Alaska Drill Rig Refit Contract Terminated

Buccaneer Energy contextualizes termination of its contract with Archer Drilling as project manager of work on one of its jack-up rigs.

The contract was for Archer Drilling to act as project manager of modifications and repairs to the Endeavour-Spirit of Independence jack-up rig owned by Kenai Offshore Ventures, LLC, which is a joint venture between Buccaneer, Singapore based Ezion Holdings Limited and the Alaska Industrial Development and Export Authority (“AIDEA”). Buccaneer is the designated Manager of Kenai Offshore.

Archer Drilling was engaged by Kenai Offshore in October 2011 under a Master Services Agreement (“MSA”) to provide project management services for the modifications and repairs required to be undertaken to the Endeavour to allow it to operate in the Cook Inlet, Alaska.

Archer Drilling was chosen through a competitive tender process undertaken in 2011, where part of Archer Drilling’s claim was that they “set the standard in providing drilling maintenance and rig management services”. Additionally Archer Drilling personnel had worked on the Endeavour (then called the Adriatic XI) while undergoing shipyard work in 2008 through its subsidiary Rig Inspection Services (“RIS”).

Prior to the finalization of the acquisition of the Endeavour in November 2011 Archer Drilling and RIS inspected the Endeavour while cold stacked and were involved in the initial engineering surveys of the Endeavour. Additionally Archer Drilling and RIS compiled the detailed engineering scopes of work required to allow various contractors to submit quotes for the modification and repair work to be undertaken in Singapore. All of these early services provided by Archer Drilling were consistent with the terms of the MSA and for which Archer Drilling and RIS received full payment.

Kenai Offshore has been continually forced to undertake unanticipated work and to contribute unanticipated expenses. Archer Drilling’s failure to live up to its representations and contractual responsibilities under the MSA seriously undermined Buccaneer’s confidence in their ability to complete their work under the MSA and subsequently operate the Endeavour within the Cook Inlet while undertaking drilling operations, requiring the termination of Archer Drilling services and the identification of a replacement.