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    Judgement in favour of DSND in proceedings against PGS

    News // August 11, 2000
    DSND Subsea Ltd issued proceedings out of the English High Court against Petroleum-Geo Services ASA and PGS Offshore AS. The judgement, made at the end of July, found in favour of DSND on all issues.

    DSND's claim relates to payment in excess of 17 million in respect of the subsea installation work performed by DSND for PGS as part of the Banff field development project. The Banff field is situated in the UK sector of the North Sea.

    On 16th July 1999, the High Court ordered that the case be broken down into separate issues, to be tried over three different periods. The trial of the first set of issues started on 12th June 2000, lasted 13 days.

    This first phase was related to a sum in the region of 10 million and costs and interest.

    The trial of the second set of issues will start on 13 November 2000 and will continue for 20 days. If required, there will be a third trial on 24 April 2001, which will continue for 15 days.

    On 14 January 2000, the Court identified the issues that it would hear during the first trial period. It allowed DSND and PGS to instruct two single joint experts to give expert opinion evidence in relation to: (a) The capability of MSV Fennica to perform part of the Banff field installation work; and (b) equipment connecting the subsea flexible risers to the turret of the Banff FPSO which had become known as the RTIAs.

    During the first trial, the court heard evidence relating to the following issues:

    (a) Whether PGS was entitled to avoid paying DSND under a number of signed supplemental agreements. The dispute centred on the circumstances of how those agreements were made and covered issues of alleged economic duress and alleged misrepresentation about the capability of one of DSND's vessel, MSV Fennica, to perform the work for PGS. DSND strenuously denied both of PGS's allegations;(b) Whether PGS was entitled to terminate the contract. DSND maintained that PGS's termination was wrongful. PGS claim for an appeal was denied. The judgement is therefore final.

    DSND are also claiming a sum of approximately 7million. DSND are confident that there is no merit in PGS's counterclaim , which DSND are, advised is misconceived and lacks substantiation. DSND's lawyers have made an application to the court requesting PGS's lawyers to particularise their claim.

    PGS released the following statement in order to address certain issues raised in recent press articles regarding the Company's ongoing dispute with DSND.

    "The Company has been invoiced certain costs related to the subsea and riser installation work on the Ramform Banff which have been in dispute since 1998. The Company has disputed the charges and has, in addition, filed a counterclaim against DSND for anamount that is approximately the same as the amount recently awarded DSND in the first phase of the court case.

    With respect to the ongoing litigation, there will be three phases to the court case. The first phase concluded on July 28, 2000 in favour of DSND, the second phase will be heard in November 2000 and the third phase is scheduled for April 2001.

    Reidar Michaelsen, PGS' chairman and chief executive officer, stated, "While we are clearly disappointed with both the outcome of the first phase and the order in which each phase is being heard by the court, the negative outcome with respect to the first phase was not unexpected and we remain optimistic with respect to the second and third phase of the court case."

    Michaelsen went on to say, "Several of the DSND invoices were recorded in the Company's accounts pending resolution of the dispute and any incremental payments that may be awarded to DSND as they relate to this dispute would likely further increase our investment in the Banff asset, with a minimal impact on our future earnings."

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