Apache North Sea Ltd v Euroil Exploration Ltd & Anor [2019] EWHC 3241 (Comm) (06 December 2019)

Apache North Sea Ltd v Euroil Exploration Ltd & Anor [2019] EWHC 3241 (Comm) (06 December 2019)

The FOA and VJOA must be read together; the FOA does not define 'total costs' and payment provisions refer to invoices issued in accordance with the VJOA. The VJOA's accounting procedure limits recoverable rig hire costs to market rates for similar equipment. There is no conflict between FOA and VJOA; thus, ANSL is only entitled to recover costs as limited by the VJOA, not the full rig hire costs.

Citation
[2019] EWHC 3241 (Comm)
Parties
Claimant: Apache North Sea Limited; First Defendant: Euroil Exploration Limited; Second Defendant: Edison S. P. A
Jurisdiction
England and Wales
Judgment Date
06 December 2019
Procedural Posture
Commercial Claim / Trial Judgment
Outcome
Claim dismissed
Legal Topics
Contract Interpretation, Farm Out Agreements, Joint Operating Agreements, Calculation of Costs, Interest on Late Payments
Contract Law Commercial Law Oil and Gas Law Contract Interpretation Farm Out Agreements Joint Operating Agreements Calculation of Costs Interest on Late Payments

Case Brief

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Parties

Apache North Sea Limited

Claimant

Euroil Exploration Limited

First Defendant

Edison S. P. A

Second Defendant

Procedural Posture

Commercial Claim / Trial Judgment

Legal Issues

  1. 1 Whether the claimant is entitled to recover the full rig hire costs under the FOA or only the market rate as limited by the VJOA
  2. 2 Interpretation of 'total costs' in the FOA
  3. 3 Interaction and precedence between FOA and VJOA provisions

Ratio Decidendi

The FOA and VJOA must be read together; the FOA does not define 'total costs' and payment provisions refer to invoices issued in accordance with the VJOA. The VJOA's accounting procedure limits recoverable rig hire costs to market rates for similar equipment. There is no conflict between FOA and VJOA; thus, ANSL is only entitled to recover costs as limited by the VJOA, not the full rig hire costs.

Court Disposition

Claim dismissed

Orders

  • Claimant's claim for the balance of rig hire costs is dismissed
  • Interest issues to be addressed at hand down in light of judgment