Irish explorer Tullow Oil has been ordered by a court in the UK to pay $140 million (€120m) to settle a row over the termination of a contract in Ghana.
Tullow was issued with the fine following a judgment in the English Commercial Court after a case was brought against its wholly-owned subsidiary Tullow Ghana by Seadrill Ghana Operations.
Tullow cancelled the contract for the West Leo rig in December 2016 after Ghana set a drilling moratorium on its offshore oil and gas field in waters that were the subject of a dispute between Ghana and Ivory Coast.
The court ruled that Tullow was not entitled to terminate the rig contract by invoking the contract's force majeure provisions.
Tullow and other parties were ordered to pay Seadrill a contractual termination fee and other standby fees that accrued in the 60 days prior to termination of the contract. These amount to about $254 million.
Tullow expects to be required to pay a total amount of around $140 million, which it said it would deposit within the next two weeks. The company made provisions of $128 million in relation to this dispute in its 2017 annual accounts.
Options
"Tullow is disappointed with the decision, and maintains the view that it was right to terminate the West Leo contract for force majeure," the company said in a statement. "Tullow will now examine its options, including seeking leave to appeal the judgment."
Separately, Tullow is in dispute with oil and gas exploration company Kosmos at the International Chamber of Commerce over its share of the liability of any costs related to the use of the West Leo rig beyond October 1st, 2016. The arbitration tribunal's decision is expected shortly.
Tullow Oil last week reported production and revenues in line with expectations, while chief executive Paul McDade said the company had performed strongly in 2018 so far.
Financial discipline
“With substantially reduced gearing and financial discipline embedded across the group, we are now able to focus on the growth of the business,” he said.
Aside from increasing activity across west Africa, he said the company continued to make “good progress towards sanctioning our developments in east Africa”.
“Having refreshed the exploration portfolio we are about to embark on a multi-year frontier drilling campaign targeting high-impact prospects in Africa and South America,” he said. “There is much to look forward to for the remainder of the year and beyond.”
