Team Banner
Energy Company vs. Construction Company

A construction company was contracted to move and erect a drilling rig owned and operated by a land drilling contractor. During the erection of the drilling rig the construction company dropped a section of the derrick causing damage to the derrick, substructure and one electrical house. This resulted in loss of dayrate and repair cost to the drilling rig. The construction company was sued for $3,261,372 in addition to payments made by its insurance company. The drilling contractor elected to build a new substructure and derrick versus repairing the damaged equipment. Review of the invoices and other documentation confirmed that other rig enhancements, in the amount of $1,100,000, were done at the same time which increased the capability of the rig including the depth it could drill laterally and as well as its efficiency. These enhancements increased the marketability of the rig. The $1,100,000 enhancements was included in the $3,261,372 asked for by the drilling contractor and was not associated with the original damage to the rig. The case was settled out of court.