In a counterclaim responding to a $6.5 million lawsuit filed by Archer Drilling, Buccaneer Energy Ltd. charges that Archer Drilling’s work on the jack-up rig Endeavour-Spirit of Independence has cost Buccaneer up to $30 million. Buccaneer filed the counterclaim last week in Texas District Court, Harris County.
Buccaneer alleges that Archer Drilling’s “misrepresentations, misconduct and delays” cost Buccaneer $30 million in revenue because the Endeavour could not be used to drill in Cook Inlet last fall and this winter.
Purchased for $68.5 million and recently assessed by the Alaska Department of Revenue at $40.24 million, the Endeavour has been moored at the Homer Deep Water Dock since last August while Archer Drilling and its subcontractors prepared the jack-up rig for work in Cook Inlet. Archer parted ways with Buccaneer in December and Spartan Offshore Drilling took over work on the rig.
The city of Homer has extended the deadline to Tuesday, March 26, for the Endeavour to leave the Deep Water Dock so construction on a fender replacement project can begin.
“I’m confident they’ll be able to meet it,” said Homer Harbormaster Bryan Hawkins of the new departure date.
Buccaneer said earlier that American Bureau of Shipping certification for the Endeavour had been done. A U.S. Coast Guard inspection also was scheduled for Monday. Once the Endeavour passes Coast Guard inspection, it can leave for the Cosmopolitan oil and gas lease site off Anchor Point.
Buccaneer has a land-use permit to put legs down at Cosmo, but still needs approval of its Oil Discharge Prevention Contingency Plan, or C-Plan, by the Alaska Department of Environmental Conservation. DEC last week sent Buccaneer a nine-page, 27-point request for additional information. Buccaneer had received a C-Plan for its Southern Cross and North West Cook Inlet projects in the upper inlet which it had intended to work last fall before the ice season. The Cosmo C-Plan is based on amendments to the upper inlet C-Plan.
Archer and Buccaneer parted ways in December after Buccaneer said it fired Archer for nonperformance and failure to pay subcontractors. Archer denied that, saying it terminated the agreement first and that all payments had been made to vendors and employees. Archer claimed there had been a history of delays in getting paid and it had seen issues with the scope of work for refurbishing the Endeavour.
The Endeavour is owned by Kenai Offshore Ventures, a consortium of Buccaneer, Ezion Holdings and the Alaska Industrial Development and Export Authority. Buccaneer is the managing partner in the group. Kenai Offshore Ventures bought the Endeavour in the fall of 2011 in Malaysia and moved it to the Keppel FELS Shipyard in Singapore in late 2011 for refurbishment. It hired Archer under a master services agreement to manage work in Singapore and Alaska.
In its counterclaim against Archer, Buccaneer alleged:
• Kenai Offshore Ventures could withhold payment to Archer for unsatisfactory work and until a dispute was resolved over that work;
• Archer said a short list of work needed to be done before the jack-up rig got American Bureau of Shipping certification, but after the Endeavour arrived in Homer, provided a 10-page, single-spaced list of work;
• Kenai Offshore Ventures believed the Endeavour would only need to be docked for a short time in Alaska while work was completed before heading to the upper inlet in September;
• Archer did work in Homer it had previously told Kenai Offshore Ventures was done in Singapore, and tried to charge Kenai Offshore Ventures for redoing that work;
• Archer did not provide 30-day notice to terminate its Master Services Agreement, and;
• Archer withheld documents and rig certificates needed for the Endeavour to get approval to work in Alaska.
Buccaneer spokesman Jay Morakis of JMR Worldwide said Kenai Offshore Ventures reproduced and got access to those documents without the help of Archer.
Kenai Offshore Ventures also disputes Archer’s claim that it is owed $6.5 million, saying that exceeded the initial $3.4 million estimate Archer gave when it signed the Master Services Agreement.
Because of Archer’s alleged nonperformance, Kenai Offshore Ventures estimates it has lost $175,000 a day in revenues, Buccaneer said in its counterclaim. Kenai Offshore Ventures seeks dismissal of Archer’s claims and to be awarded actual damages and other fees.
Morakis said Kenai Offshore Ventures would be filing its own counterclaim soon.
Phone and email messages for comment were sent to Archer Drilling, but a response had not been received by press time.
DEC had advised Buccaneer earlier that it had suspended review of its C-Plan for the Cosmo site and it would be sending another request for additional information. It sent that letter last week.
In the request for additional information, DEC sought clarification and more information on issues such as its financial responsibility, ice operations rules, how it would monitor lower Cook Inlet sea ice, and blowout and well control procedures. DEC said it would need that additional information before it can determine if the C-Plan is complete.
Michael Armstrong can be reached at michael.armstrong@homernews.com.
