English court rules against Tullow in Ghana rig dispute
A judge in the English Commercial Court case has ruled against Tullow Ghana in its dispute with Seadrill over a drilling contract.
LONDON – A judge in the English Commercial Court case has ruled against Tullow Ghana in its dispute with Seadrill over a drilling contract.
The Hon. Mr Justice Teare decided that Tullow was not entitled to terminate its contract forSeadrill’s semisubmersibleWest Leo on Dec. 4, 2016, by invoking force majeure provisions.
As a result, Tullow must pay Seadrill a contractual termination fee and other standby fees that accrued in the 60 days prior to the end of the contract totalling around $254 million.
The sum will likely have to be paid within the next fortnight with Tullow liable for around $140 million net.
Tullow said it was disappointed with the decision and maintains that it was right to terminate the contract for force majeure. It will now examine its options, including seeking leave to appeal the judgment.
Kosmos is also disputing, through arbitration against Tullow with the International Chamber of Commerce, its share of the liability (around 20%) of any costs related to the use of theWest Leo beyond Oct. 1, 2016. The tribunal’s decision is expected soon.
Seadrill, meanwhile, announced that it had emerged from Chapter 11 after successfully completing its reorganization. All conditions precedent to the restructuring have been satisfied or otherwise waived.
The plan has equitized around $2.4 billion in unsecured bond obligations, more than $1 billion in contingent newbuild obligations, various unliquidated guaranty obligations, and around $250 million in unsecured interest rate and currency swap claims, while extending near-term debt maturities.
This provides the company with more than $1 billion in fresh capital.