Background and Contractual Framework

ENSCO Offshore, L.L.C. contracted with Cantium, L.L.C. under a Master Offshore Drilling Services Contract executed May 9, 2022, to provide drilling services for Cantium's offshore oil and gas wells, including the Kings Hill well near the Louisiana coast. Operations commenced in November 2022 with an expected duration of 250 days but ultimately lasted 397 days. Cantium timely paid ENSCO's monthly invoices from November 2022 through July 2023, but ceased payment beginning in August 2023. In September 2023, the Kings Hill well was "lost," requiring ENSCO to redrill. Cantium refused to pay any invoices for work performed between August and December 2023, prompting ENSCO's breach of contract action in February 2024.

The Consequential Damages Dispute

Cantium counterclaimed for over $22.8 million for loss of the Kings Hill well and more than $4.5 million in other costs including spread costs, alleging ENSCO's gross negligence and willful misconduct caused delays justifying consequential damages. ENSCO moved for partial summary judgment, arguing that Section 15.21 of the drilling contract contained a mutual waiver of all consequential losses including spread costs, and that Section 15.6 limited Cantium's remedy for the lost well to redrilling at a specified rate. Cantium countered that Section 15.16's exception for gross negligence or willful misconduct vitiated the consequential damages waiver, creating a triable issue of fact.

The Fifth Circuit's Contract Interpretation

Applying federal admiralty law's general contract principles, the Fifth Circuit panel unanimously affirmed the district court's grant of summary judgment. The court emphasized that Section 15.21's mutual waiver explicitly listed "consequential loss" (defined to include "spread costs") among waived damage categories, while Section 15.6 made redrilling ENSCO's obligation and "[Cantium]'s sole and exclusive remedy" for a lost well. The panel found this language dispositive, noting that

"sole and exclusive" meant it was the party's only remedy

and that neither provision incorporated any exception for gross negligence or willful misconduct. Critically, the court observed that the phrase "gross negligence and/or willful misconduct" appeared elsewhere in the drilling contract, including Section 9.1(F), but was conspicuously absent from Sections 15.6 and 15.21, while Section 15.16—the provision Cantium relied upon—addressed only third-party indemnification obligations.

Chief Judge Elrod's Concurrence and Unresolved Maritime Law Question

Chief Judge Elrod authored a separate concurrence highlighting an "unsettled question in our law of maritime contract pertaining to exemptions from liability for acts of gross negligence." She noted the tension between Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d 401 (5th Cir. 1982), which stated that gross negligence "will invalidate an exemption from liability," and Coastal Iron Works Inc. v. Petty Ray Geophysical, 783 F.2d 577 (5th Cir. 1986), which suggested such clauses are not void as a matter of public policy between parties with equal bargaining strength. Judge Elrod emphasized that

"[n]either the Supreme Court nor our court has resolved whether parties are permitted to contractually indemnify parties for claims of gross negligence,"

and called for the Fifth Circuit to address this question in an appropriate future case to provide "predictability for those entering maritime contracts and clarity for district courts in our circuit."

Practice Implications for Offshore Drilling Contracts

This decision provides critical guidance for drafting and litigating offshore drilling services agreements in the Fifth Circuit. Sophisticated parties can enforce mutual waivers of consequential damages—including for catastrophic well losses and spread costs—provided the contractual language is sufficiently clear and does not explicitly incorporate exceptions for gross negligence or willful misconduct in the relevant waiver provisions. The opinion underscores the importance of holistic contract review: the mere presence of gross negligence exceptions in indemnification clauses will not automatically vitiate consequential damages waivers in separate risk allocation provisions. For operators and drilling contractors negotiating Master Offshore Drilling Services Contracts, the decision confirms that carefully drafted "sole and exclusive remedy" language will be enforced according to its plain terms, even where multi-million dollar losses are at stake. However, Chief Judge Elrod's concurrence signals that the broader public policy question regarding gross negligence indemnification remains unresolved, leaving open the possibility of future circuit guidance that could reshape risk allocation in maritime oilfield contracts.