D. The Evidence as to the Information Davis Took
Two categories of information Davis took from Anadarko are particularly sensitive. One is the June 28, 2006 reserve report for the Texas Gulf Coast Trend. Reserve reports are updated quarterly. The reserve report is Anadarko's internal assessment of the value of its wells. Although some of the information contained in the report is available publicly and other information is shared with joint working-interest owners, much of the information is kept confidential within Anadarko. Bradley Holly, an Anadarko development manager for the Austin Chalk, stated that Anadarko treats the reserve report as highly confidential for the following reasons:
• it lists Anadarko's interpreted Estimated Ultimate recovery (EUR) for each well at the end of 2005 and current estimate for 2006;
• the report contains the net remaining hydrocarbons for each well, which is the EUR minus what has been produced to date (Cumulative Production);
• the report takes the net remaining hydrocarbons and using a set oil and gas price (both listed on the report) it shows a BFIT (before federal income tax) Present Value, Anadarko's internal assessment of the value of its remaining reserves for each well; and
• the report lists Anadarko's reserve base in industry-defined reserve categories such as Proven Producing (PP), Proven Non-Producing (PN), and Proven Undeveloped (PU).
(Docket Entry No. 11, Ex. D at 2-3). This information, according to Holly, provides Anadarko's analysis of the value of a particular well and the expected profitability of that well. Holly stated that the information contained in the reserve report is highly confidential and is not distributed outside Anadarko. (Docket Entry No. 19, Ex. B at 3). Holly testified that while some of the information used to prepare the reserve report is publicly available, that information is combined with internal, proprietary data, gathered at considerable time and expense, to create the report. (Prelim. Inj. Hr'g Tr. 179, Sept. 20, 2006). Holly explained that Anadarko does not provide its reserve report to its working interest partners:
*8 We would give the joint interest owners information like production. We would give them information such as operating expenses. We would not give them any-we would not give them any of the future projections on reserves. We would not give them our internal price decks. We would not give them-I can think of no instance where [we] would give them our net revenue interest.
(Prelim. Inj. Hr'g Tr. 178, Sept. 20, 2006). Holly described why Anadarko did not disclose the reserve report even to joint working-interest owners:
Q: And why would you not share this information with your joint working interest owners?
A: Because even though your joint working interest owners like GeoSouthern and Anadarko have interest in the same well, there is always the ability for one of the partners to try to buy the other one out, or one of the partners sell to the other partner, or you could even trade properties. And so, this information is kept very confidential, because each company has a different assessment. And if you hired a third party, a third party would come up with a different assessment. There is so many uncertainty nobs in a reserve report that each individual company or each individual entity that did a reserve report would obviously come up with different net remaining and a different present value. It's a difference in perception on what the value remaining is.
Q: So, if GeoSouthern has this information from Anadarko's reserve report and they decide that they want to make a play for 1500 wells in the Giddings field, what advantage do they have over Anadarko, if any?
A: As has been stated earlier today, the S.E.C. reserve reporting is a very serious matter, and has to be accurate. And so, this is Anadarko's most accurate interpretation of what our value is in the field. If any competitor had that data, in my mind it would eliminate any ability to buy, sell, or trade properties with that company, because they know all of your cards in your hand, and it's very hard to negotiate with somebody when they know what your internal value is for something.
Q: So, it would make it impossible for you to ever get a premium on your property; is that right?
A: That's correct. I mean, if I had-if I knew what the value, true value was for something, why would I overpay for that value?
(Prelim. Inj. Hr'g Tr. 182-83, Sept. 20, 2006). Davis testified that he had not known Anadarko to give away a reserve report to a competitor and had not heard of any oil and gas company that had shared its reserve reports with a competitor. (Davis Dep. 73:5-10).
Anadarko introduced correspondence between it and another working-interest owner, Border to Border Exploration, L.L.C., to show the confidential nature of the RockPilot program images. (Pl.Ex. 26). In the first letter, dated March 26, 2005, Border to Border's chief executive officer asked for the “horizontal well logs derived from directional data and gamma ray data,” stating that this type of information was routinely provided to working-interest owners in all deals in which he had participated in the past 25 years. In a response dated April 26, 2005, Anadarko stated that while it provides its working-interest owners with geologic prognosis data, daily drilling reports, and production data, it does not provide its working-interest owners with its “internal geologic interpretation of the MWD gamma ray (a/k/a “RockPilot Program”).” (Id.
). Anadarko explained that the data its working-interest owners receive provide enough information for those partners to create their own interpretations and to provide input to the well operators, but did not “jeopardize the confidentiality of our RockPilot Program, which we developed and paid for, and believe affords us a competitive advantage in horizontal drilling applications.” (Id.
Anadarko's Geology and Geophysics Manager, Michael Hoffman, testified consistently. (Docket Entry No. 19, Ex. A). Hoffman stated that the interpretation of the data obtained through gamma ray imaging is Anadarko's intellectual property and not shared with its competitors or working-interest partners:
This information was obtained at great cost and expense to Anadarko. This information is extremely valuable because it provides an indication of whether oil and gas may be located in an area and provides information on drilling techniques and strategies that should be used to effectively explore for oil and gas in the Austin Chalk Trend. An oil and gas company in possession of such information gains a significant advantage in being able to evaluate and develop prospects.
). Hoffman also testified that creating a RockPilot image takes approximately 20 to 30 hours of interpretative work plus the cost of drilling the well. (Prelim. Inj. Hr'g Tr. 142-43, Sept. 20, 2006). The RockPilot images would be useful to a potential purchaser of Anadarko's properties by allowing it to maximize the production of those wells without having to spend the time and money to create similar imagery. (Id.