Buccaneer counters Archer

Claims international drilling company should pay $30 million in lost revenue for delays related to Endeavour jack-up drilling rig

Eric Lidji

For Petroleum News

Continuing the back and forth between the two sides, a group of Buccaneer Energy Ltd. affiliates and subsidiaries is claiming up to $30 million in lost revenue from Archer Drilling LLC, in connection with the Endeavour jack-up rig docked in Homer since fall.

In a 14-page counterclaim filed in Texas district court on March 13, a Buccaneer affiliate said it is losing $175,000 per day in rig rentals because Archer mismanaged rig upgrades, cut short its contract and now refuses to hand over documentation required to use the rig.

In December, after the companies parted ways, Archer sued Buccaneer for $6 million in damages for late payments and “nonperformance,” claiming that the Australian independent and its affiliates “undermined and underfunded” upgrades on the jack-up.

But in its version of things, Buccaneer and its affiliates such as Kenai Offshore Ventures LLC and Kenai Drilling LLC claim Archer failed to live up to its end of the deal.

Under the deal, according to Buccaneer, Archer could accept or decline work orders from the Buccaneer-affiliate Kenai Offshore Ventures LLC, but was bound to complete any work order it accepted to the satisfaction of Kenai Offshore Ventures before getting paid.

“Under the work orders, Archer was charged with project management/supervision, project engineering, cost estimating, risk assessment, change management procurement control, project reporting/planning” and other aspects of the effort to refurbish the rig at an Asian shipyard before moving it to Alaska, according to Buccaneer. While still in Singapore, Archer said it needed to complete some additional tasks before the rig could be fully certified, but said the work could be handled en route to Alaska, Buccaneer said.

The rig began its journey to Alaska in August 2012, and upon arrival “the same Archer personnel who previously identified a short list of discrete tasks left before certification suddenly produced a ten page list of single-spaced line items that had to be resolved.”

At the same time, according to Buccaneer, Archer began “pressuring” Kenai Drilling to finalize a “lucrative” management contract for the rig for when it began drilling in Cook Inlet. Although Buccaneer negotiated “in good faith,” it said it suspended the negotiations after learning about the work still needed on the rig. At that point, according to Buccaneer, “Archer’s progress on Endeavour, while incremental at best, slowed further.”

Paying local contractors

In its original complaint, Archer claimed that Buccaneer rushed the rig to Alaska, and subsequently requested work without “the resources or the manpower” necessary to complete it and later requested work “plainly outside the scope of existing work orders.”

Additionally, Archer claimed, Buccaneer kept hiring third parties and telling them to bill Archer for the work. While claiming that Buccaneer failed to pay for its work requests, Archer said its own employees “have been fully paid by Archer throughout the project.”

Buccaneer blames Archer for failing to pay local contractors.

According to Buccaneer, the two parties eventually signed a memorandum of understanding over the disputed invoices in November 2012 and “Archer was paid all amounts then due except for approximately $1.4 million in dispute.” But the debate over paying local contractors turned public and eventually the two sides parted ways.

According to Buccaneer, Archer decided to “unilaterally terminate” the contract, thereby “sabotaging all ongoing efforts to complete the rig repairs.” Buccaneer soon hired Spartan Offshore Drilling LLC to take over work, but the transition was complicated because “Archer abandoned the rig, removed rig documents and certificates necessary for the vessel to be approved for operation in Alaska, and terminated the approximately 65 crew members that had been employed and trained in the preceding five months.”