An appeals court in London has issued a final ruling in a case between the Irish oil and gas exploration company Providence, and Transocean, one of the world’s largest offshore drilling contractors.
The dispute began in 2012 when Transocean laid a claim for Providence to pay $19 million in outstanding dayrates for the use of Transocean Arctic III semi-sumbersible drilling rig.
Providence then issued a counterclaim in which it said the driller had been in breach of contract, and that Providence was entitled to set off certain spread costs againt Transocean claims.
In December 2014, Hon. Justice Popplewell found that Transocean was indeed in breach of contract for failing to maintain various parts of its subsea equipment and that Transocean was not, therefore, entitled to the amount claimed against Providence. The ruling also supported Providence’s position that Providence was entitled to set off certain spread costs against Transocean’s claim.
Transocean then appealed the part of the 2014 judgement, related to whether Providence was entitled to set off certain spread costs against Transocean’s claim.
According to a statement by Providence, the appeal of this aspect of the judgment turned on the Court of Appeal’s interpretation of the wording of the consequential loss clause in the rig contract The appeal was heard in March 2016.
On Wednesday, April 13, 2016, the court of appeals granted Transocean’s appeal on the set off point.
Providence says that all other aspects of Justice Popplewell’s judgment remain in force, including the finding that Transocean was in breach of contract.
In a statement after the final ruling, Providence said it estimates the financial implications of the court of appeal’s judgment will result in the payment of approximately US$7 million (excluding interest and costs) to Transocean.
As the parties are currently in discussion regarding the final amount to be paid to Transocean, Providence said that “at this time the Company cannot confirm the final amount payable to Transocean, nor the terms or timing of such payment.”
The oil company’s shares have been suspended on Wednesday, pending the ruling. Providence has requested the shares remain suspended, both in London and Dublin, pending clarification of the previously mentioned matters, and having regard to the Company’s existing financial resources.
“In the meantime, the Company is in active discussions with its financial advisors and current debt provider with the objective of ensuring that the Company has the appropriate financial resources to satisfy its obligations to Transocean,” Providence Resources said
In the meantime, the company says it is in active discussions with its financial advisors and current debt provider with the objective of ensuring that the Company has the appropriate financial resources to satisfy its obligations to Transocean.