Northern Natural Gas Company, Petitioner v. Conoco, Inc., Respondent

Summary

The Texas Supreme Court affirmed the Court of Appeals' judgment, holding that the gas processing agreement required Northern to deliver gas it actually purchased under dedicated contracts for a twenty‑year term and thereafter only as long as purchases continued, but did not obligate Northern to maintain those contracts or deliver gas if none was purchased. The Court rejected the application of UCC §§1.203 and 2.306 to create an independent good‑faith duty, overruled Portland Gasoline's implied‑obligation rule, and affirmed the remand for a trial on whether Northern cancelled its contracts in bad faith.