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    Court ruling announced in Balder dispute

    News // August 15, 2003
    At the end of July, the Stavanger District Court reached its decision in the dispute between Smedvig and Esso with regard to the completion of the Balder production vessel. The court concluded that Esso had the right to terminate the sales and purchase contract and the operating contract. On the other hand, the court has concluded that all contractual limitations of responsibility are applicable. Furthermore, the court has rejected Esso's claim of gross negligence on Smedvig's part. Smedvig has to pay NOK 509 million to Esso as compensation for completion and guarantee work and USD 3.5 million as part refund of the purchase price. In addition to these amounts, a preliminary estimated net interest of NOK 150 million will apply.

    Esso has to pay Smedvig NOK 23.5 million as compensation for extra work, undisputed change orders and income earned under the operations agreement.

    The court concluded that each party is responsible for their own litigation costs.

    Smedvig's contract with Esso is, on most issues, "back-to-back" with the building contract with the construction yard in Singapore. Any claims for damages Smedvig is instructed to pay Esso in a final ruling, will be claimed from the yard and under relevant insurance coverage.

    Smedvig said the results of the ruling will be reflected in the company's result for the second quarter this year.

    "We are disappointed with the court's decision, and must conclude that we did not succeed in convincing the Stavanger District Court of our view. On the other hand, it should be pointed out that Esso has only succeeded with less than 20 percent of its total claim. We will now use the next four weeks to assess whether or not we will appeal the ruling. Should the ruling be final, Smedvig has the financial strength to cover this loss from its own cashflow and existing loan arrangements", says CEO Kjell E Jacobsen.

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