IN THE SUPREME COURT, STATE OF WYOMING

2020 WY 146

OCTOBER TERM, A.D. 2020

December 4, 2020

DENBURY ONSHORE, LLC and 

DENBURY RESOURCES INC. n/k/a 

DENBURY INC.

Appellants

(Defendants),

v.

APMTG HELIUM LLC, 

Appellee

(Plaintiff).

S-19-0172

Appeal from the District Court of Sublette County

The Honorable Marvin L. Tyler, Judge

Representing Appellant:

Darin B. Scheer, James R. Belcher, and Casey R. Terrell of Crowley Fleck PLLP, 

Casper, Wyoming. Argument by Mr. Scheer.

Representing Appellee:

Scott P. Klosterman and Amy M. Iberlin of Williams, Porter, Day, and Neville, P.C., 

Casper, Wyoming; Jason A. Neville of the Spence Law Firm, LLC, Casper, 

Wyoming. Argument by Mr. Neville.

Before DAVIS, C.J., and FOX, KAUTZ, GRAY, JJ, and FENN, DJ.

NOTICE: This 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 typographical or other formal errors so correction may be made before final 

publication in the permanent volume.
1

KAUTZ, Justice.

[¶1] Denbury Onshore, LLC (Denbury), a subsidiary of Denbury Resources Inc., agreed 

to deliver certain amounts of helium to APMTG Helium LLC (APMTG) each year. 

Denbury failed to deliver the agreed-upon amounts but claimed its nonperformance was 

excused by two force majeure events—the failure of its contractor to complete its natural 

gas processing plant and the ongoing failure of its supply wells due to sulfur deposition 

plugging the wellbores. After a bench trial, the district court found Denbury had failed to 

show its non-performance was excused by a force majeure event except for a period of 36 

days. It awarded APMTG over $35 million in damages and interest. Denbury appealed. 

We affirm. 

ISSUES

[¶2] We restate and reorder Denbury’s issues as follows:

1. Did the district court err by denying Denbury’s request to terminate the 

parties’ agreement under the doctrines of frustration of purpose and/or 

impossibility of performance?

2. Did the district court err in deciding Denbury had failed to prove its nonperformance between April 23, 2013, and December 30, 2013, was 

excused by a force majeure event (Contractor Failure FM)?

3. Did the district court err in deciding Denbury had failed to prove its nonperformance after mid-August of 2014 was excused by a force majeure 

event (Well Failure FM)?

FACTS

Original Helium Feedgas Agreement (HFA I)

[¶3] On January 30, 2009, APMTG, a joint venture between Air Products and Chemicals, 

Inc. (Air Products) and Matheson Tri-Gas, Inc. (Matheson), entered into a Helium Feedgas 

Agreement (HFA I) with Cimarex Energy Co. (Cimarex) and Riley Ridge, LLC (Riley 

Ridge). Under the agreement, Cimarex and Riley Ridge agreed to design, construct, and 

operate a natural gas processing plant (the Riley Ridge Plant or Plant) and to annually 

deliver specified quantities of helium to APMTG.1 APMTG, in turn, agreed to design, 

construct and operate its own gas processing plant and to purchase the specified quantities 

of helium from Cimarex and Riley Ridge. The HFA I required Cimarex and Riley Ridge 

1 The parties’ agreements refer to “helium feedgas” and “contained helium.” We will simply refer to 

helium.
2

to deliver 200 million standard cubic feet (MMscf) of helium to APMTG the first and 

second years of the contract and 400 MMscf per year thereafter. Cimarex and Riley Ridge 

agreed to expand the Riley Ridge Plant on or before the start of the third year in order to 

meet their increased obligations. If they failed to deliver the required quantities in any 

given year, they were to pay APMTG liquidated damages pursuant to a designated formula. 

The liquidated damages were capped at $8 million per year, and total liquidated damages 

for the life of the contract could not exceed APMTG’s final investment to construct its 

plant, which APMTG predicted would be $38.6-$42.9 million. 

[¶4] The HFA I “estimated” that Cimarex and Riley Ridge would begin delivering 

helium to APMTG on December 1, 2010, but required delivery to begin no later than 

December 1, 2011, absent “delays caused by any Force Majeure” or unless the parties 

otherwise agreed in writing. The life of the agreement was 20 years. 

[¶5] Section 17 of the HFA I excused a party’s failure to perform its obligations under 

the agreement “to the extent that such failure is caused by Force Majeure.” “Force 

Majeure” was defined in § 17.1 as

any event outside the reasonable control of a Party that could 

not have been avoided or overcome by that Party’s exercise of 

reasonable care and due diligence and shall include without 

limitation the following: strike, lockout, concerted act of 

workers or other industrial disturbance; fire, explosion, flood, 

blizzard, extreme weather conditions or other natural 

catastrophe; epidemic or pandemic; civil disturbance, riot or 

armed conflict (whether declared or undeclared); acts of 

terrorism; curtailment, shortage, rationing or allocation of

normal sources of supply of labor, materials, transportation, 

energy or utilities; accident; act of God; delay(s) or failure of 

performance of contractor(s) (of any tier) or vendor(s); 

sufferance of or voluntary compliance with act of government 

and government regulations and/or orders (whether or not 

valid); cancellation by the U.S. Bureau of Land Management, 

Department of the Interior, of the “Contract for Extraction and 

Sale of Federal Helium”; embargo; natural or mechanical 

supply well failure (in whole or in part) and machinery or 

equipment breakdown. Notwithstanding anything herein to 

the contrary, the following events shall not be considered Force 

Majeure events: the concentration of helium contained in the 

Helium Feedgas below thatdefined in Clause 9.1; and loss of 

markets for natural gas or Helium.
3

(Emphasis added). Section 17.3 of the HFA I required the party “whose performance under 

this Agreement is affected by Force Majeure [to] promptly Notify the other Party of the 

occurrence, and the effect and likely duration of the Force Majeure event, and . . . keep the 

other Party informed of any changes to those circumstances.” Section 17.4 required the 

party claiming force majeure to “as soon as practicable after the commencement of the 

Force Majeure, proceed with diligence and do all things reasonably practicable at its own 

cost to overcome and/or remedy the situation, and to recommence performance of its 

obligations, provided that . . . neither Party shall be required to incur any extraordinary 

costs or make more than commercially reasonable investments.” 

Failure of Contractor Force Majeure 

[¶6] Cimarex was the majority owner and operator of the Riley Ridge Plant project; 

Riley Ridge owned only a minority interest in the project. As operator, Cimarex made the 

day-to-day decisions about how to run the project. It hired BCCK Engineering 

Incorporated (BCCK) pursuant to a turn-key contract to engineer, design and construct the 

Riley Ridge Plant in Big Piney, Wyoming, and bring it to “mechanical completion,” which 

was expected to occur by December 2011. 

[¶7] In July 2010, Denbury purchased Riley Ridge’s interests in the Riley Ridge Plant 

and assumed all of its rights and obligations under the HFA I. About a year later, in June 

2011, Denbury acquired Cimarex’s interests in the Plant and the HFA I, as well as 

Cimarex’s rights and obligations under the construction contract with BCCK. Two months 

later, on August 1, 2011, Denbury officially took over as operator of the Riley Ridge Plant 

project from Cimarex, which meant it began making the day-to-day decisions about how 

to run the Plant and Cimarex’s employees became Denbury’s employees. At that time, 

BCCK had completed the engineering design of the Riley Ridge Plant and was in the 

process of constructing the Plant. 

[¶8] The next month, Denbury notified APMTG it was “experiencing delays in the 

construction and commissioning of [the Riley Ridge Plant]” and estimated it would begin 

delivering helium on November 15, 2011. However, that did not occur. In January 2012, 

after discovering BCCK had not performed in accordance with industry standards, 

Denbury removed BCCK from the Riley Ridge Plant project and began using its own 

personnel and contractors to correct BCCK’s deficiencies and complete the Plant. 

[¶9] On November 12, 2012, Denbury sent a letter to APMTG declaring force majeure 

under Article 17 of the HFA I due to “delay(s) or failure of performance of contractor(s) 

(of any tier) or vendor(s)” (hereinafter referred to as Contractor Failure FM). Denbury 

explained:

Denbury has discovered through plant inspections by third

party consultants who were hired to prepare for start-up and 
4

commissioning . . . that there remained major uncompleted 

work at the plant. Whether caused by the contractor’s 

construction mismanagement, or the failure to design 

equipment and controls properly, the deeper that Denbury 

investigated the circumstances, it became apparent to both 

Denbury and its third party consultants that the plant was not 

even close to being in a condition for operations that would 

satisfy not only operational safety considerations, but also the 

required regulatory compliance. As you are also very aware, 

this plant will be handling a production stream that contains 

corrosive and toxic, hazardous constituents that require not 

only high-grade equipment, but also particular alarm and 

emergency shut-down systems. Much of this work had not 

even been addressed by the previous contractor. As a result, 

and even before Denbury officially terminated the construction 

contract, third party experts undertook the work of redesigning, 

refurbishing and revising equipment, controls and systems to 

get the process up to . . . standards for a safe processing 

operation in accordance with OSHA rules and regulations.

The work is continuing and, based upon the latest 

information we have with our fast-track work schedule, the 

plant construction should be complete and ready for start-up by 

July 1, 2013. 

APMTG disagreed with Denbury’s declaration of force majeure and sent Denbury an 

invoice for $8 million based on Denbury’s failure to deliver the agreed-upon amounts of 

helium the first year of the HFA I. 

MOU and the Amended and Restated Helium Feedgas Agreement (HFA II)

[¶10] After a series of negotiations, APMTG and Denbury entered into a “Memorandum 

of Understanding” (MOU) on April 25, 2013. Under the terms of the MOU, the parties 

agreed to execute an amended helium feedgas agreement, and Denbury agreed to pay 

APMTG an $8 million lump sum payment and $1.1 million for APMTG’s expenses in 

operating its gas processing plant between December 1, 2012, and August 1, 2013. 

[¶11] A month later, on May 23, 2013, the parties executed an “Amended and Restated 

Helium Feedgas Agreement” (HFA II). The HFA II required Denbury to begin delivering 

helium to APMTG no later than August 1, 2013, “except for delays caused by any Force 

Majeure” or if the parties agreed to a different date in writing. The HFA II, like the HFA 

I, was to terminate after 20 years. Denbury agreed to deliver 200 MMscf of helium per 

year the first three years and 400 MMscf per year thereafter. To meet the increased 
5

quantities, Denbury was to start an expansion of the Riley Ridge Plant on or before January 

1, 2017. The HFA II provided the same liquidated damages provision as the HFA I, 

including the $8 million annual cap. It capped liquidated damages for the life of the 

contract at $46 million, which represented APMTG’s actual investment to construct its 

plant. The HFA II’s force majeure provisions mirrored those of the HFA I. The parties 

agreed the HFA II would be “construed in accordance with the laws of the State of New 

York.” 

Well Failure Force Majeure

[¶12] The Riley Ridge Plant was designed around five gas wells, identified by numbers 

based on their location on the property. Wells known as 10-14, 17-34, and 20-14 were 

drilled to the Madison Formation and 16-24 and 16-31 went to the Big Horn Formation, 

which is below the Madison Formation. Both formations contain helium. The 10-14 and 

17-34 are older wells, having been drilled in approximately 1981. The remaining wells are 

newer; Cimarex drilled the 20-14 in 2008-2009 and Denbury drilled the 16-24 and 16-31 

in 2013-2014. 

[¶13] Prior to starting-up the Riley Ridge Plant, Cimarex and Denbury knew there was a 

risk of sulfur deposition due to the presence of hydrogen sulfide in Madison gas and the 

fact Exxon experiences sulfur deposition at its nearby Shute Creek Plant, which processes 

the same gas. They purposefully equipped the wells with larger and more expensive tubing 

in order to move any sulfur deposition to the surface, where it is easier to remediate. If 

sulfur deposition occurred downhole, they anticipated it could be treated with chemical 

solvents and a coil tubing (CT) operation. 

[¶14] On December 30, 2013, Denbury started-up the Riley Ridge Plant using the 10-14 

and 17-34 as supply wells. Less than four months later, on April 18, 2014, the 10-14 

stopped producing due to sulfur deposition plugging the wellbore. Denbury hired a thirdparty contractor to perform a CT operation to remediate the sulfur deposition. The 

operation was successful and the 10-14 began producing again on May 3, 2014. The 

success was short-lived. On June 15, 2014, the 10-14 again stopped producing due to sulfur 

deposition. 

[¶15] On April 23, 2014, the 17-34 was also shut-in due to sulfur deposition. A thirdparty contractor performed a chemical solvent treatment on the 17-34. The treatment did 

not restore the well to full production, so Denbury performed a CT operation on the 17-34 

on April 29. The CT operation successfully cleaned out the sulfur deposition, but during 

the operation the controller lost control of the CT string and it remained suspended in the 

well for 5-6 days. Before Denbury could pull the string out, it broke apart due to the harsh 

downhole environment and a portion of it fell to the bottom of the hole. 
6

[¶16] On July 11, 2014, Denbury provided APMTG written notice of a new force majeure. 

In that notice, Denbury declared a force majeure “starting on June 15[, 2014,] continuing 

until about mid-August, at which time the [Riley Ridge Plant] is expected to be back on 

but at a potentially reduced rate” (hereinafter referred to as Well Failure FM). Denbury 

explained the 10-14 had been shut-in due to sulfur deposition since June 15, 2014, and it 

had ordered a CT unit to clean it. It stated the CT operation should begin on July 15 and 

take two days to complete, absent any delays. It also noted the 17-34 had been shut-in 

since April due to sulfur deposition and explained its attempts to remedy it with a chemical 

solvent treatment and a CT operation, the latter of which resulted in equipment being lost 

in the hole. It stated it had placed a snubbing unit in the 17-34 on June 2, 2014, to “remove 

all the remaining down-hole junk” and believed it was working. It estimated the well had 

a “good chance” of being back on production in August. Denbury promised to provide 

prompt notice when it could restart the Plant. 

[¶17] APTMG objected to Denbury’s declaration of force majeure, claiming the well 

conditions described by Denbury did not constitute force majeure under the HFA II because 

they “are within [Denbury’s] reasonable control and could have been avoided or overcome 

by the exercise of reasonable care and due diligence” under § 17.1. It also objected because 

Denbury’s July 11, 2014, letter did not constitute prompt notice of a force majeure under 

§ 17.3. 

[¶18] On August 9, 2014, Denbury performed the second CT operation on the 10-14. The 

operation “got through the sulfur deposition zone” but the string broke and Denbury’s 

subsequent attempt to retrieve the string from the hole with a snubbing unit was only 

partially successful. Similarly, the snubbing unit in the 17-34 was not able to retrieve all 

of the lost string. CT string remains in both the 10-14 and 17-34. Dr. Bruce Craig, a 

metallurgist and Denbury consultant, strongly recommended against performing any 

further CT operations due to the harsh downhole conditions. 

[¶19] Denbury delivered only 4.3 MMscf of helium to APMTG between December 30, 

2013, and June 2014; Denbury has not delivered any other helium to APMTG. It also did 

not expand the Riley Ridge Plant by January 1, 2017, as it promised to do in the HFA II. 

District Court Proceedings

[¶20] APMTG filed a complaint against Denbury alleging breach of contract, unjust 

enrichment, and breach of the implied covenant of good faith and fair dealing. Denbury 

agreed it had failed to provide the agreed-upon quantities of helium and to expand the Riley 

Ridge Plant but claimed its nonperformance was excused by the Contractor Failure FM 

and Well Failure FM. 

[¶21] The case ultimately proceeded to a seven-day bench trial. Denbury bore the burden 

of proving its failure to provide the agreed-upon quantities of helium was excused by a 
7

valid force majeure event. See Beardslee v. Inflection Energy, LLC, 904 F. Supp. 2d 213, 

220 (N.D.N.Y. 2012), aff’d, 798 F.3d 90 (2d Cir. 2015) (the party invoking a force majeure 

provision bears the burden of establishing it has been met) (citing Phillips Puerto Rico 

Core, Inc. v. Tradax Petroleum, Ltd., 782 F.2d 314, 319 (2d Cir. 1985)). The district court 

decided Denbury had failed to meet its burden except for a period of approximately 36 

days (from July 11, 2014, to mid-August 2014). As a result, it found in favor of APMTG 

on its breach of contract claim and awarded it over $35 million in liquidated damages and 

interest. The court concluded APMTG’s unjust enrichment claim was barred under New 

York law because the parties’ disputes were controlled by a contract and APMTG had 

failed to prove Denbury’s breach of the implied covenant of good faith and fair dealing 

was “not duplicative of its breach of contract claims.” 

[¶22] Denbury appealed. While this appeal was pending, Denbury Resources Inc. filed a 

voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the 

United States Bankruptcy Court for the Southern District of Texas. Upon stipulation of 

the parties, the bankruptcy court granted relief from the automatic stay provisions for 

purposes of this appeal. Denbury Resources Inc. emerged from the bankruptcy case on 

September 18, 2020, and is now known as Denbury Inc. 

[¶23] Additional facts will be set out, as necessary, in the discussion of the issues.

APPLICABLE LAW

[¶24] The district court concluded the governing agreement was the HFA II and it was a 

valid and enforceable contract. Neither party challenges these conclusions on appeal. The 

HFA II states: “The provisions of this Agreement shall be construed in accordance with 

the laws of the State of New York.” We will enforce a contract’s choice-of-law provision 

and “apply foreign law when doing so is not ‘contrary to the law, public policy, or the 

general interests of Wyoming’s citizens.’” Finley Res., Inc. v. EP Energy E&P Co., L.P., 

2019 WY 65, ¶ 9, 443 P.3d 838, 842 (Wyo. 2019) (quoting Res. Tech. Corp. v. Fisher Sci. 

Co., 924 P.2d 972, 975 (Wyo. 1996)). See also, Bradley v. Bradley, 2007 WY 117, ¶ 21, 

164 P.3d 537, 543 (Wyo. 2007). We will apply New York law when interpreting the HFA 

II; however, Wyoming law controls any procedural matters, including the applicable 

standard of review. See Smithco Eng’g, Inc. v. Int’l Fabricators, Inc., 775 P.2d 1011, 1018 

(Wyo. 1989) (“Clearly, the law of the forum controls procedural matters.”) (citations 

omitted). 

STANDARD OF REVIEW

[¶25] Our standard of review on appeal following a bench trial in the district court is wellestablished:
8

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 

weighing disputed evidence. Findings of fact will not be set 

aside unless the findings 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. We review a district court’s conclusions of law de 

novo on appeal.

Davis v. Harmony Dev., LLC, 2020 WY 39, ¶ 31, 460 P.3d 230, 240 (Wyo. 2020) (quoting 

Ekberg v. Sharp, 2003 WY 123, ¶ 10, 76 P.3d 1250, 1253 (Wyo. 2003)) (other citations 

omitted). The district court’s interpretation of the HFA II is a conclusion of law reviewed 

de novo. See Larson v. Burton Constr., Inc., 2018 WY 74, ¶ 16, 421 P.3d 538, 544 (Wyo. 

2018) (“Contract interpretation presents questions of law which we review de novo.”).2

DISCUSSION

1. Frustration of Purpose and/or Impossibility of Performance

[¶26] Denbury requested termination of the HFA II under the doctrines of frustration of 

purpose and impossibility of performance due to its chronic force majeure status.

3

 The 

district court denied its request because § 2.5 of the HFA II provided the exclusive remedy 

for termination of the agreement and nothing in the plain language of that provision 

allowed a party to terminate the HFA II based on those doctrines. Denbury argues the 

2 Denbury suggests the district court’s findings pursuant to Wyoming Rule of Civil Procedure 52(a) are not 

sufficient to indicate the factual basis for its decision on the contested matters. Because neither party 

requested findings under Rule 52(a)(1)(A), the district court was required only to find generally for 

APMTG. See Rule 52(a)(1). See also, Kimzey v. Kimzey, 2020 WY 52, ¶ 38, 461 P.3d 1229, 1241 (Wyo. 

2020). Moreover, while the district court admittedly did not “include all findings and/or conclusions 

supported by the testimony and evidence adduced at trial,” it did “include[] those findings and/or 

conclusions necessary to explain the Court’s determinations of the issues to the parties.” The court’s 

findings more than adequately explained the factual basis for its decision. 

3 Denbury also refers to impracticability of performance, but it appears that doctrine is synonymous to the 

impossibility of performance doctrine. See Matter of Liquidation of New York Agency & Other Assets of 

Bank of Credit & Commerce Int’l, S.A., 90 N.Y.2d 410, 424 (N.Y. 1997) (referring to 

“impossibility/impracticability of performance”); Reed Found., Inc. v. Franklin D. Roosevelt Four 

Freedoms Park, LLC, 964 N.Y.S.2d 152, 156 (N.Y. App. Div. 2013) (referring to “[t]he defense of 

impossibility or impracticability of performance”). We will refer simply to impossibility of performance.
9

district court erred in concluding the parties waived these doctrines merely by including a 

standard 90-day termination provision for uncured default. We agree with the district court

with additional reasons.

[¶27] First, it is unclear whether the doctrines of frustration of purpose and impossibility 

of performance allow for termination of a contract under New York law. While older New 

York cases suggest they do, more recent cases indicate they merely excuse a party’s nonperformance. Compare Reed Found., Inc. v. Franklin D. Roosevelt Four Freedoms Park, 

LLC, 964 N.Y.S.2d 152, 156 (N.Y. App. Div. 2013) (“The defense of impossibility or 

impracticability of performance is ‘applied narrowly’ such that performance is excused

‘only when the destruction of the subject matter of the contract or the means of performance 

makes performance objectively impossible’ and that ‘the impossibility must be produced 

by an unanticipated event that could not have been foreseen or guarded against in the 

contract.’”) (emphasis added) (quoting Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 

900, 902 (N.Y. App. Div. 1987)), and PPF Safeguard, LCC v. BCR Safeguard Holding, 

LCC, 924 N.Y.S.2d 391, 394 (N.Y. App. Div. 2011) (“For a party to a contract to invoke 

frustration of purpose as a defense for nonperformance, the frustrated purpose must be so 

completely the basis of the contract that, as both parties understood, without it, the 

transaction would have made little sense.”) (emphasis added) (quotations and citations 

omitted), with 119 Fifth Ave., Inc., Taiyo Trading Co., Inc., 73 N.Y.S.2d 774, 776 (N.Y. 

Sup. Ct. 1947), aff’d sub nom. 87 N.Y.S.2d 430 (N.Y. App. Div. 1949) (“The general 

principle underlying [the frustration of purpose doctrine] is that, where the purpose of a 

contract is completely frustrated and rendered impossible of performance by a supervening 

event or circumstance which was not within the contemplation of the parties and which 

could not have been anticipated and guarded against, the contract is discharged.”) 

(emphasis added), and Robitzek Investing Co., Inc. v. Colonial Beacon Oil Co., 40 

N.Y.S.2d 819, 822 (N.Y. App. Div. 1943) (“Where there is complete frustration of 

performance of a contract by act of the government, cancellation is permissible.”) 

(emphasis added) (citation omitted).

[¶28] Even if the doctrines allow for termination of a contract under New York law, they 

are not available where “the event which prevented performance was foreseeable and 

provision could have been made for the event’s occurrence.” Rebell v. Trask, 632 N.Y.S.2d

624, 627 (N.Y. App. Div. 1995) (frustration of purpose) (citations omitted); Kel Kim Corp., 

70 N.Y.2d at 902 (impossibility). As a corollary, if the parties’ contract provides for the 

occurrence of the alleged frustration or impossibility, then the parties obviously foresaw 

the frustration or impossibility and the doctrines are not available. 

[¶29] In Center for Specialty Care, Inc. v. CSC Acquisition I, LLC, 127 N.Y.S.3d 6, 9 

(N.Y. App. Div. 2020), the defendants agreed to purchase the plaintiff’s surgical center 

and to lease the premises until closing. The defendants failed to pay the rent under the 

lease but argued they were excused from doing so because the purpose of the lease was 

frustrated as they could not occupy the surgical center without a Certificate of Need (CON) 
10

from the Health Department, which could not be obtained by the effective date of the lease. 

Id. at 13-14. The court concluded the frustration of purpose doctrine was not available 

because the parties’ agreements “acknowledged and planned for” the fact the defendants 

would not be able to occupy the surgical center on the lease date due to the need for them 

to obtain a CON. Id. at 14. Specifically, the parties’ agreements allowed the defendants 

to start deriving benefits from the surgical center prior to their occupancy of the building. 

Id.

[¶30] Similarly, in Warner v. Kaplan, 892 N.Y.S.2d 311, 313 (N.Y. App. Div. 2009), the 

plaintiff agreed to purchase a cooperative apartment from the defendants. The sales 

contract required plaintiff to deposit $230,000 in escrow and the sale to be approved by the 

cooperative’s Board of Directors. Id. The plaintiff made the requisite deposit and the 

Board approved the sale. Id. The plaintiff died prior to closing. Id. Her estate sought 

return of the deposit due to, among other things, frustration of purpose. Id. at 313-15. It 

claimed it was justified in not continuing with the purchase of the apartment because the 

plaintiff was purchasing the apartment solely for her own residence and she was no longer 

living. Id. at 314-15. The court concluded the frustration of purpose doctrine did not apply 

because the sales contract expressly stated it was binding on the parties’ “heirs, personal 

and legal representatives and successors in interest.” Id. at 313. It reasoned: “The 

inclusion of this provision indicates that the parties explicitly contemplated, and provided 

for, the possibility of either party’s death before closing, by specifying that the death would 

not terminate the contract, but that the contract would survive, to be performed by the 

successors or heirs of the deceased party.” Id. Because the contract made explicit 

provision for the event of either party’s death, the frustration of purpose doctrine was not 

available. Id. at 315. See also, Neumann v. Metro. Med. Grp., P.C., 557 N.Y.S.2d 663, 

664 (N.Y. App. Div. 1990) (plaintiffs’ proposed amendments to their complaint were 

properly denied as meritless because their “cause of action seeking a declaration that the 

contract was terminated by frustration of purpose was correctly rejected, as the record 

demonstrates that the alleged ‘frustration’, Falkirk Hospital’s cessation of operations, was 

contemplated by the contract”).

[¶31] In this case, the HFA II expressly states “failure of performance of contractor” and 

“natural or mechanical supply well failure” will excuse a party’s performance and the 

payment of liquidated damages if they “are outside [the party’s] reasonable control” and 

“could not have been avoided or overcome by [the] exercise of reasonable care and due 

diligence.” Because the parties “explicitly contemplated, and provided for” the possibility 

that BCCK would fail to perform under the construction contract and the supply wells 

would naturally or mechanically fail, the frustration of purpose and impossibility doctrines 

are not available. Warner, 892 N.Y.S.2d at 313.

[¶32] Moreover, as the district court noted, the parties set forth the grounds for termination 

of the HFA II in § 2.5, which provides:
11

A Party shall be entitled to terminate this Agreement if 

the other Party is in default of a material obligation hereunder 

and has not commenced and does not diligently pursue, a cure 

of such default within 90 days following a reasonable period 

of receipt of Notice from the non-defaulting Party. 

Notwithstanding the foregoing, the Parties shall endeavor in 

good faith to rectify any material default hereof as 

expeditiously as possible upon receipt of Notice from the nondefaulting Party.

[¶33] “The fundamental, neutral precept of contract interpretation is that agreements are 

construed in accord with the parties’ intent. . . . The best evidence of what parties to a 

written agreement intend is what they say in their writing. . . . Thus, a written agreement 

that is complete, clear and unambiguous on its face must be enforced according to the plain 

meaning of its terms.” Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569-70 (N.Y. 

2002) (citations and quotations omitted). “A contract is unambiguous if the language it 

uses has a definite and precise meaning, unattended by danger of misconception in the 

purport of the [agreement] itself, and concerning which there is no reasonable basis for a 

difference of opinion.” Id. (citation and quotations omitted). See also, Riverside S. 

Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398, 404 (N.Y. 2009) (“Where 

the language chosen by the parties has a definite and precise meaning, there is no 

ambiguity.”) (citation and quotations omitted).

[¶34] Section 2.5 is clear and unambiguous. Under its plain language, Denbury may 

terminate the HFA II only if APMTG is in material default and fails to timely cure the 

default. APMTG is not in material default of the HFA II. Moreover, § 2.5 does not include 

“failure of performance of contractor” and “natural or mechanical supply well failure” as 

grounds for termination. Had the parties wished to allow termination of the agreement due 

to these events, they could have included them in § 2.5. They did not and we are not at 

liberty to re-write the HFA II to include them. See Beardslee v. Inflection Energy, LLC, 

25 N.Y.3d 150, 157 (N.Y. 2015) (“[C]ourts may not by construction add or excise terms, 

nor distort the meaning of those used and thereby make a new contract for the parties under 

the guise of interpreting the writing.”) (citations and quotations omitted); Robitzek 

Investing Co., Inc., 40 N.Y.S.2d at 822 (“If it were the intention of the parties [that the 

lease be cancelled in the event of a regulation of defendant’s business], they could readily 

have provided [so] by employing language to that effect.”). 

[¶35] Denbury wants us to imply the doctrines of frustration of purpose and impossibility 

of performance into the HFA II because without them, it claims, “the HFA II contains no 

mechanism to address a situation where, as here, a party has done all things ‘reasonably 

practicable’ to overcome a valid force majeure event, but cannot do so because the only 

viable options require ‘extraordinary costs’ or ‘more than commercially reasonable 

investments.’” The cases it relies on for the proposition that we can imply terms into a 
12

contract are inapposite. They involved implied duties, in particular, the implied covenant 

of good faith and fair dealing, not implied defenses to the nonperformance of such duties, 

such as the doctrines of frustration of purpose and impossibility of performance. See, e.g.,

Wakefield v. N. Telecom, Inc., 769 F.2d 109, 112 (2d Cir. 1985) (implied covenant of good 

faith and fair dealing prevented employer from terminating plaintiff for the purpose of 

avoiding the payment of commissions which are otherwise owed the plaintiff); Zilg v. 

Prentice-Hall, Inc., 717 F.2d 671, 679 (2d Cir. 1983) (holding the promise to publish the 

plaintiff’s book implies a good faith effort by the publisher to promote the book); 

Travellers Int’l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570, 1575-77 (2d Cir. 1994) 

(concluding district court did not err in finding defendant had breached the implied 

covenant of good faith and fair dealing due to its inadequate promotional efforts). 

Moreover, its argument is contrary to New York law, cited above, which refuses to apply 

these doctrines if the parties could have or, as here, did provide for the occurrence of the

alleged frustration or impossibility in their contract. 

[¶36] The district court did not err in denying Denbury’s request to terminate the HFA II 

under the doctrines of frustration of purpose and impossibility of performance.

2. Contractor Failure FM

[¶37] The district court found the unambiguous terms of the HFA II prevented Denbury 

from claiming its November 15, 2012 Contractor Failure FM was still viable and ongoing 

beyond May 23, 2013, the date the parties executed the HFA II. According to the court, 

“[t]he HFA II represents the parties[’] negotiated and agreed resolution of their dispute 

over the existence, vel non, of a qualifying force majeure event excusing Denbury’s nonperformance and, among other things, it expressly provides for an agreed-upon new 

commencement date of no later than August 1, 2013, for Denbury to provide helium to 

APMTG.” It also found Denbury had “failed to prove that any purported ongoing force 

majeure event on or after May 23, 2013 (i.e., the effective date of the HFA II) excusing 

non-performance under the HFA II was ‘outside the reasonable control of [Denbury] that 

could not have been avoided or overcome by [Denbury’s] exercise of reasonable care and 

due diligence.’” The court explained: 

Denbury assumed control of completion of the Riley Ridge 

Plant on August 1, 2011, and Denbury became its own 

‘engineer, designer, and general contractor’ assuming the task 

of bringing the Riley Ridge Plant to ‘mechanical completion’ 

when it removed BCCK in January 2012. Denbury was in 

control of scheduling, sub-contracting, engineering, designing, 

and performing the work necessary to perform on its agreement 

with APMTG to supply helium feed gas under the HFA II.
13

It further found Denbury had failed to provide any notice, as required by the HFA II, of 

any ongoing or new force majeure event from May 23, 2013, to July 11, 2014, when it 

provided notice of the Well Failure FM. It rejected Denbury’s claim that a string of emails 

concerning the start-up of the Plant between its project manager, Clay Duellman, and an 

APMTG engineer, Michael Carberry, provided the requisite notice. 

[¶38] Denbury argues the district court erred in rejecting its Contractor Failure FM based 

on its finding that Denbury became its own “engineer, designer, and general contractor” 

after it removed BCCK from the project and therefore Denbury was responsible for the 

continuing delays in starting-up the Riley Ridge Plant. It claims that finding ignores the 

unrebutted testimony that (1) Denbury only assumed the responsibility of bringing the 

Plant to mechanical completion because it had to fix the failures of contractor BCCK under 

the turn-key construction contract, and (2) Denbury would not have assumed that 

responsibility but for the failure of performance of contractor BCCK. It points to the 

testimony of Bill Jackson, its construction project management expert, who opined “[t]he 

root cause of Denbury’s failure to timely start the Plant up . . . was a failure by BCCK to 

properly engineer the plant and execute the project.” Denbury further claims that had it 

not fixed BCCK’s failures, it would have violated its obligations under § 17.4 of the HFA 

II, which requires it “to proceed with diligence and do all things reasonably practicable . . 

. to overcome and/or remedy the [force majeure].” It also maintains the district court erred 

in deciding it had failed to provide proper notice of a force majeure event after the 

execution of the HFA II. 

[¶39] At the outset, we note the limited scope of Denbury’s arguments. It does not 

challenge the district court’s conclusion that the HFA II resolved the parties’ dispute as to 

whether or not Denbury’s November 12, 2012 Contractor Failure FM constituted a valid 

force majeure event under the HFA I or the court’s conclusion that Denbury’s alleged 

November 12, 2012 Contractor Failure FM did not continue after May 23, 2013, the date 

the HFA II was executed. Moreover, the Riley Ridge Plant began producing on December 

30, 2013. While Denbury alleged in the district court the Contractor Failure FM had 

continued into August of 2014,4 Denbury makes no such claim on appeal. Therefore, the 

limited question before us is whether the district court erred in finding Denbury failed to 

prove a valid force majeure event between May 23, 2013, and December 30, 2013. We 

see no error.

[¶40] Section 17.1 of the HFA II defines “Force Majeure,” in relevant part, as “any event 

outside the reasonable control of a Party that could not have been avoided or overcome by 

that Party’s exercise of reasonable care and due diligence and shall include without 

4 Dan Cole, Denbury’s Vice President of Commercial Development and Governmental Relations, testified 

the Contractor Failure FM continued after the MOU and HFA II. He also indicated in an August 14, 2014,

letter to APMTG that the Contractor Failure FM “has actually continued and continues to this time.” 

However, in Denbury’s July 11, 2014 Well Failure FM notice, Mr. Cole expressly stated the Contractor 

Failure FM “continued until December 30, 2013, when the Plant commenced operations . . . .” 
14

limitation the following . . . delay(s) or failure of performance of contractor(s) (of any tier) 

or vendor(s).” “Force majeure clauses are to be interpreted in accord with their purpose, 

which is to limit damages in a case where the reasonable expectation of the parties and the 

performance of the contract have been frustrated by circumstances beyond the control of 

the parties. . . . [W]hen the parties have themselves defined the contours of force majeure 

in their agreement, those contours dictate the application, effect, and scope of force 

majeure.” Constellation Energy Servs. of New York, Inc. v. New Water St. Corp., 46 

N.Y.S.3d 25, 27 (N.Y. App. Div. 2017) (citations and quotations omitted). 

[¶41] The phrase “failure of performance of contractor” contemplates the failure of 

performance of a third-party contractor, not one of the parties. It would make little sense 

for a party’s failure of performance to be contained in a force majeure provision, which is 

intended to excuse a party’s non-performance. Properly construed, the district court 

correctly found there was no “failure of performance of contractor” between May 23, 2013, 

and December 30, 2013, because there was no third-party contractor. Denbury had 

removed BCCK from the project approximately 18 months earlier. See Kel Kim Corp., 

524 N.Y.2d at 386 (“[C]ontractual force majeure clauses [are] clauses excusing 

nonperformance due to circumstances beyond the control of the parties . . . . Ordinarily, 

only if the force majeure clause specifically includes the event that actually prevents a 

party’s performance will that party be excused.”) (emphasis added).

[¶42] Moreover, § 17.1 requires any “failure of performance of contractor” to be (1) 

outside the party’s reasonable control, and (2) incapable of being avoided or overcome by 

that party’s exercise of reasonable care and due diligence. Any failure to complete the 

Riley Ridge Plant between May 23, 2013, and December 30, 2013, was not outside 

Denbury’s “reasonable control,” because at that time Denbury, not BCCK, was in charge 

of bringing the Plant to mechanical completion. The fact Denbury had to correct BCCK’s 

failures in order to do so is immaterial. As of May 23, 2013, Denbury knew of BCCK’s 

failures and was in the process of correcting them. Yet, it executed the HFA II, in which 

it expressly agreed to begin delivering helium to APMTG by August 1, 2013. Additionally, 

as the district court found, by executing the HFA II, Denbury terminated its ability to 

continue to rely on its November 12, 2012 Contractor Failure FM to excuse any delay in 

the start-up of the Plant. Again, Denbury has not appealed that finding. Executing the 

HFA II was completely within Denbury’s “reasonable control.” 

[¶43] The district court also correctly found Denbury failed to provide notice of a new 

force majeure event between May 23, 2013, and December 30, 2013. Section 17.3 of the 

HFA II requires the party “whose performance under the Agreement is affected by Force 

Majeure [to] promptly notify the other Party of the occurrence, and the effect and likely 

duration of the Force Majeure event, and . . . keep the other Party informed of any changes 

to those circumstances.” Section 19.1 allows notices to be transmitted by post, facsimile, 

email or personally, but § 19.3 requires them to be addressed to APMTG’s General 

Manager in Allentown, Pennsylvania, with a copy provided to Matheson in New Jersey. 
15

[¶44] The email exchange between Mr. Duellman and Mr. Carberry does not satisfy either 

§ 17.3 or § 19.3. On May 28, 2013, Mr. Carberry emailed Mr. Duellman requesting a 

status update and stated: “I’m hearing that you are now looking at something in early 

August. Any confirmation o[r] further information will be appreciated.” The next day, a 

mere six days after Denbury had executed the HFA II and agreed to begin delivering helium 

to APMTG by August 1, Mr. Carberry responded,

We experienced delays in material deliveries and we now have 

all materials. Workforce was increased to recover schedule but 

we are now addressing productivity concerns with the 

mechanical contractor. Startup will not occur in July and the 

outlook appears to be late August based on current 

productivity. Safety revisions are approximately 50% 

complete. Denbury has hired Carl Robertson (PM) and placed 

[him] at the plant site until startup. I am focusing on 

operational readiness items.

This email exchange does not mention § 17, force majeure, a failure of performance of 

contractor, or otherwise indicate Denbury was declaring a force majeure. It was not sent 

to APMTG’s General Manager, nor was a copy sent to Matheson. The failure of this email 

exchange to constitute proper notice is readily apparent when it is compared to Denbury’s 

November 12, 2012 and July 11, 2014 written notices of the Contractor Failure FM and 

Well Failure FM. Denbury knew how to provide proper notice of force majeure; it did not 

provide any such notice between May 23, 2013, and December 30, 2013.

[¶45] Denbury argues that under New York law, a lack of notice does not prevent a party 

from invoking a force majeure clause unless the contract clearly indicates notice is a 

condition precedent to a party’s reliance on the force majeure provision. We agree with 

this statement of New York law. See Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon 

& Co., 636 N.Y.S.2d 734, 737 (N.Y. 1995) (“A condition precedent is an act or event, other 

than a lapse of time, which, unless the condition is excused, must occur before a duty to 

perform a promise in the agreement arises.”) (quotations and citations omitted); Kidder 

Peabody & Co., Inc. v. Unigestion Intern’l, Ltd., 903 F. Supp. 479, 501 (S.D.N.Y. 1995) 

(“[A] contractual duty is not to be construed as a condition precedent unless the language 

of the contract clearly imposes such a condition.”). Denbury then claims nothing in the 

HFA II indicates notice is a condition precedent to reliance on the force majeure provision. 

We agree the HFA II does not expressly make notice a condition precedent to a party 

invoking the force majeure provision. Rather, it simply requires the party claiming force 

majeure “[to] promptly Notify the other Party of the occurrence, and the effect and likely 

duration of the Force Majeure event, and . . . keep the other Party informed of any changes 

to those circumstances.” See Toyomenka Pac. Petroleum, Inc. v. Hess Oil Virgin Islands 

Corp., 771 F. Supp. 63, 67 (S.D.N.Y. 1991) (“Although Clause QQQ requires the party 
16

claiming force majeure to give written notice within forty-eight hours, whether such notice 

is a condition precedent to invoking force majeure is determined by the intention of the 

parties as expressed in the contract . . . . Clause QQQ does not expressly make a force 

majeure defense conditional upon giving notice within forty-eight hours.”). Nevertheless, 

as Denbury acknowledges, it still had a duty under the HFA II to provide notice of a force 

majeure. See Kidder Peabody & Co., 903 F. Supp. at 501 (although notice was not a 

condition precedent, it remained a contractual duty); Toyomenka Pac. Petroleum, Inc., 771 

F. Supp. at 68 (although notice was not a condition precedent to a force majeure defense, 

it was still a duty to be performed under the contract). Denbury failed to provide any notice 

of a force majeure between May 23, 2013, and December 30, 2013. 

[¶46] Denbury maintains it did not materially breach its duty to provide notice because 

APMTG did not suffer any prejudice due to the lack of notice. It claims APMTG “was 

well-aware of the underlying facts and ongoing problems that delayed start-up of the [Riley 

Ridge] Plant,” and it did not identify any different actions it would have taken had it 

received notice. The cases Denbury relies upon for this proposition, however, are 

inapposite. They either did not apply New York law or involve untimely notice, not a 

failure to provide any notice. See Toyomenka Pac. Petroleum, Inc., 771 F. Supp. at 68 

(untimely notice); Vinegar Hill Zinc Co. v. United States, 149 Ct. Cl. 494, 499-500, 276 

F.2d 13, 16 (Ct. Cl. 1960) (federal law). Moreover, the evidence Denbury relies on for the 

proposition that APMTG was “well aware” of the underlying problems delaying the startup of the Plant primarily consists of correspondence between Denbury and APMTG 

outside the relevant time period, i.e., prior to the HFA II or after the wells failed in 2014. 

The only communication occurring between May 23, 2013 and December 30, 2013, was 

the email exchange noted above, which indicated the Plant would start-up in late August, 

and an email exchange between Denbury and one of APMTG’s representatives between 

September 11, 2013, and October 3, 2013, in which Denbury informed APMTG it could 

not provide a tour of the Riley Ridge Plant due to a “flurry of activity as we make the big 

push to complete, test, and get [the Plant] online.” Neither of these email exchanges, 

however, indicated Denbury was relying on a force majeure, in particular, a failure of 

performance of a contractor, to excuse its failure to start-up the Plant on August 1. 

[¶47] Further, the record supports a conclusion that APMTG was prejudiced by Denbury’s 

failure to provide notice. Robert Lein, APMTG’s general manager, testified that while 

APMTG was aware Denbury was not delivering helium, it did not know the failure was 

due to a force majeure event. Without such notice, Air Products and Matheson could not 

inform their customers not to expect helium deliveries due to their helium supplier being 

in force majeure, which in turn affected their “credibility and interactions with their 

customers.”5 

5 Although they formed APMTG in order to obtain helium from the Riley Ridge Plant, Air Products and 

Matheson remained competitors in the industrial gas market.
17

[¶48] The district court correctly decided Denbury had failed to prove its nonperformance 

between May 23, 2013, and December 30, 2013, was excused by a force majeure event.

3. Well Failure FM

[¶49] The district court found Denbury had “proven that between July 11, 2014, [the date 

it provided notice of the Well Failure FM], and mid-August of 2014, Denbury’s selected 

end-date of the force majeure event (i.e., approximately 36 days), its non-performance 

under the HFA II was excused by a qualifying force majeure event which was then ‘outside 

the reasonable control [of Denbury] that could not have been avoided or overcome by 

[Denbury’s] exercise of reasonable care and due diligence.’” However, it found Denbury 

had failed to show the Well Failure FM “extended beyond mid-August of 2014.” The 

district court explained:

Denbury failed . . . to prove that, “as soon as practicable 

after the commencement of the Force Majeure, [Denbury] 

proceed[ed] with due diligence and [did] all things reasonably 

practicable at its own cost to overcome and/or remedy the 

situation, and to recommence performance of its obligations” 

or that [to do so it would have been] “required to incur any 

extraordinary costs or make more than commercially 

reasonable investments.” (HFA II, § 17.4). Denbury failed to 

prove that any event(s) excusing non-performance under the 

HFA II after mid-August of 2014 were “outside the reasonable 

control of [Denbury] that could not have been avoided or 

overcome by [Denbury’s] exercise of reasonable care and due 

diligence.” Examples, but not a complete itemization of 

decisions and/or actions that Denbury has failed to prove were 

“outside the reasonable control of Denbury” or that “could not 

have been . . . overcome by Denbury’s exercise of reasonable 

care and due diligence” excusing its non-performance under 

the HFA II, were (and are): failure to use the 20-14 well as a 

supply well; failure to attempt to or to actually implement 

remedy/remedies for the sulfur deposition issues in the supply 

wells; failure to actually use the Big Horn formation as an 

alternative source of gas for the Riley Ridge Plant; and failure 

to use the 16-31 and 16-24 wells to supply gas to the Riley 

Ridge Plant from the Madison formation or from the Big Horn 

formation. 

[¶50] Denbury argues the district court correctly found the Well Failure FM was a 

qualifying event of force majeure under § 17 of the HFA II. It claims, however, the court 

erred in finding the Well Failure FM ended in mid-August of 2014. Denbury claims mid-
18

August was “plainly nothing more than a good faith estimate, not a binding determination.” 

It also claims the unrebutted evidence shows the Well Failure FM was far from over on 

August 15, 2014. Rather, Denbury had lost another CT string in the 10-14 and its expert 

had advised it not to attempt any further CT operations due to the harsh downhole 

environment. As a result, it could no longer rely on the primary method it had planned to 

use to address downhole sulfur deposition and had to begin the “long, costly, and difficult 

process of evaluating countless potential alternatives.” 

[¶51] The evidence supports the district court’s finding that Denbury chose mid-August 

as the end date of the Well Failure FM. Denbury’s July 11, 2014 letter declaring the Well 

Failure FM was clear. It stated: “Denbury is claiming a new Force Majeure starting on 

June 15 continuing until about mid-August, at which time the Plant is expected to be back 

on but at a potentially reduced rate.”6 (Emphasis added). While the exact date in midAugust was an estimate, Denbury clearly informed APMTG it was declaring a force 

majeure only until mid-August. Denbury never informed APMTG the circumstances had 

changed or provided APMTG a new force majeure end date. 

[¶52] Denbury claims it extended the Well Failure FM in a letter dated August 14, 2014, 

in which it stated the Riley Ridge Plant “has never had more than thirty-five days of 

sustained helium production performance, and the [helium] at that time was limited to the 

volume produced from only one supply well . . . .” It explained: “Denbury has been 

diligent in its attempts to solve the downhole problems that have been encountered since 

start-up. Nevertheless, while efforts continue to be made to find a permanent solution for 

the downhole well problems, none has yet been found.” Read as a whole, however, the 

purpose of the August 14, 2014, letter was not to extend the Well Failure FM, but rather to 

invoke the HFA II’s dispute resolution procedures to resolve the parties’ disagreement over 

the validity of the Well Failure FM. Additionally, the letter speaks to Denbury’s failure to 

find a permanent solution to the downhole problems, not Denbury’s inability to implement 

shorter-term solutions to resolve the Well Failure FM. 

[¶53] In any event, the district court also found Denbury had “failed to prove that the 

qualifying force majeure event deemed to have commenced on July 11, 2014, extended 

beyond mid-August of 2014.” Specifically, it found Denbury had failed to prove any event 

after mid-August was “outside the reasonable control of [Denbury] that could not have 

been avoided or overcome by [Denbury’s] exercise of reasonable care and due diligence” 

as required by § 17.1 of the HFA II. Denbury maintains the district court was precluded 

from making this finding. It argues by finding the Well Failure FM was a valid force 

majeure event between July 11, 2014, and mid-August of 2014, the district court 

necessarily found the sulfur deposition was “outside [Denbury’s] reasonable control” and 

6 Although Denbury claimed in its July 11, 2014 notice that the Well Failure FM began on June 15, 2014, 

the district court decided Denbury’s notice was not “prompt” under §§ 7.2 and 17.3 of the HFA II and, as 

a result, deemed the Well Failure FM to have commenced on July 11, 2014. Denbury does not dispute this 

decision on appeal. 
19

“could not have been avoided or overcome by the exercise of reasonable care and due 

diligence.” And, it claims we cannot review this finding because APMTG chose not to 

appeal it. Denbury argues once the district court made this finding under § 17.1, it was 

required to analyze under § 17.4 whether Denbury “proceeded with diligence and did all 

things reasonably practicable” to overcome the Well Failure FM, subject to the 

“extraordinary costs” and “more than commercially reasonable investments” limitations. 

Denbury is mistaken for two reasons.

[¶54] First, its argument assumes the district court found sulfur deposition to be the force 

majeure event occurring between July 11, 2014, and mid-August 2014. The district court, 

however, did not specifically identify the force majeure event. The evidence shows the 

force majeure event was not supply well failure due to sulfur deposition but rather 

“mechanical supply well failure.” In its July 11, 2014 Well Failure FM notice, Denbury 

informed APMTG the 10-14 and 17-34 had stopped producing due to sulfur deposition. 

However, the events Denbury described were the need to perform a CT operation on the 

10-14 and to retrieve equipment from the 17-34. It was these events which were expected 

to be completed by mid-August of 2014, the date Denbury stated the force majeure would 

end. Dan Cole, Denbury’s Vice-President of Commercial Development and Governmental 

Relations and the author of the July 11, 2014 notice confirmed it was these events, not 

sulfur deposition, which formed the basis for Denbury’s Well Failure FM. He testified 

Denbury sent the July 11, 2014 force majeure notice because “after the issues with the well 

flow started in April or May and we were working to try to get the gas flow back, we had 

some issues with equipment lost in the hole . . . and the snubbing unit trying to recover the 

junk in the hole that the decision was made that we probably should be sending those force 

majeure due to mechanical well failure.” (Emphasis added). 

[¶55] Second, even if the district court found sulfur deposition to be the force majeure 

event between July 11, 2014, and mid-August 2014, this finding means only that sulfur 

deposition during that time period was outside Denbury’s reasonable control and incapable 

of being avoided or overcome by the exercise of reasonable care and due diligence. It did 

not preclude the district court from finding that after mid-August, sulfur deposition was 

not a valid force majeure event because it was within Denbury’s reasonable control and 

could have been avoided or overcome by the exercise of reasonable care and due diligence. 

[¶56] Under § 17.1 of the HFA II, “natural or mechanical supply well failure” constitutes 

force majeure only if it (1) is outside the reasonable control of the party, and (2) could not 

have been avoided or overcome by the exercise of reasonable care and due diligence. 

In evaluating whether the ‘reasonable control’ element 

of [a] force majeure clause[] has been met, courts consider two 

related notions:
20

“First, a party may not affirmatively cause the 

event that prevents his performance. The 

rationale behind this requirement is obvious. If a 

contractor were able to escape his 

responsibilities merely by causing an excusing 

event to occur, he would have no effective 

obligation to perform.

The second aspect of reasonable control is more 

subtle. Some courts will not allow a party to rely 

on an excusing event if he could have taken 

reasonable steps to prevent it. The rationale 

behind this requirement is that the force majeure 

did not actually prevent performance if a party 

could reasonably have prevented the event from 

occurring. The party has prevented performance 

and, again, breached his good faith obligation to 

perform by failing to exercise reasonable 

diligence.”

In re Old Carco LLC, 452 B.R. 100, 120-21 (Bankr. S.D.N.Y. 2011) (emphasis added) 

(quoting Nissho–Iwai Co. v. Occidental Crude Sales, Inc., 729 F.2d 1530, 1540 (5th Cir. 

1984)). 

[¶57] The district court’s finding that sulfur deposition after mid-August of 2014 was 

within Denbury’s reasonable control and could have been avoided or overcome by the 

exercise of reasonable care and due diligence is not clearly erroneous and is supported by 

the evidence. Prior to starting up the Riley Ridge Plant, Denbury knew sulfur deposition 

was likely because Madison gas contains hydrogen sulfide and Exxon experiences sulfur 

deposition at its nearby plant, which processes the same gas. Indeed, the Plant’s wells were 

purposefully equipped with larger and more expensive tubing than normal in order to 

increase the flow rates and thereby move any sulfur deposition to the surface, where it is 

easier to remediate. 

[¶58] Denbury also knew the wells had damage (“skin”) prior to starting up the Plant. 

Christina Harvick, a Denbury engineer and a member of Denbury’s “sulfur team,” testified 

the 10-14 and 17-34 were perforated in 2011 but were not brought online until December 

2013. She stated that allowing a well to sit between perforation and the flowing of gas can 

create skin, which in turn can decrease the pressure and temperature and cause sulfur 

deposition. Patrick Colin Smith, Denbury’s expert in production chemistry and sampling 

analysis, and Scott Stinson, a petroleum engineer who worked for Cimarex and continued 

on with Denbury until August 2012, confirmed this phenomenon. Moreover, Denbury 

knew temperature played a key role in sulfur deposition and starting the Plant in warmer 
21

weather would reduce the chances for sulfur deposition. Yet, Denbury chose to start the 

Plant on December 30, 2013. 

[¶59] Denbury started up the Plant with only two supply wells, even though Mr. Stinson 

testified three to four supply wells were needed to allow for flexibility. If one well 

experienced plugging or skin, it could be taken offline for an acid wash or re-perforation

(adding holes to the tubing to allow more gas to flow into the wellbore), while Denbury 

could continue to produce gas from the other two to three wells. Denbury also failed to 

use the 20-14 as an injection well. Mr. Stinson testified Cimarex obtained permission from 

the Wyoming Oil and Gas Conservation Commission to use the 20-14 as an injection well. 

According to Mr. Stinson, it was imperative to reinject the gas back into the Madison 

Formation in order to prevent drainage, as drainage lowers the pressure in the reservoir and 

thereby increases the chances of sulfur deposition occurring. Mr. Smith confirmed there 

is a greater chance of sulfur deposition with a depleted reservoir. 

[¶60] Prior to starting up the wells, Denbury was also aware of industry operations which 

can minimize or mitigate the effects of any damage in the wells, including sulfur 

deposition. Those operations included acid washes and re-perforating the wells. Ms. 

Harvick testified an acid wash cleans out the perforations, allowing more gas to flow into 

the wellbore and increasing temperature and pressure, which in turn decreases the 

opportunity for sulfur to deposit in the wellbore. Ray Lewis, Denbury’s senior production 

engineer and “well guy,” testified Exxon uses acid washes at its nearby plant, and Mr. 

Stinson testified he had anticipated an acid wash would be performed on the supply wells 

prior to the Plant starting. Similarly, Ms. Harvick and Mr. Lewis stated, and Mr. Smith 

confirmed, re-perforating wells increases flow rates, temperatures and pressures, thereby 

decreasing the chance for sulfur deposition. Denbury did not perform either operation prior 

to starting up the Riley Ridge Plant. 

[¶61] Once the Plant started-up, the supply wells were choked off by sulfur deposition in 

the wellbore. While Denbury believed any sulfur deposition in the wellbore could be 

treated with CT operations and chemical solvents, the chemical solvent failed to restore the 

17-34 to full production and the CT operations resulted in equipment left in the wells. 

Nevertheless, David Hamilton, Denbury’s well engineer, opined the 10-14 and 17-34 could 

still produce even with the equipment in their wellbores. Moreover, the very same 

operations Denbury could have performed to reduce the risk of sulfur deposition prior to 

starting up the Plant could have been performed in August 2014 to restore flow in the 10-

14 and 17-34. Mr. Stinson testified acid washes are considered routine well maintenance, 

and he anticipated they would need to be routinely performed at Riley Ridge. In fact, 

Cimarex and Denbury had a permit to inject the used acid from an acid wash into the 20-

14. Ms. Haverick testified Denbury had to flow the wells to determine the extent of damage 

before performing an acid wash. She stated the sulfur team had discussed performing an 

acid wash on the 10-14 and 17-34, but had not recommended it to Denbury’s Board of 

Directors as a potential remedy. She also testified the sulfur team had considered re-
22

perforating the wells but had yet to recommend it because they “would start out with the 

acid [wash] first” because “that’s a cheaper option.” Denbury never performed an acid 

wash or re-perforated the 10-14 and 17-34.

[¶62] Denbury also could have begun using the 20-14, 16-24 and 16-31 as supply wells 

in mid-August. Henry (J.R.) Roman, Denbury’s project manager and “plant guy,” and 

David Hamilton, a Denbury engineer, testified the 20-14 was drilled to the Madison 

Formation but was never perforated or used as a supply well. Ms. Haverick testified the 

20-14 was never brought online but Denbury plans to perforate it at Layer 25, clean it out, 

and begin producing it. While she testified Denbury is “prepared to move forward [with 

using the 20-14 as a supply well] when needed,” Denbury has not done so. The 16-24 and 

16-31 wells are drilled to the Big Horn Formation. However, Mr. Lewis testified they 

could be capped off above the Big Horn and perforated into the Madison Formation. 

Denbury chose not to use the 16-31 and 16-24 as supply wells. 

[¶63] Denbury claims it proceeded with diligence and did all things reasonably practicable 

at its own cost to overcome and/or remedy the situation, and to recommence performance 

of its obligations under § 17.4. The problem for Denbury is that § 17.4 is triggered only if 

there is a valid force majeure event under § 17.1. See Vol. 15, Ex. 6, p. 19, § 17.4 (“Any 

party whose performance under this Agreement is affected by Force Majeure shall, as soon 

as practicable after the commencement of the Force Majeure, proceed with diligence and 

do all things reasonably practicable at its own cost to overcome and/or remedy the situation, 

and to recommence performance of its obligations, provided that . . . neither Party shall be 

required to incur any extraordinary costs or make more than commercially reasonable 

investments.”). As we have already discussed, the district court found, and the evidence 

shows, sulfur deposition did not constitute a valid force majeure event after mid-August 

2014. In any event, the district court also found Denbury had failed to prove that “as soon 

as practicable after the commencement of the Force Majeure, [Denbury] proceed[ed] with 

diligence and [did] all things reasonably practicable at its own cost to overcome and/or 

remedy the situation, and to recommence performance of its obligations” or that it must 

have been “required to incur any extraordinary costs or make more than commercially 

reasonable investments.” 

[¶64] Denbury claims this finding is clearly erroneous. Mr. Smith opined Denbury had 

“left no stone unturned” in attempting to remediate the downhole sulfur deposition. 

Denbury maintains APMTG did not present any expert testimony to rebut this opinion and 

it is supported by the evidence. The evidence shows Denbury (1) evaluated downhole 

electrical heat and heat by circulation; (2) investigated and studied physical solvent batch 

treatments; (3) researched a dozen different chemicals for treatment of sulfur deposition, 

including the chemical used by Exxon, and analyzed their effects on the Plant’s equipment; 

(4) became a member of Alberta Sulfur Research, Ltd. (ASRL) and conducted tours in 

Canada and bi-weekly calls with ASRL experts for the purpose of evaluating remediation 

options; (5) engaged in a multi-year survey and analysis of all publicly available 
23

information from Exxon for information as to how it remediates its sulfur deposition; and 

(6) investigated the possibility of using gas from the Big Horn Formation, which contains 

helium but has a lower sulfur content than gas from the Madison Formation. Based on 

these efforts, Denbury presented the chemical batch treatment and using the Big Horn

Formation to its Board. The Board approved beginning front-end engineering design for 

both options at a total cost of $1.1 million. Denbury ultimately decided against both 

options because the total estimated cost for the chemical batch option was determined to 

be $60 million in up-front costs (including $31 million to retrofit the Plant in order to 

protect it against the chemicals that would be used), plus $8 million per year in costs for 

the chemicals, and the total estimated cost for the Big Horn option was $160 million. Both 

investments would have equated to a negative present value of $40-$100 million and 

constituted extraordinary costs and exceeded commercially reasonable investments. 

APMTG did not claim otherwise. 

[¶65] We need not decide whether the chemical batch treatment and Big Horn options 

constitute extraordinary costs and would require Denbury to invest more than is 

commercially reasonable. Denbury had other low cost options to re-start the 10-14 and 17-

34. Mr. Stinson testified an acid wash costs between $300,000 and $1 million and reperforating costs a few hundred thousand dollars. Ms. Haverick and Mr. Lewis confirmed 

these options are inexpensive, and Denbury presented no evidence indicating the 

implementation of these options would require them to incur extraordinary costs and more 

than commercially reasonable investments. See Beardslee, 904 F. Supp. 2d at 220, aff’d,

798 F.3d 90 (2d Cir. 2015) (the party invoking a force majeure provision bears the burden 

of establishing it has been met) (citing Phillips Puerto Rico Core, Inc., 782 F.2d at 319). 

[¶66] Denbury also could have begun using the 20-14, 16-24 and 16-31 as supply wells. 

Although the 16-24 and 16-31 are drilled to the Big Horn Formation, Denbury presented 

no evidence that plugging them off above the Big Horn and perforating them into the 

Madison Formation would require it to incur extraordinary costs or to make more than 

commercially reasonable investments. Denbury alleges it considered using these other 

wells but decided against it because, without a viable option to address sulfur deposition, 

it would risk losing another $40 million well. Consequently, Mr. Lewis did not recommend 

trying to flow Madison gas through these other wells until Denbury identified a chemical 

that could remove sulfur deposition from the wellbores and studied how the Riley Ridge 

Plant would need to be modified in order to accept that chemical. It claims the evidence 

showed Denbury would have had to spend $60 million to implement this option, which 

would have resulted in a negative present value to Denbury of between $40-100 million. 

[¶67] Denbury’s claim it could lose these wells to sulfur deposition ignores the actions 

available prior to flowing them which would reduce the chances of sulfur deposition in the 

wellbores. Denbury could perform an acid wash to remove any damage to these wells. It 

could perforate them just prior to flowing them, rather than allowing them to sit for two 
24

years and sustain damage. It could start them up in the summer. And it could use one of 

the wells as an injection well, thereby preventing depletion of the reservoir. 

[¶68] In sum, as the district court aptly stated, “other than to study/investigate options, 

Denbury has not attempted to, nor actually implemented any remedy/remedies for the 

sulfur deposition issues in the [10-14 and 17-34],” and Denbury has “chosen” not to use 

the 20-14, 16-24, and 16-31 as supply wells. These failures and choices do not constitute 

force majeure under the HFA II. The district court correctly decided Denbury had failed 

to prove its nonperformance after mid-August of 2014 was excused by a force majeure 

event.

CONCLUSION

[¶69] The district court did not err in finding Denbury had failed to prove its nonperformance of the HFA II was excused by a valid force majeure event, other than for a 

period of 36 days. It also did not err in denying Denbury’s request to terminate the HFA 

II under the doctrines of frustration of purpose and impossibility of performance. We 

affirm.