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Gold/Mining/Energy : KOB.TO - East Lost Hills & GSJB joint venture -- Ignore unavailable to you. Want to Upgrade?

To: Salt'n'Peppa who wrote (4999)	9/20/1999 11:16:00 AM
From: Poseidonas	Read Replies (1) \| Respond to of 15703

S&P and Grayhairs: Regarding ELK An interesting post on Bullboards which makes a lot sense: " I have posted previously that I favor ELK at this point. I would like to comment regarding certain suggestions of legal action pending against ELK which have been raised on the SI thread. I am not a lawyer, however I have quite a lot of experience at the provincial supreme court level...having brought actions against numerous individuals/organizations, winning in each case. Law suits tend to send shivers down to one's toes, however, in reality they are just business. The suggestion on SI is that ELK may be on the receiving end of littigation concerning the blow out....the number $34M was also suggested. The suggested reason for the action was negligence. I would like to point out a couple of important things here (and before I say anything, I point out that I have not heard any information on this subject other than rumor). Firstly, Bellevue Resources Inc was the operator at the time of the blow out. Although this firm is a wholly owned subsidiary of ELK, it is nevertheless a limited liability corporation. Limited liability protects shareholders from loss (the shareholder being ELK). Directors (ie Bellevue's) are not alway immune from legal action (and as a result usually carry contingent liability insurance to protect against law suits), but the shareholders are usually free and clear. Now thats not much help if Bellevue also happens to hold the ELH and surrounding assets, but nevertheless its information which got left out the of the rumor mill! Someone else will need to comment on that one (which firm holds the ELH assets). With regard to negligence. This is the omitting to do something that a reasonable person would do, or the doing of something that a reasonable person would not do. If this is what caused the blow out, and it can be proved on the balance of probabilities (the insurance firm would carry the burdon of proof) then the suggested legal action probably has merrit, and the insurance firm will likely get reinbursed. However, if anything else caused the blow out.....ie, caught by surprize...more pressure or more permeability or equipment failure etc, in short, if the rig crew acted reasonably, then the action would likely be unsuccessful. The next issue to consider is timing....it always seems to take about 2 years to get a trial date.....so don't expect anything material in the near term. An appeal date seems to take about further year ish. Finally there is the issue of who's on the hook IF there was negligence in the blow out (I have NO knowledge here, I assumed it was an accident. My assumption of an accident was further supported by instruction from ELK a few months ago that the insurance company was reinbursing the costs of plugging the blow out, and my belief that no payments would have been made if the blow out was caused by negligence) If an action is brought, and IF it is successful, and IF it gets through an appeal, and IF it matters to ELK, expect the other partners to be asked to pay up their share....with a court order if needed."