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Monday, September 26, 2016

Rowan Wins Against BP in Gorilla V Contract Dispute

November 16, 2001

Rowan Companies, Inc. reported that the English Court has given a comprehensive judgement in its favor in proceedings between its subsidiary, British American Offshore Limited (BAO) and Amoco (UK) Exploration Company (Amoco). The court found that Amoco's case "fails on the facts at every point", and dismissed in its entirety Amoco's claim that it had been entitled, in January 1999, to terminate its drilling contract with BAO for the use of the jack-up rig Rowan Gorilla V. The court declared that the rig was fit for purpose in all respects when the contract was terminated.

Amoco had refused to commence drilling at the Arbroath platform in January 1999, arguing that much of Gorilla V's equipment was unfit and unsafe. It was BAO's case that the reasons for Amoco's decision to terminate the contract were economic, following a downturn in oil prices and the BP (BP)/Amoco merger on January 1, 1999. The court rejected the evidence of Amoco and BP witnesses that the decision was made for safety reasons, or because Amoco had "lost confidence" in BAO. The court criticized Amoco's approach of seeking to exploit any and every argument available concerning Gorilla V when, in fact, no ground for complaint was justified.

The court ordered Amoco to pay all unpaid day rates, damages, interest and an interim payment on account of costs. In total, the Court ordered Amoco to pay in excess of $85 million. Rowan has sued BP, Amoco Corporation and Arbroath co-venturers Amerada Hess and Enterprise in tort in Houston for their involvement in terminating the contract, wrongfully as it has now been determined. The proceedings are set for trial in May 2002.

Gorilla V continues to operate successfully in Canadian waters, where it has completed the drilling of several wells and abandonments. Bob Palmer, Chairman and Chief Executive Officer, commented, "The London court has spoken. For almost three years, Rowan's firmly held position has been that BP made a serious mistake in judgement, a mistake that would prove costly to their reputation and pocketbook. I believe Rowan's reputation as a 'different breed of cat' remains intact. 'Our word is our bond', 'a deal is a deal' and 'fast pay makes fast friends' "Please note that BP has until December 14, 2001 to appeal Justice Langley's decision. So, it is not over -- just yet. The next item on the agenda is the litigation in Houston, which I believe will have meaningful consequences. I relish the prospects."



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