find breach of the covenant of good faith.
 
STANDARD 
OF REVIEW
 
[¶18]   Because BOG’s claims were tried to 
the court, we apply the following standard of review:
 
Following 
a bench trial, this court reviews a district 
court’s findings and conclusions using a clearly erroneous standard for the 
factual findings and a de novo standard for the conclusions of law. 
Piroschak 
v. Whelan, 
2005 WY 26, ¶ 7, 106 P.3d 887, 890 (Wyo. 2005).
 
The 
factual findings of a judge are not entitled to the limited review afforded a 
jury verdict. While the findings are presumptively correct, the appellate court 
may examine all of the properly admissible evidence in the record. Due regard is 
given to the opportunity of the trial judge to assess the credibility of the 
witnesses, and our review does not entail re-weighing disputed evidence. 
Findings of fact will not be set aside unless they are clearly erroneous. A 
finding is clearly erroneous when, although there is evidence to support it, the 
reviewing court on the entire evidence is left with the definite and firm 
conviction that a mistake has been committed.
 
Piroschak, 
¶ 7, 106 P.3d  at 890. 
Findings may not be set aside because we would have reached a different result. 
Harber 
v. Jensen, 
2004 WY 104, ¶ 7, 97 P.3d 57, 60 (Wyo. 2004). 
Further,
 
we 
assume that the evidence of the prevailing party below is true and give that 
party every reasonable inference that can fairly and reasonably be drawn from 
it. 
We 
do not substitute ourselves for the trial court as a finder of facts; instead we 
defer to those findings unless they are unsupported by the record or erroneous 
as a matter of law.
 
Id.
 
Pennant 
Service Co., Inc. v. True Oil Co., LLC, 2011 
WY 40, ¶ 7, 249 P.3d 698, 703 (Wyo. 2011) (quoting Hofstad 
v. Christie, 
2010 WY 134, ¶ 7, 240 P.3d 816, 818 (Wyo. 2010)) 
(some citations omitted).  We review 
the district court’s conclusions of law de novo. Claman v. Popp, 2012 WY 92, ¶ 22, 
279 P.3d 1003, 1012 (Wyo. 2012); Lieberman 
v. Mossbrook, 
2009 WY 65, ¶ 40, 208 P.3d 1296, 1308 (Wyo. 2009).
 
DISCUSSION
 
A.        
Breach of Contract Claim
 
[¶19]   BOG contends that the Gas Purchase 
Contract obligated Kinder Morgan/DCP to maintain the pipeline connection with 
BOG and, assuming an available market and no systems failure, to then purchase 
the gas BOG produced.  In other 
words, BOG argues that Kinder Morgan/DCP could not voluntarily decommission its 
pipeline and then terminate the Contract because the decommissioned line made 
the purchase of gas uneconomical.  
Based on this premise, BOG argues that the district court erred in 
finding no breach of the Gas Purchase Contract.  
 
[¶20]   Interpretation of a contract is a 
question of law.  Union 
Pacific Railroad Co. v. Caballo Coal Co., 
2011 WY 24, ¶ 13, 246 P.3d 867, 871 (Wyo. 2011).  We begin our analysis with our rules of 
contract interpretation, the most basic of which mandates that a contract’s plain language is controlling.  Claman, ¶ 26, 279 P.3d  at 1013; 
Hunter 
v. Reece, 
2011 WY 97, ¶ 17, 253 P.3d 497, 501-02 (Wyo. 2011).
 
[T]he 
words used in the contract are afforded the plain meaning that a reasonable 
person would give to them. Doctors’ 
Co. v. Insurance Corp. of America, 
864 P.2d 1018, 1023 (Wyo. 1993). 
When the provisions in the contract are clear and unambiguous, the court looks 
only to the “four corners” of the document in arriving at the intent of the 
parties. Union 
Pacific Resources Co. 
[v. 
Texaco], 
882 P.2d [212,] 220 
[(Wyo. 1994)]; Prudential 
Preferred Properties 
[v. 
J and J Ventures], 
859 P.2d [1267,] 1271 
[(Wyo. 1993)]. In the absence of any ambiguity, the contract will be enforced 
according to its terms because no construction is appropriate. Sinclair 
Oil Corp. v. Republic Ins. Co., 
929 P.2d 535, 539 (Wyo.1996).
 
Claman, 
¶ 26, 279 P.3d  at 1013 (quoting Hunter, ¶ 17, 253 P.3d at 502) 
(alterations in original).  
Our 
rules of interpretation further require that we interpret a contract as a whole, 
reading each provision in light of all the others to find their plain meaning. 
State ex rel. Arnold 
v. Ommen, 
2009 WY 24, ¶ 40, 201 P.3d 1127, 1138 (Wyo. 2009); 
see also Caballo 
Coal Co. v. Fid. Exploration & Prod. Co., 
2004 WY 6, ¶ 11, 84 P.3d 311, 314-15 (Wyo. 2004).
 
[¶21]   Citing economic reasons, DCP 
terminated the Gas Purchase Contract pursuant to Paragraph 4 of the 
Contract.  Paragraph 4 allowed 
either party, in this case DCP as Buyer, to terminate the Contract, if, in the 
sole opinion of that terminating party, it became uneconomical to purchase the 
gas.  Neither party suggests that 
Paragraph 4, or any part of the Contract, is ambiguous, and in our review, we 
find no ambiguity.  

 
[¶22]   Having concluded that the Contract 
is clear and unambiguous, we look then to the plain meaning of the Contract’s 
terms.  The language that first must 
be considered is the term “uneconomical.” “Uneconomical” is defined to mean “not 
economically practicable; costly, wasteful.”  Merriam-Webster’s 
Collegiate Dictionary 1366 (11th ed. 
2007).  

 
[¶23]   When MEG owned the feeder pipelines 
that connected BOG to the gathering system, it made the economic decision to 
remove the feeder lines rather than attempt to force ACC to pay the costs of 
relocating the line.  MEG made that 
decision as the coal mine was expanding and at a time when BOG’s wells were shut 
in, and the economic reasons it cited were: 1) the calculated cost of relocating 
the feeder pipelines was two million dollars and the anticipated future revenue 
from that pipeline was only $400,000; 2) the feeder lines were larger than 
necessary for the volume of gas they were transporting; 3) removal of the feeder 
lines would result in a guaranteed immediate profit of $556,000 in contrast with 
the relocation which would result in a possible but not guaranteed profit of 
$400,000 over time; and 4) MEG hoped to find other economical ways to connect 
and continue to purchase gas from producers.1
 
[¶24]   We can find no clear error in the 
district court’s finding that these circumstances warranted MEG’s determination 
that it was uneconomical, that is, costly, wasteful and impracticable, to demand 
relocation of its feeder pipelines rather than accepting payment for removal of 
the pipelines.  We conclude likewise 
with respect to DCP’s ultimate decision to terminate the Contract.  DCP had spent millions of dollars trying 
to repair its main line, thousands of dollars trying to find an economical way 
to reconnect the producers with whom it had contracts, and was faced with a 
nearly two million dollar claim by BOG.  
Under these circumstances, we can find no clear error in upholding DCP’s 
termination of the Contract because, in DCP’s sole opinion, it was no longer 
economical to purchase the gas.
 
[¶25]   We turn next to BOG’s arguments 
that MEG and its successor could not rely on an economic basis to terminate the 
Contract, because MEG’s own actions caused the economic issue.  BOG contends that MEG had a right under 
its superior easement, which was prior in time to the coal mine’s permits, to 
demand that the coal mine relocate the lines, whatever the cost.  BOG’s argument continues, that having 
voluntarily relinquished its right to have the line relocated and connected to 
the producers, MEG could not then claim it was uneconomical to purchase the 
gas.
 
[¶26]   The flaw in BOG’s argument is its 
premise that the Gas Purchase Contract obligated MEG to keep and maintain its 
connection to BOG for the entire term of the Contract.  That obligation cannot be found in the 
Contract, and in fact, the Contract provides each party with authority and 
control over its facilities.  

 
[¶27]   Pursuant to Paragraph 10 of the 
Contract, BOG, as the Seller, was permitted full authority over its facilities 
and operations, and full authority and discretion to decide whether it would 
even produce gas.  Likewise, 
pursuant to Paragraph 7 of the Contract, MEG, as the Buyer, was permitted to 
condition its purchases of gas on market demands and “the operating conditions 
and capacity of Buyer’s facilities.”  
The next sentence of Paragraph 7 follows with the parties’ express 
understanding that “Buyer cannot guarantee the purchase of any particular 
quantity of Seller’s gas which is available for sale.”  Read as a whole, the Contract was simply 
not one of guarantees.  The Contract 
did not guarantee that gas would always be flowing, that gas would always be 
purchased, or even that the facilities would be present and available to 
purchase the gas. 
 
[¶28]   Based on the foregoing, we find no 
breach of contract in MEG’s decision, inherited by DCP, to remove rather than 
relocate its feeder pipelines, and we find DCP properly terminated the Contract 
in accordance with the Paragraph 4 provisions.
 
B.        
Covenant of Good Faith and Fair Dealing
 
[¶29]   This Court has recognized that 
commercial contracts contain an implied covenant of good faith and fair 
dealing.  Ultra Res., Inc. v. Hartman, 2010 WY 36, 
¶ 84, 226 P.3d 889, 919 (Wyo. 2010).  

 
Restatement 
(Second) of Contracts § 205 (1981) 
states the general principle: “Every contract imposes upon each party a duty of 
good faith and fair dealing in its performance and enforcement.” We have 
determined that “the implied covenant requires that neither party to a 
commercial contract act in a manner that would injure the rights of the other 
party to receive the benefit of the agreement.” City 
of Gillette v. Hladky Constr., Inc., 
2008 WY 134, ¶ 30, 196 P.3d 184, 196 (Wyo. 2008). 
A party breaches the covenant by interfering or failing to cooperate in the 
other party’s performance under the contract. [Scherer 
Constr., LLC v. Hedquist Constr., Inc., 
2001 WY 23, ¶ 19, 18 P.3d 645, 653 (Wyo. 2001)].
 
Ultra 
Res., 
¶ 84, 226 P.3d  at 919.  

 
[¶30]   The covenant of good faith and fair 
dealing requires that each party’s actions be consistent with the agreed common 
purpose and justified expectations of the other party.  Grommet v. Newman, 2009 WY 150, ¶ 25, 
220 P.3d 795, 804 (Wyo. 2009).  
Those purposes and expectations are defined by reference to the contract 
language, the parties’ course of dealing, and the parties’ conduct.  Hladky 
Constr., 
¶ 31, 196 P.3d  at 196. 
 
[¶31]   BOG contends that DCP/MEG violated 
the covenant of good faith and fair dealing when it agreed to accept payment for 
removal of its feeder lines, in lieu of demanding that the lines be 
relocated.  BOG characterizes this 
as a “sweet deal” for DCP/MEG and argues that DCP/MEG intended to “get away” 
with the deal by relying on Paragraph 4 of the Contract.  BOG casts the deal between MEG and ACC 
in a nefarious light, and contends that MEG’s decommissioning of the feeder 
lines undermined BOG’s justified contract expectations. 
 
[¶32]   The district court viewed the 
evidence differently, finding, in relevant part:
 
The 
Plaintiff argues persuasively that the contract became uneconomical because the 
Defendant, DCP, made a side agreement with ACC to decommission the gathering 
system for a money payment. . . .
 
However, 
after giving this matter much consideration and despite the excellent 
presentation by Plaintiff’s counsel, I must disagree with that 
analysis.
 
In 
fact, there was another player in this matter, an undeniable “elephant in the 
room.”  That of course was Antelope 
Coal Company.  Everything in this 
case, did, and likely always would have been controlled by the economic needs of 
the mine.
 
ACC 
was the surface owner of much of the property in question.  ACC had a [surface] agreement that 
required BOG to cease operations on any of the BOG’s wells when the mine came 
within five hundred (500) feet of the wells.
 
. 
. . It is also clear that ACC was expanding its mine site.
 
Most 
telling is that BOG shut off its gas well operations in the fall of 2006 for six 
months in deference to the mine relocating the creek 
drainage.
 
I 
must find and conclude that the actions of ACC regarding the expansion of the 
mine were the precipitating factor that caused the gas contract to fail.  It is clear to the Court that all of the 
activities in the vicinity of the gas wells would, to varying degrees, be 
subject to the plans of ACC.
 
BOG 
and the mine agreed that the wells and naturally the gathering lines would be 
shut down when the mine expanded near the wells.  Thus, BOG could not reasonably expect 
DCP to keep the lines intact and operating when they would interfere with the 
mine.
 
* 
* * * 
 
DCP, 
if it had constructed a new gathering system, had no guarantee from anyone that 
it would ever receive enough gas to recover its capital 
costs.
 
On 
the other hand, by abandoning the gathering system due to the mine expansion, 
DCP gave up an asset.  Therefore, it 
was reasonable for DCP to reach a settlement with the 
mine.
 
DCP, 
after August of 2007, made good faith efforts to determine if it was feasible to 
continue to buy gas from BOG.  These 
efforts were ongoing until November of 2008, when DCP ultimately cancelled the 
contract.
 
* 
* * * 
 
Since 
DCP acted in accordance with the contract and made good faith efforts to look 
for alternatives to continue to purchase BOG gas, I can not find a breach of the 
covenant of good faith.  Let me 
reiterate that I believe that all parties were subject to the actions of the 
mine.  Given that circumstance, it 
is difficult to find breach of the covenant of good faith.
 
[¶33]   BOG’s argument on appeal does not 
suggest that the district court’s findings are not supported by the 
evidence.  Instead, what BOG urges 
is a different interpretation of the evidence.  We find that the evidence supports the 
district court’s findings and reject BOG’s interpretation of the evidence.  BOG’s apparent expectation that MEG/DCP 
would maintain a line and connection to BOG at any cost was unjustified, not 
only in light of the coal mine’s expansion and BOG’s obligations to ACC, but 
also in light of the Contract terms and the parties’ course of conduct.  As discussed above, the Contract 
contained no guarantees that gas would be produced or purchased, and indeed, BOG 
shut in its wells for six months, and the record shows it had not produced for 
two months before that, with no consequence under the Contract. 

 
[¶34]   We can find no clear error in the 
district court’s ruling on BOG’s breach of the implied covenant and fair dealing 
claim.
 
CONCLUSION
 
[¶35]   We find no breach of contract in 
MEG’s removal of the pipelines connecting BOG to the gas gathering system and 
that DCP properly terminated the Gas Purchase Contract for economic cause.  We further find no clear error in the 
district court’s rejection of BOG’s claim for breach of the implied covenant and 
fair dealing.
 
FOOTNOTES
1We understand that MEG’s decision to remove the feeder lines was not a 
direct decision to terminate the Contract and thus arguably was not subject to 
the question of whether the situation’s economics supported the decision.  The question of whether MEG’s decision 
to remove the line breached the Contract is not an economic question, but 
instead depends on whether the Contract obligated MEG and its successor to 
maintain the feeder lines and connection to BOG’s facilities.  We will discuss that question 
below.  We include the economic 
basis for MEG’s decisions regarding the line removal because DCP inherited those 
decisions as part of its own economic analysis.  We thus find the analysis of MEG’s 
economic considerations helpful in determining whether DCP was economically 
justified in its decision to terminate the Gas Purchase 
Contract.