Apache North Sea Ltd v Euroil Exploration Ltd & Anor

Apache North Sea Ltd v Euroil Exploration Ltd & Anor

The FOA and VJOA must be read together; the FOA does not define 'total costs' and refers to payment mechanisms governed by the VJOA. The parties intended that costs, including rig hire, be calculated and limited by the VJOA's accounting procedure, which restricts recoverable rig hire costs to prevailing market rates. There is no conflict between the FOA and VJOA, so the FOA does not override the VJOA's limitation. ANSL is only entitled to recover the market rate, not the full rig hire cost.

Parties
Claimant: Apache North Sea Limited; Defendant: Euroil Exploration Limited; 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, Joint Operating Agreements, Farm Out Agreements, Cost Allocation, Interest on Late Payment
Contract Law Commercial Law Contract Interpretation Joint Operating Agreements Farm Out Agreements Cost Allocation Interest on Late Payment

Case Brief

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Parties

Apache North Sea Limited

Claimant

Euroil Exploration Limited

Defendant

Edison S. P. A

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 farm out agreement or only the market rate as limited by the joint operating agreement's accounting procedure.
  2. 2 How 'total costs' in the farm out agreement should be construed and calculated.
  3. 3 Whether the farm out agreement prevails over the joint operating agreement in case of conflict.

Ratio Decidendi

The FOA and VJOA must be read together; the FOA does not define 'total costs' and refers to payment mechanisms governed by the VJOA. The parties intended that costs, including rig hire, be calculated and limited by the VJOA's accounting procedure, which restricts recoverable rig hire costs to prevailing market rates. There is no conflict between the FOA and VJOA, so the FOA does not override the VJOA's limitation. ANSL is only entitled to recover the market rate, not the full rig hire cost.

Court Disposition

claim dismissed

Orders

  • Claimant's claim for the balance of rig hire costs is dismissed.
  • Interest payable, if any, to be determined after judgment hand down.