This is the case of Cabot Oil & Gas Corporation v. Daugherty Petroleum, Inc.

Question: please summarize and include

the following;

Fact:

Judgment:

Issue:

Holding:

General Analysis

Applied Analysis:

Transcribed Image Text:

Cabot Oil & Gas Corporation v. Daugherty Petroleum, Inc. 479 Fed. Appx. 524 (4th Cir. 2012) Cabot Oil issued a solicitation for bids to purchase several oil and gas leases it owned in West Virginia. The solicita- tion letter invited recipients to submit a preliminary bid or proposal" and stated that "those submitting such propos- als, if any, will be notified for further discussion and negotiation." Daugherty Petroleum received the solicitation and responded with a letter that it called alternatively a "bid" and an offer." Daugherty Petroleum proposed a purchase price and indicated its ability to close on the deal within 75 days of Cabot Oil's acceptance. The Daugherty Petroleum letter emphasized, however, that it was contingent and conditioned" on the negotiation of various terms, including form of payment, due diligence issues, and a requirement that Cabot Oil take the leases off the market for 60 days to allow the due diligence process to be completed. The parties referred to the latter as the "exclusivity period." Finally, Daugherty Petroleum indicated that, during the due diligence process, the parties would "negotiate the terms and conditions of an asset purchase agreement." Eventually, after some delay when the parties communicated informally and Cabot Oil executives contemplated the bid, Cabot Oil sent Daugherty Petroleum a letter in which it agreed to the purchase price and the proposed form of pay- ment. Cabot Oil indicated that it preferred to move directly into hammering out a purchase and sale agreement (PSA), during which Daugherty Petroleum could perform whatever due diligence it deemed necessary. To that end, Cabot Oil indicated that it would begin drafting the PSA immediately. Cabot Oil's letter omitted any reference to the exclusivity period. Around six weeks later, after numerous failed attempts to communicate with Daugherty Petroleum and hearing nothing, Cabot Oil sent a letter indicating that it had accepted Daugherty Petroleum's offer to purchase the leases and threatening to pursue legal action. Daugherty Petroleum responded that their bid was conditioned on the negotiation of a PSA and the comple- tion of due diligence. Shortly thereafter, Cabot Oil sent Daugherty Petroleum a 12-page draft PSA. The terms differed in certain respects from Daughtery Petroleum's letter, including terms governing form and timing of payment. It also included additional terms not previously contemplated in their communications. Daugherty Petroleum never responded to the PSA despite Cabot Oil's numerous attempts to make contact. Cabot Oil sued Daugherty Petroleum in West Virginia for breach of contract, seeking more than $2 million in dam- Cabot Oil & Gas Corporation v. Daugherty Petroleum, Inc. 479 Fed. Appx. 524 (4th Cir. 2012) Cabot Oil issued a solicitation for bids to purchase several oil and gas leases it owned in West Virginia. The solicita- tion letter invited recipients to submit a preliminary bid or proposal" and stated that "those submitting such propos- als, if any, will be notified for further discussion and negotiation." Daugherty Petroleum received the solicitation and responded with a letter that it called alternatively a "bid" and an offer." Daugherty Petroleum proposed a purchase price and indicated its ability to close on the deal within 75 days of Cabot Oil's acceptance. The Daugherty Petroleum letter emphasized, however, that it was contingent and conditioned" on the negotiation of various terms, including form of payment, due diligence issues, and a requirement that Cabot Oil take the leases off the market for 60 days to allow the due diligence process to be completed. The parties referred to the latter as the "exclusivity period." Finally, Daugherty Petroleum indicated that, during the due diligence process, the parties would "negotiate the terms and conditions of an asset purchase agreement." Eventually, after some delay when the parties communicated informally and Cabot Oil executives contemplated the bid, Cabot Oil sent Daugherty Petroleum a letter in which it agreed to the purchase price and the proposed form of pay- ment. Cabot Oil indicated that it preferred to move directly into hammering out a purchase and sale agreement (PSA), during which Daugherty Petroleum could perform whatever due diligence it deemed necessary. To that end, Cabot Oil indicated that it would begin drafting the PSA immediately. Cabot Oil's letter omitted any reference to the exclusivity period. Around six weeks later, after numerous failed attempts to communicate with Daugherty Petroleum and hearing nothing, Cabot Oil sent a letter indicating that it had accepted Daugherty Petroleum's offer to purchase the leases and threatening to pursue legal action. Daugherty Petroleum responded that their bid was conditioned on the negotiation of a PSA and the comple- tion of due diligence. Shortly thereafter, Cabot Oil sent Daugherty Petroleum a 12-page draft PSA. The terms differed in certain respects from Daughtery Petroleum's letter, including terms governing form and timing of payment. It also included additional terms not previously contemplated in their communications. Daugherty Petroleum never responded to the PSA despite Cabot Oil's numerous attempts to make contact. Cabot Oil sued Daugherty Petroleum in West Virginia for breach of contract, seeking more than $2 million in dam-