Offshore drilling rigs. Photo: Chris Ratcliffe/Bloomberg

A Houston-based oil and gas company won an $11.2 million verdict for royalties wrongly withheld by Warrior Energy Services Corp. for a patented invention that has revolutionized offshore oil and gas drilling.

Oilfield Specialties owns the rights to co-owners Don Umphries and Gabe Williger's invention, WIPER, which solves a problem that offshore drilling companies such as Exxon, Chevron and Anadarko experience when a pipe gets stuck in a hole, said Tanya Dugas Dawson, a partner in Raley & Bowick in Houston who represented Oilfield Specialties. Previously it took 10 days or more to clear a stuck pipe, but the men's invention does the job within 32 hours. The time savings is valuable because it costs $1.5 million a day to operate a rig.

“It's like an insurance policy because 99% of the time, you don't need it, but when you need it, you want to have it,” Dawson said.

The attorney said that Warrior Energy Services Corp., a drilling services company owned by Superior Energy Services, has made $70 million in profit from WIPER in the past nine years.

Oilfield Specialties alleged in a breach-of-contract lawsuit that Warrior, where Umphries works and Williger previously worked, entered employment agreements with both men in 2000. Those agreements provided that if they developed a patentable process or product that the company used in its business, then Warrior would get first exclusive rights to the invention and would pay each man a 25% royalty of gross revenue within 30 days of a customer paying an invoice, according to the May 14 first amended petition in the case, Oilfield Specialties v. Warrior Energy Services, filed in Harris County's 80th District Court.

In 2008, Williger and Umphries formed Oilfield Specialties and assigned it all rights to their patents. Next, Oilfield Specialties invoiced Warrior for the money it owed the men. Warrior made payments for a period of time, but the petition alleged the payments were on net revenue, not gross revenue, as the employment agreements required.

Oilfield Specialties alleged that Warrior hadn't paid the full amount of royalties, because each inventor was supposed to get a 25% royalty on gross revenue, which comes to 50% total, yet Warrior only paid 25% of net revenue. Then in January 2018, Warrior quit paying altogether.

In a May 16 first amended answer, Warrior denied all of the allegations. Among other things, Warrior argued that Umphries and Williger had waived their rights under the contract, that Warrior had satisfied the contract and already paid everything that it owed, and the men were estopped from bringing their lawsuit. Warrior also claimed the plaintiff had failed to mitigate its alleged damages.

Akerman partner Brian Bagley of Houston, who represented Warrior, wrote in an email that the company wouldn't comment until it completed the appeal process.

The parties seated a jury on May 28, and completed the entire trial on May 29, said Dawson. The jury deliberated for one to two hours before returning a verdict.

The jury found unanimously that Warrior failed to comply with the agreement. Jurors determined that Umphries, Williger and Oilfield Specialties had not waived their employment agreements with Warrior, which may have excused Warrior's failure to comply with the agreements. The failure to comply also was not excused by Umphries, Williger and Oilfield Specialties accepting some other type of performance to fully satisfy the agreement's obligations, the jury found.

The jury awarded Oilfield Specialties $11.2 million in damages to compensate Umphries and Williger for Warrior's failure to comply with the employment agreements.

“The clients are really blown away,” Dawson said. “Both of these guys are in their 70s. They both had worked for this company for 20 years.”