time periods prior to our ownership of EE Group and MHH, and includes several causes of action including
claims of civil conspiracy, breach of fiduciary duty and fraud. We acquired a 90% interest in MHH from Dart
Energy Corporation (“Dart”), a 5% interest in MHH from Prospect Street Energy, LLC and a 100% interest in
EE Group, which owned the remaining 5% interest in MHH. The Claim seeks, from the Respondents
collectively, alleged actual, punitive and treble damages and disgorgement of profits, as well as fees and
costs. The purchase agreements for the Acquisition contain indemnification and other provisions that may
provide some protection to us for any breach of the representations, warranties and covenants made by the
sellers in the Acquisition. At this point, we cannot predict whether we will have any liability for the Claim. This
proceeding is subject to the uncertainties inherent in any litigation, and the ultimate outcome of this matter may
not be known for an extended period of time. We intend to vigorously defend this matter.
Environmental
— During the first quarter of 2011, we discovered excess emissions at our East Texas gas
plant. We met with the Texas Commission on Environmental Quality, or TCEQ, in April 2011 to discuss this
matter and included these issues in Title V reports we submitted to the State. In August 2011, the TCEQ
conducted a standard inspection at the East Texas gas plant to evaluate compliance with applicable air quality
requirements. On August 31, 2011, the TCEQ issued us a Notice of Violation and a Notice of Enforcement
citing a number of alleged violations of terms and requirements of the facility air permit. We responded to the
Notice of Violation on September 28, 2011, including the implemented measures to ensure the facility is in
compliance with the relevant air permit terms and conditions. We responded to the Notice of Enforcement on
October 14, 2011, including a description of the measures that have been implemented, and will be
implemented at the facility to ensure compliance with the relevant air permit terms and conditions. In
December we received a proposed penalty assessment for this matter and we believe that we will likely receive
a penalty of up to $0.7 million for this matter. We do not believe the ultimate resolution of this matter will have
a material adverse effect on our consolidated results of operations, financial position or cash flows.
Item 4.
Mine Safety Disclosures
Not applicable.
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