Long-term contracts may present various risks and issues in market upcycle

As the offshore drilling market continues its recovery from the post-COVID downturn, drillers must be aware of the risks and pitfalls they may face while executing longer-term contracts that were signed in a weaker market. Glenn Kangisser, Partner at Haynes and Boone, discussed some of those risks in this interview with DC, taken at the 2024 IADC Contracts and Risk Management Conference in Houston on 9 October. In particular, he spoke about how current contracts now burden drilling contractors with onerous performance clauses, limited mutual indemnities and difficulties in recovering increased costs. He also discussed the importance of clauses for non-payment remedies and interest on late payments, stressing the importance of putting mechanisms in contracts that allow contractors to recover increased costs due to changes in law or the location of operations.