HOUSTON (Dow Jones)–Contract drillerNoble Corp. (NE) is suing Marathon Oil Corp. (MRO) and seeking damages for terminating a four-year, $752 million deal to lease an ultra-deepwater rig in the Gulf of Mexico, the company said in a securities filing Friday.
Houston-based oil producer Marathon terminated the contract on Noble’s Jim Day rig in January, saying Noble failed to provide the rig according to the requirements specified in the drilling contract. Marathon also maintained that a force majeure condition existed under the contract.
Noble said it “believed the rig was ready” to start operations and should have been accepted by Marathon, according to documents it filed with the Securities and Exchange Commission.
Noble is seeking damages that include the rig’s $42 million mobilization fee and the $515,000 a day rate for the term of the contract, according to the lawsuit the company filed with Harris County district court here.
Deepwater drilling operations in the Gulf of Mexico were frozen by the U.S. government following BP PLC’s (BP, BP.LN) oil spill last year. The moratorium was lifted and companies are slowly returning back to the area to drill. But while the ban was in place, some energy producers sought to terminate contracts that often cost more than $500,000 a day even if the rigs were not drilling.
“This is a case of rig-buyer remorse,” Noble’s lawyers wrote in the lawsuit. “That remorse was precipitated by a perfect storm of drastically changed economic circumstances, a resulting decline in oil prices and deadly and headline-grabbing deep water rig explosion.”
Marathon spokeswoman Lee Warren said the company believes the lawsuit is without merit. The company “intends to defend itself vigorously in this case,” she said in a emailed statement.
“Noble’s failure to timely meet the acceptance criteria for the rig raised serious concerns over the crew’s and rig’s readiness to safely conduct operations” in the Gulf of Mexico, Warren said.
-By Isabel Ordonez and Ben Lefebvre
Image: Noble ‘Jim Day’ courtesy Noble Corp.