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Shell Oil contractor’s felony plea shows value of legal-compliance and indemnity clauses

Noble Drilling, an oil-well drilling contractor, pled guilty to eight felony charges relating to Noble’s operation of two offshore drilling rigs in the Arctic for Shell Oil. (Noble apparently had problems with pollution, propulsion equipment failures and record-keeping.) Shell doesn’t seem to have been charged. See Jennifer A. Dlouhy, Arctic charges result in guilty plea, Houston Chronicle, Dec. 9, 2014, at D1 col. 1.

It’s a safe bet that Shell Oil’s contract with Noble Drilling included at least two types of provision requiring Noble Drilling to:

  • comply with applicable law; and
  • “handle it,” that is, defend and indemnify Shell Oil (and probably all of its affiliates) if something were to go wrong on the legal-compliance front.

See, for example, the Common Draft compliance-with-law section, which goes into detail about just what laws must be complied with and also includes an indemnity clause. (I took a quick look at Noble Drilling’s SEC filings but didn’t see that it had filed any drilling contracts.)

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