Britain’s Tullow Oil has to cough up around $65-million for Kosmos Energy’s share and legal fees over a cancelled rig contract in Ghana, the companies said on Wednesday.
A London judge had ordered Tullow this month to pay rig owner Seadrill around $254-million, saying Tullow was wrong to end the contract on the grounds of force majeure over a maritime border dispute in West Africa.
Tullow cancelled the contract for Seadrill’s West Leo rig in December 2016 after Ghana set a drilling moratorium on its TEN offshore oil and gas field which is located in waters then claimed by both Ghana and Ivory Coast.
Tullow is lead operator of the project, while Kosmos Energy, along with Anadarko Petroleum Corporation, Ghana National Petroleum Corporation and PetroSA also hold stakes.
Tullow said its partners would pay in keeping with their stakes in the project, but Kosmos challenged this logic.
A panel of arbitrators at the International Chamber of Commerce ruled in favour of Kosmos, which means Tullow will not be able to claim back Kosmos’ $50.8-million share of the Seadrill cost and will have to reimburse Kosmos around $14-million in legal legal and rig demobilisation costs.
With Tullow’s 47% stake in TEN and its duty to pay costs for Ghana National Petroleum Corporation’s (GNPC) stake, the British company had expected to pay around $140-million net.
“The challenge for Tullow is to demonstrate that the events of
2015-16 are behind it, and in H2/18 it is pushing ahead with a strategy that involves doing more with less and unlocking the upside potential in East Africa,” RBC said in a note.
Tullow is working towards final investment decisions for its Kenya and Uganda projects.