Skip to content Skip to sidebar Skip to footer

Drilling Firm Drags Oriental Energy To Court Over Unpaid $4.2m Debt

An offshore drilling company, Borr International Operations (BIO), has dragged the Oriental Energy Resources Limited before the Federal High Court, in Lagos, to recover the sum of $ 4,143,856.70 million.

The debt, according to BIO is the outstanding of approved but unpaid invoices for the drilling services provided in accordance with Contract Number OER-C-0560 for the provision of Jack-Up Drilling Unit and Drilling Rig Services rendered in the defendant’s Ebok Field in OML 67.

The BIO, in suit number FHC/L/CS/311/2022 that was filed by its Lawyer, Mr. Gabriel Uduafi, is also praying the court for interest on the $4,143,856.70 million based on the current London Interbank Offered Rate (LIBOR), one month interest rate increased by 5 percent and calculated pro data on a daily basis from October 6, 2021, till the date of liquidation of the judgment debt.

The plaintiff, in its statement of claim, said that by the relevant provisions of the contract, the drilling operations, which the BIO was engaged to carry out was required to be done within the firm term of 120 days.

It stated that going by the relevant provisions of the contract, there was no fixed or set target that the plaintiff was obligated to achieve, as the contract was not a turnkey but a day rate’ contract; and to this effect, Clauses 10.2; 10.3, 10.4; 10.5; 10.8; 10.9; 10.10 and Schedule 6 of the contract explicitly set out the various rates to include operating rate, standby rate, repair rate, force majeure rate, re-drill rate, moving rate and zero rate.

The plaintiff stated that the lump sum payments under the contract are the bilisation cost of $450,000 and the demobilisation cost of $250,000, a sum which would become due and payable upon the completion of the contract.

However, following the default in making payment as stipulated under the contract, the plaintiff wrote to the defendant, both by mail and letters, demanding for the payment of the outstanding and approved invoices and that the defendant wrote replies raising issues and points that are completely alien to the contract as its reason for not making the payment.

The plaintiff argued that in setting up a completely ridiculous claim, the defendant claimed spread cost for nonproductive time (NPT) in the total sum of $3,437,500.00 where there is no provision in the contract to support such claim.

The plaintiff added that following series of engagement, it was compelled to instruct its lawyers to issue a demand for the payment of the invoices, and by a letter dated January 19, 2022, the plaintiffs’ solicitors delivered a formal demand for the payment of some of the outstanding invoices in the sum of $2,533,749.12 net of taxes.

The plaintiff stated that rather than simply honouring its payment obligation under the contract and credit the plaintiff with the value of the invoices, the defendant by a letter dated January 26, 2022, sought to claim the sum of $10,511,754.00 as spread cost for non-productive time (NPT) and consequential loss, as against the sum of $3,437,500.00 initially set up by the defendant in its earlier engagement with the plaintiff.

The plaintiff added that in accordance with the provisions of the contract, the same came to completion on October 10, 2021, when the plaintiff’s drilling unit left the defendant’s Ebok Field OML 67.

The plaintiff averred that by the completion date, the lump sum demobilisation rate of $250,000 has become due and payable.

The firm stated that the reasons given by the defendant in refusing to honour its payment obligation under the contract were flimsy, frivolous, vexatious and ultra vires of the provisions of the contract between the parties, and having approved the invoices, the plaintiff is obligated to make the payment within the stipulated 30 days under the contract.

Consequently, the plaintiff stated that the excuses given by the defendant in failing to honour its contractual obligations to the plaintiff were simply provocative, as same are not supported or derived from the contract.

It added that the plaintiff is being denied payment due to it in respect of the services rendered to the defendant as a result of which the defendant is indebted to the plaintiff to the tune of $4,143,856.70 as stipulated under Clause 11.2 of the contract.

The firm stated that it would be in the interest of justice to grant all the reliefs claimed in this suit, adding that except the court intervenes and grant the reliefs sought, the defendant would continue to default in the payment of the invoices which have been duly approved for payment by the plaintiff.

In its defence, Oriental Energy Resources Limited (OERL) stated that the company is not indebted to the plaintiff in the manner alleged in its claim or in any manner whatsoever as the invoices upon which the alleged debt purportedly arose were disputed by the defendant.

The defendant stated that the plaintiff misled it into agreeing to the mobilisation of the drilling rig to commence the contract, by fraudulently misrepresenting to the defendant that its drilling rig, Borr Natt, was suitable for the defendant’s drilling programme.

An affidavit that was deposed to by the Well Engineering Manager of OERL, Mr. Abraham Faga, stated that the defendant is not indebted to the plaintiff in the way and manner alleged in its claim or in any way and manner whatsoever as the defendant is disputing the invoices upon which the purported debt arose.

Faga averred that without the plaintiff’s fraudulent misrepresentations, the defendant would never have commenced the contract and approved mobilisation of the drilling unit, hence the issue of plaintiff’s invoices which were issued within the contract would never have arisen.

He added that the defendant would be claiming for a refund of all payments it has so far made to the plaintiff as the payments were fraudulently obtained.

He further averred that due to the plaintiff’s fraudulent misrepresentation, the purported execution of the contract was completely appalling with non-productive time of over 25 days attributed to rig related repairs, which is unprecedented in the industry for drilling operations.

He stated that the plaintiff hastily commenced the suit under undefended list to mislead the court into believing that the defendant has no defence to its claims.

The deponent further stated that justice will be better served if the OERL is allowed to defend the suit.

He urged the court to transfer the suit to Ordinary Cause List for a complete and holistic determination of all issues in controversy.

What's your reaction?
0Love It!0Do Better!
Show CommentsClose Comments

Leave a comment


This Pop-up Is Included in the Theme
Best Choice for Creatives

Purchase Now