Case Studies
Experience Driven Results

Texas Oil Company Found Negligent When Dry Hole Drilled 600 Yards from Intended Target

Two years after drilling a dry hole in a Louisiana lake to the tune of $4.3 million, a Texas oil company and its working interest owners discovered the well had been drilled in the wrong location—600 yards from the intended target. The oil company demanded arbitration against our client, who provided a consultant to supervise drilling, and against the company that drilled the well and the company that towed the drilling barge into position.

After a full hearing, the arbitration panel accepted our proof that the drilling supervisor was not responsible for navigation of the drilling barge to the correct location. Although the consultant was on board the night of the tow, the contract specifically limited his duties to supervising drilling, and his pay began only after the drilling barge was set down and rigged up to drill. The towing company was hired only to tow the drilling barge out and set it down at the staked location. When they arrived at the staked location, the consultant, towing and drilling crew all assumed they were in the right spot. In an odd twist of fate, the operator had staked two separate locations 1800 feet apart, intending to drill a second well later, but failed to tell the drilling supervisor or the towing company that there were two staked locations. The panel found that the oil company retained responsibility for the drilling rig’s mobilization because it was not contractually delegated to anyone else, and that its failure to carry out that duty amounted to gross negligence. Our client was released of any liability for the $4.3 million it cost to drill the dry hole, and the oil company was held liable to its investors for its gross negligence, reimbursing the investors their $2.3 million share of the drilling costs.