Northern Offshore, Erin Energy settle ‘Energy Searcher’ contract dispute

Northern Offshore, Ltd. today announced a development in its contract dispute with Erin Energy Corporation (formerly CAMAC Energy Inc.) related to the contract for the drillship the Energy Searcher.

Namely, the parties have reached an agreement with respect to the contract dispute settling all disputes and claims between them.

To remind, Northern Offshore’s drillship was under contract at the Oyo-8 well offshore Nigeria with Erin Energy. On September 12, 2014, Erin Energy had to stop its drilling operations at the Oyo-8 well due to leaks discovered in some control system hoses of the well’s blow out preventer.  The drillship resumed normal operations on September 23, 2014.

However, Northern Offshore expected its consolidated financial results for the third quarter 2014 to be negatively impacted by a reduction of approximately thirty nine days of zero revenues rather than the forty five days previously estimated.

In January 2015, Northern Offshore issued a notice of contract termination to Erin Energy for the Energy Searcher drillship and said that Erin Energy “breached various terms of the drilling contract” and added that the company “will be filing a claim for in excess of $50 million associated with this matter pursuant to the arbitration provisions of the contract”.

Erin Energy issued a counter statement saying they had terminated the contract with Northern and not the other way around. The company elected to terminate the contract for “Northern’s repudiatory breach of contract and other material breaches of the drilling contract by Northern. These breaches have caused significant damages and loss, including delay damages and wasted spread costs to the Company. CAMAC is considering all legal options to enforce its rights under the contract”.

Offshore Energy Today Staff

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