Greymouth wins $780,000 from former executive

John Sturgess.

Greymouth Petroleum's former chief operating officer and his company have been ordered to pay almost $780,000 to the oil and gas firm for negligence associated with a fracking operation and a seismic survey programme in Taranaki.

The damages award against John Sturgess comes at the tail end of a long feud with his former colleagues on Greymouth's board, rich-listers Peter Masfen and Mark Dunphy.

This dispute saw Dunphy and Masfen get High Court orders forcing Sturgess' interests to sell their 14 per cent stake in the firm.

Before the same court, the two directors also complained about Sturgess' conduct while he was Greymouth's chief operating officer and sought damages from him and his company, JSAL.

In the ensuing judgment, Justice Murray Gilbert found Sturgess and his firm were liable to pay damages to Greymouth for negligence to do with two Taranaki operations.

The amount of these damages was not set at the time of the original decision in 2013 and Greymouth, Sturgess and his company came back to argue the matter in February.

Greymouth sought about $830,000 from the former director.

The bulk of this was related to a fracking operation at a Taranaki well at Sturgess' direction.

During this time, the well was not producing any gas and there were limited prospects of finding producible hydrocarbons.

Sturgess did not consult his fellow board members before proceeding with the operation and Judge Gilbert found the decision to proceed was negligent.

Sturgess and his company were found liable for the cost of the operation, less what would have been spent if a recommended mini-frac had gone ahead instead.

It was estimated by the engineer who recommended it that this mini-frac would have cost US$20,000 ($27,250).

The full-frac which Sturgess directed instead cost $733,000, according to Greymouth.

Sturgess claimed the mini-frac was "fatally flawed".

In his calculations, the judge set the costs of the full frac at $700,000 and the cost of the recommended mini-frac at $50,000.

He therefore awarded damages to Greymouth of $650,000.

In respect of a separate seismic programme Justice Gilbert set the damages at $129,630.