Carter Baron Drilling v. Badger Oil Corporation

581 F. Supp. 59 (1984)

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Nature of the Case

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Facts

P and D entered into a contract executed on a standardized International Association of Drilling Contractors form on June 24, 1981. P was styled the 'contractor' and Dl was styled the 'operator.' The contract obligated P 'to furnish the equipment and labor to drill (a well for D) in search of oil or gas on a day work basis.' Paragraph 4 provided that 'D shall pay contractor' specified amounts for mobilization, for demobilization, for moving the rig, plus a payment for each day's operations. D allegedly explained to P that the working interest in the well was owned by Knee Hill Energy, Inc. and that as Knee Hill had no staff to operate the well, it had retained D to operate it on behalf of Knee Hill. Drilling commenced in August 1981. In September of that year D first experienced difficulty in collecting money from Knee Hill. It informed P that this was the reason why payments for the drilling work were in arrears. P allegedly discussed the matter directly with Knee Hill. This state of affairs continued until January 1982 when D resigned as operator because of continued difficulty in obtaining money from Knee Hill. P was paid no money by D but was paid approximately $950,000 on its account on the Chrisman No. 1 well by Knee Hill and the other working interest owners. P sued D and then moved for summary judgment on the issue of D's liability for breach of contract. P contends that the clause of the contract that reads 'operator shall pay to the contractor' is unambiguous. D's position is that as it was acting solely as Knee Hill's agent, it was under no duty to pay P if Knee Hill did not provide it with funds. D wants to introduce extrinsic evidence to prove this.