Westfort Files Lawsuit Against Patterson Drilling

Westfort has filed a lawsuit in the Circuit Court of Rankin County Mississippi seeking damages from Patterson Petroleum L.P. and Patterson Drilling L.P. arising out of Patterson's conduct of the drilling and completion attempts of the Karges 18-3 No. 1 well in Pelahatchie Field, Rankin County, Mississippi.

Westfort's Complaint charges and alleges that Patterson committed numerous negligent acts in both the drilling and completion of the well together with conduct constituting several breaches of contract. The Complaint also charges Patterson with certain specified frauds. Actual and punitive damages are being sought from Patterson by Westfort. The actual damages demanded are those that are found by a jury to be just but not less than $2,000,000 (the cash payment by Westfort to Patterson) and the return of the 3,000,000 shares of Westfort stock in Patterson's possession. The punitive damages are to be ascertained by the jury but in an amount not less than 25 percent of Patterson's net worth.

Westfort's Complaint, among other things, charges that "Patterson

  • designed and installed the rigid ratchet-in assembly for the attempted completions of the Well without consulting with or obtaining the approval of Westfort. This assembly was defectively designed and has prevented completion of the Well "to the tanks" and now poses a formidable obstruction for any future testing, completion or production of oil and gas from the Well;
  • failed to case the bottom 118 feet of the Well in the sidetracked hole;
  • cemented a five inch liner to a total depth of only 17,181 feet which has prevented the testing and completion of a potentially productive Norphlet zone at 17,200 feet and has caused inadequate rat hole to be available for the production from and rework (when necessary) of a potentially productive Norphlet zone at 17,114 feet;
  • ignored the results of a cement bond log run to 17,168 feet that indicated the absence of an adequate cement bond of the five inch liner, negligently did not perform a protective squeeze to prevent channeling of water and perforated an interval at 17,120 to 17,130 feet in a potentially productive Norphlet zone that allowed the channeling of formation water with oil and prevented obtaining a definitive test of the perforated zone;
  • utilized a non-retrievable perforating gun that, after perforating, fell into the bottom of the hole and further reduced the rat hole and necessitates problematic operations to fish the gun remnant from the hole, the removal of which will be necessary to perform remedial squeezing in order to obtain a definitive test of the perforated zone."

The Complaint also charges Patterson with numerous breaches of its contract with Westfort, together with "negligent design, engineering and installation" and fraud.

As charged in the Complaint, Patterson "abandoned the Well and its contract obligations to Westfort." After the abandonment, Westfort retained consulting engineers with extensive and considerable background and experience in completion and production of similar deep wells in the area of the Karges well, who with Westfort's engineers, conducted studies to ascertain the appropriate and best method to obtain a definitive test of the Norphlet Formation in the well and to produce the same. The engineers determined that no definitive test of the perforated Norphlet Formation can be conducted until such time as the down-hole assembly installed by Patterson in the well has been removed. They further concluded that the potentially productive zone at 17,200 feet cannot be tested in the Karges well due to Patterson's cementing of the liner at 17,181 feet.

The numerous zones above the Norphlet Formation in the Karges well, which, from the logs and cores appear to be productive, may be tested and completed without the removal of the down-hole assembly. However, if they are tested and completed without removing the down-hole assembly, Westfort would be forever abandoning the Norphlet Formation in the well.

Repeated and exhaustive attempts have been made by Westfort to persuade Patterson to perform its obligations under its contract with Westfort and to amicably reconcile the differences existent between the companies without the necessity of a lawsuit.

Prior management met with Patterson's management to attempt to persuade Patterson to return to the well, to remove the down-hole assembly and to perform its obligations to Westfort. These efforts met with denial and refusal on the part of Patterson.

Upon his election as President and CEO of Westfort, Norris R. Harris resumed a dialog with Patterson's management and met with Patterson's CEO in a good-faith attempt to arrive at a mutually acceptable conciliation of the two companies' differences. Patterson's demands were unreasonable, obdurate, adamant, threatening and unyielding and therefore, completely unacceptable. This obstinate and inflexible posture on the part of Patterson has left no recourse to Westfort but to bring this lawsuit to seek redress of its grievances and obtain compensation for the grievous wrongs committed by Patterson in its cavalier treatment of Westfort.

It is the opinion of Westfort's management that this lawsuit should have been filed months ago.

Headquartered in Jackson, Mississippi, Westfort Energy Ltd., is an independent oil & gas exploration and development company, operating through its wholly owned subsidiary Westfort Energy (U.S.) Ltd. The Company currently holds leases to oil, gas and mineral rights that comprise a majority interest in three, known producing fields: Pelahatchie, Pickens and Gillsburg, all located within a 125-mile radius of Jackson. Westfort also operates its own workover and drilling rigs.