Seconds Out

Only once in my thirty years in the upstream industry have I seen a negotiation turn into a fist fight. This was in an argument between co-venturers over the location of an appraisal well. An appraisal well is designed to test the extent of a discovery.

Normally such disputes are resolved by a passmark vote of the Joint Operating Committee, but in this case there was deadlock. The group was evenly divided and neither of the competing proposals could reach the required passmark.

The dispute was whether the well should be drilled to the north or the south of a geological fault visible on the seismic data. The difference between the two proposed locations was only fifty yards, but the geologists on both sides were passionately convinced that the oil was on their side.

The argument began to get heated, and personal. The Chairman of the Committee called a break to allow tempers to cool, but the two protagonists left the room and a fight broke out, leaving one of them with a bloody nose. American negotiators use the phrase “blood on the carpet” to describe a particularly vicious negotiation, but this was the first time I had actually seen it.

We agreed to decide the issue by the toss of a coin, an unconventional but essential solution if the well was to be drilled at all. As a result the well was drilled to the north of the fault and found oil. The next well found oil to the south of the fault also.

I jokingly asked my colleagues in the Legal Department whether this should be adopted as a means of resolving deadlocks in meetings – three five minute rounds and a knock out to decide it?

My learned friends reminded me that the English common law started in the reign of King Henry II (1154 – 1189) with the great Writ of Right, where disputes over land were decided by trial by battle. The truth or falsity of conflicting oaths was tested by armed combat between the claimants, often to the death. It was supposed that God would not allow the right to be defeated. We common lawyers are the direct descendants, in every sense, of those medieval combatants.

In a modern court room you do not see trial by battle, but you do see a highly adversarial procedure, with oaths and ritual, intended to give a final answer to the question guilty or not guilty.


See also: Junkyard Dog

Chris Thorpe

Chris Thorpe is a respected independent lawyer in the upstream oil and gas industry, and an established lecturer and author. Chris has a LLB in law from Magdalene College, Cambridge and trained as a barrister in London. He worked for eight years' as an in-house lawyer for BP and Marathon. Since 1991, Chris has run his own upstream legal practice, CPTL, which has acted for many upstream clients. He has extensive experience of international upstream transactions, principally in the North Sea, the FSU, Africa and the Middle East. Chris has spoken at many UK and International Conferences and Seminars, both public and in-house. His most popular current lecture is Fundamental of Upstream Petroleum Agreements, a two-day course with accompanying book.