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Court rules against Tullow Oil in dispute over West Leo rig contract termination

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Court rules against Tullow Oil in dispute over West Leo rig contract termination

Tullow Oil PLC will pay $245 million to Seadrill Ghana Operations Ltd. for the Dec. 4, 2016, termination of the West Leo rig contract, according to a judgment in the English Commercial Court.

In October 2016, Seadrill Ghana filed claims against Tullow Ghana Ltd., alleging that the company was not entitled to terminate the West Leo rig contract for force majeure.

In a July 3 ruling, High Court of Justice Judge Nigel Teare said Tullow Ghana wrongfully terminated the contract by invoking the force majeure provisions, and Tullow now must pay Seadrill a contractual termination fee and other standby fees that accrued in the 60 days prior to termination.

Tullow said in a June 28 release that any resulting liabilities would be shared by the TEN joint venture, where the West Leo rig had operated at the time. Within the next 14 days, Tullow expects to pay a net amount of about $140 million, compared with the provision of $128 million made in the 2017 Annual Report and Accounts, according to a July 3 news release.

Tullow is the operator of the TEN field with a 47.18% interest. Kosmos Energy Ltd. and Anadarko Petroleum Corp. each hold a 17% interest, while GNPC Exploration and Production Co. Ltd. has a 15% interest and Petro SA holds a 3.82% stake.

Tullow is exploring the possibility of appealing the judgment.

Separately, Kosmos is disputing, through an arbitration against Tullow with the International Chamber of Commerce, its 20% share of the liability of costs related to the use of the West Leo rig after Oct. 1, 2016.

The arbitration tribunal's decision is expected shortly.