August 15, 2007
Thule Drilling project hits problems
Things appear to have gone sour for a Norwegian company that plans to get into the offshore rig business by reconstructing one jackup and building two others at yard in the Hamriyah Free Zone, in Sharjah, UAE.
Thule Drilling ASA reports that on August 2, it received a letter from QGM Group LLC of Dubai (which operates the yard in Sharjah.) The letter from QGM Group stated that it is "completely out of funds" and that the yard will close down permanently.
Thule Drilling says it has "made several attempts both before and after receiving this letter to settle the matter amicably, regretfully without success."
Thule Drilling ASA has been informed that QGM Group LLC's vendors and subcontractors have filed "writs" against QGM Group LLC.
As QGM Group LLC has admitted to be "completely out of funds" bankruptcy proceedings may be initiated by those vendors and subcontractors.
The registered titles of the jackups Thule Power, Thule Energy and Thule Force are vested with Thule Drilling ASA and it says its ownership to the rigs will not be affected by a bankruptcy.
In the event of a bankruptcy, says Thule Drilling, it will immediately initiate negotiations with the bankruptcy estate. The first priority will be to secure completion and delivery of Thule Power. This is the former Arab Drill 19 which Thule bought in 2005 for $2.5 million.
The two other rigs are newbuildings of the Friede & Goldman Super M2 design
Thule Drilling ASA has emphasized its contractual right to take control over the rigs and complete the rigs with the present workforce, material and equipment of QGM Group LLC's yard, but is still denied access to the yard and the rigs by QGM Group LLC.
Legal proceedings are continuing at the Court of Urgent Matters in the United Arab Emirates (UAE). As injunctive relief is not available under local law, these proceedings are not expected to be finalized in the immediate future.
Thule has also filed three separate criminal charges in the UAE against certain senior management members of QGM Group LLC, among others in connection with actions carried out by those individuals that Thule Drilling says it "considers to be fraudulent with the obvious intent to deny Thule Drilling ASA its rightful access and control over its assets at the QGM yard." These cases are currently under investigation by UAE authorities.
Thule Drilling has also initiated dispute resolution under the construction contracts by serving QGM Group LLC a notice of dispute, which has triggered a mandatory negotiation period before arbitration can commence.
In addition to the legal proceedings, Thule Drilling says it is also working to resolve the matter by assistance of the top management level of various administrative bodies in the UAE and through diplomatic channels. Thule Drilling ASA is also working with the Director General of the Hamriyah Freezone Authority, who, it says, supports a speedy resolution of the matter and is endeavoring to achieve that.
Thule Drilling ASA says it is confident that "justice will prevail and that the dispute will be resolved in its favor."