David B. Lerman | Managing Director | Energy | FTI Consulting
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David B. Lerman

  • Managing Director
  • T: +1 713 353 5411
  • F: +1 713 353 5456
Office
    • First City Tower
    • 1001 Fannin, Suite 3950
    • Houston, TX, 77002
    • United States
    • T: +1 800 349 9990
    • F: +1 713 353 5459
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David B. Lerman is a Managing Director in the Oil and Gas Energy practice of FTI Consulting, and is based in the Houston office. He has over 20 years of experience working in and consulting to the energy and chemical industries. He is an Accredited Valuation Analyst and a licensed Professional Engineer. His valuation experience includes estimating damages and lost profits from business interruptions, insurance claims, contract disputes, construction disputes, antitrust matters, commodity price disputes and other commercial disputes. Mr. Lerman has also conducted financial analyses and business valuations to support merger & acquisition transactions and assist clients in shareholder disputes. In addition, he has assisted clients with technology management and new product commercialization by conducting valuations of intellectual capital and technology portfolios. He has testified in matters filed in state and federal court as well as international arbitrations.

Prior to becoming a consultant, Mr. Lerman spent 11 years at Amoco Corporation (now known as BP) where he held assignments in plant operations, R&D, supply chain planning, capital planning, environmental compliance and profitability improvement. Since Amoco, Mr. Lerman has been a consulting and testifying expert for energy companies including oil & gas companies, trading companies, pipeline companies, chemical companies and power companies.

Mr. Lerman has a BSE and MSE in chemical engineering from the University of Michigan and an MBA from the University of Chicago.

Professional Experience

  • Natural Gas Royalty Litigation - ORRI holders retained Mr. Lerman to opine on the long-term, fixed natural gas pricing basis used to calculate royalties where the mineral interests are in Africa. The operators sell the entire natural gas production from the mineral interests to related entities. Mr. Lerman is conducting a natural gas market analysis to develop a market price for the natural gas and estimate the damages from the underpayment of royalties.<l/i>
  • Marine Terminal Lost Profits – Oil Spill - Mr. Lerman was retained by a marine terminal that filed a lawsuit against the primary responsible parties for an oil spill on a waterway that forced a temporary closure of the facility during the clean-up operations. The defendants in this case were the vessels and shipping companies responsible for the oil spill. Mr. Lerman testified on the lost profits associated with shutdown of the dock facilities, which is the primary mode for receipt of incoming materials for re-delivery via pipeline, rail and truck.
  • Insurance Dispute – Petroleum Pipeline - An oil company retained Mr. Lerman to opine on the expenses the company made to remediate a pipeline spill and defend itself in the subsequent litigation. The challenge for this engagement is that the time period spanned more than two decades and the financial records needed to be recreated as the ownership of the company changed as the result of several mergers and joint ventures.
  • Chemical Distributor Contract Dispute - A major chemical company retained Mr. Lerman to testify on the alleged damages to a distributorship contract dispute. The company terminated the contract for cause and was sued by the distributor for damages. Mr. Lerman testified at the arbitration on the actual lost profits and the value of certain pieces of equipment.
  • Business Interruption Litigation – Oil & Gas Company - Testified for a major integrated oil company involved in business interruption litigation. Mr. Lerman led a large engagement team to evaluate the lost profits to the refinery during the interruption, evaluate the plaintiff’s extraordinary expenses and evaluate some of the potential mitigation opportunities. The business interruption analyses included evaluating the refining operations, marketing opportunities and the impact to the refineries logistics system including the pipeline operations, marine operations and truck operations.
  • Business Interruption Damages – Asphalt Refinery - Engaged by an asphalt refiner to prepare its business interruption and property damage claims resulting from Hurricanes Emily and Katrina. Mr. Lerman led the engagement team to develop the lost profits and property damage estimates and author the damage reports to file with the insurance companies.
  • Business Damages – International Treaty Dispute - Engaged by a foreign chemical company involved in an international treaty dispute to estimate damages created by proposed new regulation to ban MTBE. Mr. Lerman led the engagement team to prepare the damage estimate using linear program analysis. The analysis estimated the impact to their global operations including the lost sales, damages from the external negative demand shock on their remaining sales and dispute expenses.
  • Insurance Coverage Dispute – International Arbitration - A multinational oil company retained Mr. Lerman to prepare an expert report and witness statement on covered expenses after its insurer denied coverage under an excess liability policy. Mr. Lerman reviewed the general ledger entries, estimated the total expenses and documented the results in his expert report and witness statement that was submitted to the arbitration panel.
  • Environmental Insurance Claim Dispute – International Arbitration - Engaged by a multinational Oil company to evaluate and document their actual expenditures for an insurance claim dispute over the costs to remediate an MTBE contaminated water resource. Mr. Lerman led the engagement team to identify and collect the relevant accounting and cost data to evaluate the expenditures. Mr. Lerman created the database used to match the actual expenditures from the general ledger records with the project invoices and create the data reports that documented the matched records.
  • Trade Secret Theft and Shareholder Oppression Dispute – Geophysical Science Company - Mr. Lerman was retained as a testifying expert for a geophysical sciences company that filed a complaint against an officer of the company for breaching his contractual and fiduciary duties to the company. The counterclaimed with a shareholder oppression claim. One of the consequences of these alleged actions was the loss of 40% of the company’s revenues. Mr. Lerman evaluated the damages from these alleged actions and performed a valuation of the officer’s shares.
  • Chemical Manufacturing Contract Dispute - Mr. Lerman was retained as a testifying expert for a chemical company in bankruptcy. A creditor brought a claim against the debtor for damages to an impaired manufacturing agreement. Mr. Lerman opined on the creditor’s damage calculations and assisted the client’s counsel during the mediation process.
  • Construction Dispute – Steam Cracker Plant - Mr. Lerman was retained by an ethylene /polyethylene producer to evaluate the damages from a severely delayed start-up of a green- field plant in South America. In addition, he participated in the mediation process to settle the dispute. Mr. Lerman evaluated the damages associated with a very protracted start-up and commissioning process. The damages include the delay damages, lost profits, and extra expenses.
  • Joint Development Technology Consulting - Engaged by a US Chemical Company to assist in developing the technology plan for the joint development and commercialization of a new product for the US and European markets. The client requested assistance to develop a technology and commercialization plan that met the mutual needs of their operations (in the US and Europe) and the needs of their development partner.
  • False Advertising / Unfair Competition – Consumer Plastics - A small environmentally-friendly consumer products company retained Mr. Lerman to opine on the alleged damages that flowed from supposedly misleading information on its website. In this dispute, the client was defending itself from three larger consumer plastic companies that alleged that incorrect facts about plastics and recycling on the client’s website had harmed the plaintiffs. The results of the analysis on the market exposure in the common marketing regions showed that virtually no one in these regions viewed the webpage with the alleged misleading information.
  • Valuation – Exploration & Production Company - A small E&P company retained Mr. Lerman to perform a valuation of the company. The E&P company was in the process of renegotiating its debt and needed a third party valuation.
  • Valuation – Petroleum Extraction Technology - A start-up company retained Mr. Lerman to assist them with the valuation of its petroleum extraction technology in several different applications. The company had recently received patents for its technology and was seeking a valuation in order to attract additional capital to further develop the technology.
  • Valuation – Petroleum Brokerage Business - Mr. Lerman was retained by an international law firm to conduct a valuation of a petroleum brokerage business, opine on the opposing experts report and testify as needed. The company and its owners were litigation with a third party that made ownership claims. The matter settled during trial in Singapore after Mr. Lerman submitted his expert report.
  • Business Interruption – Crude Oil Refinery - A small crude oil refiner engaged Mr. Lerman to review their business interruption and damages claim that resulted from an oil spill that closed the waterway to their refinery. The waterway closure prevented the refinery from receiving crude oil and shipping products. Mr. Lerman’s review assisted the client in reaching a quick settlement with the primary responsible party.
  • Natural Gas Contract Dispute - A major natural gas marketer retained Mr. Lerman to testify on the actual market price of natural gas based on an analysis of market transactions and a comparison to several natural gas price indices. Mr. Lerman also opined on the alleged damages the plaintiff incurred due to the defendants paying below market prices for its natural gas.
  • Tortuous Interference - Oil Field Services - Mr. Lerman is retained by an oil field services company as a privileged consultant to assess the damages to one of its service lines as a result of the interference by a former director and employee. The damages include lost profits, extra expenses to replace & train new employees and damages to its capital program.
  • Breach of Contract – Purchase Power Contract - Provided expert and rebuttal reports for a power customer on damages from a power contract dispute. The customer purchases multiple blocks of power with each block having its own rate and/or pricing terms from the same utility. The central issue in this litigation was the utility company’s deviation from pricing terms for just one of those blocks of power. Mr. Lerman led the engagement to evaluate the utility’s marginal costs and apply the contract terms to estimate the damages. Mr. Lerman co-authored the expert & rebuttal reports and provided testimony.
  • Antitrust - Engaged by a natural gas processing company involved in antitrust litigation to evaluate the competitiveness of their natural gas processing contract terms and prepare the testifier for deposition and testimony. Mr. Lerman lead the economic model development that compared their contract terms to both their weight averaged cost of capital and the industry weight averaged cost of capital. The economic analysis included commodity price-risk analysis to address the volatility inherent to the natural gas market.
  • Intellectual Property - As the result of a merger, an industrial gas company engaged Mr. Lerman to lead the technology integration team to integrate two similar R&D organizations. He assisted with the organizational design, coordinated the patent portfolio evaluation, project portfolio evaluation and provided guidance on the terms demanded by European Union on the sharing of non-patented technical know-how.
  • Intellectual Property - Lead the engagement team retained to improve a large integrated oil company’s project and portfolio management processes and tools. This client is realizing greater returns on their R&D investments from both improved project management (cycle-time reduction) and better portfolio decision making. Value to the client exceeded $10 Million per year.
  • Asset Divestiture - Engaged by a US refining, marketing and transportation company to evaluate an asset divestiture. Mr. Lerman assisted the client in the asset valuation and identifying potential buyers.
  • Supply Chain Analysis - Engaged by a Latin American, government owned refining company to evaluate opportunities to improve its supply chain planning process, reduce working capital and develop the business case for implementation.
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