Nabors back in Algerian court for multimillion-dollar battle
The Bermuda registered owner and operator of one of the world's largest land-based drilling rig fleets, is in an Algerian court today (Monday), facing a multimillion-dollar judgment — a ruling against the company that Algeria’s Supreme Court has already twice thrown out.
Judicial proceedings in the African country involve a near-11-year-old currency dispute and a $21-million judgment assessed against Nabors Industries Ltd in March 2011 by a court in Ouargla Province.
The court had entered the judgment against Nabors relating to alleged violations of Algeria’s foreign currency exchange controls, which require that goods and services provided locally be invoiced and paid in local currency.
Nabors also is a provider of offshore platform rigs in the United States and numerous international markets.
The company provides directional drilling services, performance tools and innovative technologies for its own rig fleet and those of third parties.
Leveraging advanced drilling automation capabilities, Nabors announced last week that it had deployed the first fully automated land rig to successfully drill its first well.
Nabors drilled wells for the Spanish operator CEPSA in 2006. CEPSA paid Nabors $7.5 million of the total contract amount offshore in foreign currency, and approximately $3.2 million was paid in local currency.
This discussion was contained in a Nabors 10-Q filing to the US Securities and Exchange Commission for the quarter that ended in June.
Nabors said in the filing: “The judgment includes fines and penalties of approximately four times the amount at issue.
“We have appealed the ruling based on our understanding that the law in question applies only to resident entities incorporated under Algerian law.
“An intermediate court of appeals upheld the lower court’s ruling, and we appealed the matter to the Supreme Court.”
On September 25, 2014, the Supreme Court overturned the verdict against Nabors and the case was heard again by the Ouargla Court of Appeals on March 22 the following year in light of the Supreme Court’s opinion.
But seven days later, the Ouargla Court of Appeals reinstated the initial multimillion-dollar judgment against the company.
Nabors again appealed the decision to the Supreme Court, which annulled the decision of the Ouargla Court of Appeals and sent the case back to the Court of Ouargla for further proceedings today, consistent with the Supreme Court’s ruling.
Nabors stated in the filing: “While our payments were consistent with our historical operations in the country, and, we believe, those of other multinational corporations there, as well as interpretations of the law by the Central Bank of Algeria, the ultimate resolution of this matter could result in a loss of up to $13.0 million in excess of amounts accrued.”