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Samsung Heavy wins against U.S. drilling firm in damage suit

Samsung Heavy Industries Co. has won a lawsuit against Pacific Drilling S.A. (PDC), an American offshore drilling company, eliminating the risk related to the years-long legal battle.

According to industry sources on Wednesday, a high court in London rejected PDC’s appeal against an earlier ruling by an arbitration tribunal in London. In January, the court had ordered PDC to compensate $318 million to Samsung Heavy for cancellation of a drill ship order.

The South Korean shipbuilder received the order from PDC in 2013 to build a drill ship. But the U.S. company notified in October 2015 that it would terminate the contract, claiming that the shipbuilder was delaying the construction.

PDC can proceed with remaining appeals procedures, but its bid will likely be rejected.

Samsung Heavy can collect the damage if the U.S company accepts the ruling.

The latest triumph removed the drill ship risk entirely from the shipbuilder. It has been embroiled in damage suits over cancellation of five drill ships for the past few years.

The company set aside more than 100 billion won ($88.2 million) as allowance for the case. If it is retrieved in the fourth quarter, the company’s balance sheet would improve significantly.

The win will likely boost the company’s chances for further orders. It recently secured a $110 million worth order from a European company to build two Suezmax crude tankers, and is set to sign a contract with Russia to build 10 liquefied natural gas (LNG) carriers. The value of the deal with Russia is estimated to reach 3.6 trillion won.

Samsung Heavy has won around $1 billion worth orders so far this year, reaching just 12 percent of its target.

Shares of Samsung Heavy Industries fell 1.17 percent to end Thursday at 5,050 won in Seoul.
Source: Pulse

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