Legal Matters

Friday, August 18, 2000
Court Moves Coastal's Lease Confiscation Claim Forward

Coastal Petroleum Company said Florida's First District Court of Appeal denied motions by the State and certain environmental groups asking for a rehearing of the Court's decision of Oct. 6, 1999. The Court also affirmed that the Florida circuit court was the proper venue to determine the issue of the State's taking of Coastal's property.

In its October decision, the Court said, "There is no dispute that (Coastal) has a viable contract with the State of Florida to explore for and extract oil from submerged sovereignty lands.

DEP's interpretation and application of the permitting statute, based on its determination that there is a compelling public purpose in not allowing (Coastal) to drill offshore, effectively prevents the appellant from exercising its rights under the contract. DEP's action would be unconstitutional only if just compensation is not paid for what is taken. This is a matter to be resolved in the circuit court."

In the two-sentence ruling, the three-judge panel said that, because the issue of whether the State's denial of a permit constituted a taking was not before the Court "we decline to comment on the merits of that issue, leaving it to be resolved in the circuit court," and went on to deny all other motions.

Phillip W. Ware, Coastal's president, said the company is very pleased there will be no rehearing, and that it looks forward to proceeding expeditiously in the circuit court with its claim for the inverse condemnation of its approx. 400,000-acre offshore lease 224-A. That leasehold, he said, encompasses the highly regarded St. George's Island prospect in the Panhandle region, for which the company has been seeking a drilling permit since 1992.

Ware said the State may attempt to appeal the decision to the Florida Supreme Court, but must do so within the next 30 days. In the State's two previous appeals to the high court on the permit issue, he noted, both were denied within 90 days.

Precision Drilling, Pride International Settle Lawsuit

Precision Drilling Corp. settled a breach of contract suit filed against it by U.S. rival Pride International Inc., which alleged Precision bought a Canadian driller after the driller had agreed to a deal with Pride.

The $500-million suit, which Pride launched against Precision and Plains Energy Services Ltd. in Texas last week, was settled "amicably" and was conditional on Precision acquiring all shares of Plains under its current offer, said Precision, Canada's biggest oil and gas drilling contractor.

Calgary-based Precision said it would not provide any details of the settlement, but stressed the terms were "not in any way material to Precision."

Pride said it believed it had a deal to buy Plains on the same day Precision agreed to purchase the smaller Canadian rival in a friendly offer that was richer than its previous hostile one.

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