Diamond Offshore Drilling Inc., a unit of Jim Tisch’s Loews Corp., suffered a loss in its lawsuit against Statoil ASA as a judge said Norway’s biggest oil company didn’t breach a contract when it terminated a deal over a rig. Diamond Offshore, which filed the lawsuit in September 2014 in the Stavanger District Court in Norway, plans to appeal the judgment, the Houston-based company said Wednesday in a regulatory filing.
The firm had alleged that Statoil wrongfully terminated a contract for the Ocean Vanguard drilling rig, a deal which provided a daily rate of about $454,000 and was to expire in late February 2015. The defeat is another setback for Diamond Offshore, which has suffered from decreased demand for its rigs amid the plunge in oil prices. The driller has dropped 39 percent since Dec. 31, heading for its third-straight annual decline.
“Statoil has claimed that the rig is not in compliance with certain customer-specific technical requirements, even though the rig has a long history of successful performance in Norway,” Diamond Offshore’s Chief Executive Officer Marc Edwards said in a July 2014 earnings conference call. “Diamond Offshore believes that our customer had no basis to terminate the relationship.” Statoil canceled the lease about nine months early, wiping away more than $100 million of future drilling work, Diamond Offshore said.
That had a “significant negative impact” on Diamond Offshore’s results for the quarter ending June 30, 2014, according to Edwards, and resulted in unexpected down time for the rig, further pressuring results. Darren Daugherty, a spokesman for Diamond Offshore, didn’t immediately return phone and e-mail messages seeking comment. Ola Anders Skauby, a spokesman for Statoil, said the company is aware of the ruling and declined to comment further.