5th Circuit Says Agreement Didn't Oblige Partner to Share Decommissioning Costs

NEW ORLEANS - An agreement to share royalties and drilling expenses on a particular block did not obligate the non-controlling party to share decommissioning costs of an oil rig damaged in a hurricane, the 5th Circuit Court of Appeals has affirmed. Apache Corp. v. W&T Offshore Inc., No. 09-31122 (5th Cir.).

The Circuit Court affirmed a ruling in favor of W&T Offshore Inc. on Nov. 16, agreeing with a lower court that no such obligation can be read into an agreement that is silent on the decommissioning issue.

At issue was a 1979 Farmout Agreement between W&T's predecessor, Atlantic Richfield …