Reports that the United States Government is set to issue a new ban on deep sea drilling in U.S. waters in response to the Deepwater Horizon oil spill, could cause a further spate of force majeure claims under drilling contracts in the Gulf of Mexico. Press reports indicated that at least one drilling contract has already come before the Louisiana courts in connection with such claims. Other consequences of the drilling ban could include wasted operating costs, wasted rent during a non productive period of the lease, loss of future production, and even the reclassification of reserves if production from fields becomes less likely.

What is the upshot for companies affected by the drilling ban or similar government action elsewhere?

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