IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-60152

ZENERGY, INCORPORATED, 

 Plaintiff - Appellant

v.

PERFORMANCE DRILLING COMPANY, L.L.C., 

 Defendant - Appellee

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 3:10-CV-483

Before KING, DAVIS, and OWEN, Circuit Judges.

PER CURIAM:*

Plaintiff-Appellant Zenergy, Inc., appeals the district court’s grant of a 

directed verdict in favor of Defendant-Appellee Performance Drilling 

Company, L.L.C., in this action for breach of a daywork oil and gas drilling 

contract. For the following reasons, we AFFIRM the judgment of the district 

court.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

March 17, 2015

Lyle W. Cayce

Clerk

 

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I.

Zenergy, Inc., hired Performance Drilling Company, L.L.C., to drill an 

oil well in Calcasieu Parish, Louisiana. The well was intended to be a vertical 

well with a bottom hole depth of 11,800 feet. The contract Zenergy and 

Performance entered into was an International Association of Drilling 

Contractors (“IADC”) form onshore daywork drilling contract (the “Contract”). 

Zenergy was the operator1 under the Contract and Performance was the 

drilling contractor.2

Prior to beginning work on the well, Zenergy gave Performance a copy of 

the drilling procedure, which indicated that the well was to be drilled 

vertically.3 Under the terms of the Contract, Performance was to provide a 

conventional drift indicator, which is a tool used to measure the deviation of 

the wellbore. The conventional drift indicator that Performance provided was 

called a “Sure Shot.”

Performance began drilling in December 2008. In addition to 

Performance’s drilling crew, Zenergy had a company representative, Dean 

Dick, present at the drilling site. Per Zenergy’s instructions, Performance 

conducted deviation surveys every 1,000 feet. The results of those deviation 

surveys, along with other information about the progress of the well, were 

logged on API-IADC form daily drilling reports (which were given to Zenergy). 

For the first few weeks of drilling, the Sure Shot surveys showed a deviation 

1 In the context of the oil and gas business, an operator is “[t]he company that serves 

as the overall manager and decision-maker of a drilling project.” Entry for Operator in The 

Oilfield Glossary, Schlumberger, http://glossary.oilfield.slb.com/en/Terms/o/operator.aspx. 2 A contractor is “[t]he company that owns and operates a drilling rig.” Entry for 

Drilling Contractor in The Oilfield Glossary, Schlumberger, http://glossary.oilfield.slb.com/

en/Terms/d/drilling_contractor.aspx. 3 The parties apparently agree that, for purposes of this case, a well with a deviation 

of less than five degrees from true vertical would be considered a vertical well.

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of less than one degree.4 Then, on January 2, 2009, a Sure Shot survey ran at 

9,504 feet reported a deviation of seven degrees or greater.5 Performance 

called out a technician who examined—and ultimately replaced—the Sure

Shot tool. On the field ticket for replacing the Sure Shot, the technician wrote 

“pendulum bent.” Meanwhile, Zenergy called in a third-party contractor, 

Multi-Shot, to perform a more-accurate gyroscopic deviation survey. Because 

the Multi-Shot technician mistakenly downloaded data from a different 

deviation survey, the Multi-Shot survey reported a deviation of only two 

degrees. Their concerns settled, Zenergy instructed Performance to resume 

drilling.

The surveys on the new Sure Shot continued to report a deviation of two 

and one quarter degrees or less, and the well was drilled to a depth of 11,060 

feet. Zenergy then called out Schlumberger, another third-party contractor, to 

“log” the well. Schlumberger informed Zenergy that its hole was severely 

deviated. Incredulous, Zenergy called Multi-Shot back out to perform another 

gyroscopic deviation survey. This time, the correct data was downloaded, and 

the Multi-Shot survey showed that Zenergy had a wellbore that was deviated 

by twenty degrees and horizontally displaced by 1,145 feet. Zenergy then had 

the drill backed up to a point where the wellbore was still vertical, had the 

deviated portion of the wellbore cemented in, and had the hole redrilled as a 

vertical well.

4 What the Sure Shot tool actually reported was hotly contested at trial, but, given the 

posture of this case, we view the evidence in the light most favorable to Zenergy. See Hagan 

v. Echostar Satellite, L.L.C., 529 F.3d 617, 622 (5th Cir. 2008) (reciting that in reviewing a 

Rule 50(a) motion for judgment as a matter of law “we view all of the evidence in the light 

and with all reasonable inferences most favorable to the party opposed to the motion” 

(internal quotation marks omitted)).

5 The Sure Shot tool used in this case could only record a deviation of up to seven 

degrees. As such, the deviation may have been—and in fact was later shown to have been—

greater than seven degrees.

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After the well was completed, Zenergy paid Performance for only the 

days during which the wellbore was deviated by less than five degrees. The 

parties met in Houston to attempt to resolve their dispute but were ultimately 

unsuccessful.

Zenergy sued Performance in Louisiana state court seeking a declaratory 

judgment stating that it owed no further money to Performance under the 

Contract. Performance counterclaimed alleging breach of contract and seeking 

payment for the twenty-three days of drilling for which Zenergy has not paid. 

Performance removed the action to federal court and it was transferred to the 

Southern District of Mississippi. Before the district court, Zenergy argued that 

it owed Performance no further payment because Performance breached the 

Contract by drilling a deviated well, failing to provide a working conventional 

drift indicator, failing to provide accurate reports, violating the covenant 

requiring compliance with Louisiana law, and failing to perform in a good and 

workmanlike manner. After a six-day jury trial, the district court granted 

Performance’s motion for a directed verdict, holding that under the Contract 

Zenergy bore all of the risk of a deviated wellbore. Nevertheless, the district 

court concluded that Performance could still be held liable for fraudulent acts 

notwithstanding the Contract, and therefore the district court instructed the 

jury only on an intentional misrepresentation cause of action that neither 

party had pleaded. The jury returned a special verdict finding Performance 

not liable.6 Zenergy timely appealed.

6 Zenergy argues that the district court erred in instructing the jury on an intentional 

misrepresentation theory of recovery on the basis of implied consent under Federal Rule of 

Civil Procedure 15(b)(2). Rule 15(b)(2) states that “[w]hen an issue not raised by the 

pleadings is tried by the parties’ express or implied consent, it must be treated in all respects 

as if raised in the pleadings.” Fed. R. Civ. P. 15(b)(2). Assuming arguendo the district court 

erred in so doing, we find that such error is harmless. See Fed. R. Civ. P. 61 (“At every stage 

of the proceeding, the court must disregard all errors and defects that do not affect any party’s 

substantial rights.”). Zenergy argues that it was prejudiced by the district court sending the 

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II.

This court reviews a district court’s ruling on a Rule 50 motion for 

judgment as a matter of law de novo, applying the same standard as the district 

court. Flowers v. S. Reg’l Physician Servs., 247 F.3d 229, 235 (5th Cir. 2001). 

Judgment as a matter of law may be granted “[i]f a party has been fully heard 

on an issue during a jury trial and the court finds that a reasonable jury would 

not have a legally sufficient evidentiary basis to find for the party on that 

issue.” Fed. R. Civ. P. 50(a)(1). In deciding a motion for judgment as a matter 

of law, we view the evidence in the light most favorable to the non-moving 

party. Hagan, 529 F.3d at 622.

“Interpretation of a contract is the determination of the common intent 

of the parties.” La. Civ. Code art. 2045; see also Sovereign Ins. Co. v. Tex. Pipe 

Line Co., 488 So. 2d 982, 984 (La. 1986). “When the words of a contract are 

clear and explicit and lead to no absurd consequences, no further 

interpretation may be made in search of the parties’ intent.” La Civ. Code art. 

2046; see also Sims v. Mulhearn Funeral Home, Inc., 956 So. 2d 583, 589 (La. 

2007). In interpreting the words of a contract, the words “must be given their 

generally prevailing meaning;” however, “[w]ords of art and technical terms 

must be given their technical meaning when the contract involves a technical 

matter.” La. Civ. Code art. 2047. When the words of the contract are 

ambiguous, they “must be interpreted as having the meaning that best 

conforms to the object of the contract.” La. Civ. Code art. 2048. When the 

intentional misrepresentation claim to the jury because, as it never pleaded or argued for 

such a claim, Zenergy had no opportunity to put on evidence to prove such a claim. Yet we 

fail to see how, in this particular situation, Zenergy was prejudiced by being unable to put on 

evidence of a claim it never intended to bring in the first place. As the jury returned a verdict 

finding Performance not liable for intentional misrepresentation, Zenergy is in exactly the 

same position it would have been in had the district court not instructed the jury as to an 

intentional misrepresentation claim.

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parties to a contract have “made no provision for a particular situation, it must 

be assumed that they intended to bind themselves not only to the express 

provisions of the contract, but also to whatever the law, equity, or usage 

regards as implied in a contract of that kind or necessary for the contract to 

achieve its purpose.” La. Civ. Code art. 2054. Equity “is based on the 

principles that no one is allowed to take unfair advantage of another and that 

no one is allowed to enrich himself unjustly at the expense of another,” whereas 

usage “is a practice regularly observed in affairs of a nature identical or similar 

to the object of a contract subject to interpretation.” La. Civ. Code art. 2055.

There are, broadly speaking, three types of contracts for the drilling of 

an onshore oil and gas well: the daywork contract, the footage contract, and 

the turnkey contract. Owen L. Anderson, The Anatomy of an Oil and Gas 

Drilling Contract, 25 Tulsa L.J. 359, 374 (1990). Generally speaking, in a 

daywork contract, the operator pays the contractor a fixed price per day to drill 

the well and assumes all of the risks of the drilling operation except for those 

expressly assigned to the contractor. See id. At the other end of the spectrum 

is the turnkey contract, in which the operator pays the contractor a fixed price 

for drilling the well to a specific depth or formation and the contractor assumes 

considerably more risk due to his general control over the drilling operation. 

Id. at 378.7 A footage contract falls between the two, with the contractor being 

paid a fixed price per foot of well drilled and assuming greater risk than under 

a daywork contract but less risk than under a turnkey contract. Id. at 376–77. 

The hallmark of each type of contract is the amount of control the operator has 

over the drilling operation. See id. at 375 (“Under the traditional daywork 

contract, the operator is in charge of directing the drilling operation. In other 

7 It is called a turnkey contract because, “[u]nder a ‘pure’ turnkey contract, in the 

event a commercial quantity of oil or gas is discovered, the contractor completes the well so 

that the operator may simply ‘turn the key’ to commence production.” Id.

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words, a daywork contract is similar to the contractor’s lease of a rig, related 

equipment, and crew to the operator.”); id. at 377 (“The IADC footage contract 

specifies that the operator is an independent contractor, and that the 

‘Contractor shall direct, supervise and control drilling operations and assumes 

certain liabilities to the extent specifically provided for herein.’ Accordingly, 

at the outset the contractor more clearly assumes the general risk associated 

with drilling under a footage contract rather than a daywork contract.”); id. at 

378 (“In general, a drilling contractor assumes more risk under the turnkey 

contract than under the other types of contracts because the contractor has 

general control of all drilling operations.”). As under a daywork contract the 

contractor has less control over the drilling operation than under a turnkey 

contract, the contractor assumes only “specified risks, while the general risk of 

delay and the risk of liabilities not assumed by the contractor are on the 

operator.” Id. at 375.

The Contract signed by Zenergy and Performance is a form IADC 

daywork drilling contract. Zenergy argues that Performance breached the 

Contract by (a) failing to drill a vertical well in accordance with Zenergy’s 

instructions, though no provision of the Contract expressly required that the 

well be vertical; (b) failing to comply with Louisiana law, in breach of 

paragraph 8.3 of the Contract (“Each party hereto agrees to comply with all 

laws, rules, and regulations of any federal, state or local governmental 

authority which are now or may become applicable to that party’s operations 

covered by or arising out of the performance of this Contract.”); failing to 

provide accurate reports of the work performed, in violation of paragraph 8.4 

of the Contract (“Contractor shall keep and furnish to Operator an accurate 

record of the work performed and formations drilled on the IADC-API Daily 

Drilling Report Form or other form acceptable to Operator.”); failing to furnish 

a working conventional drift indicator, in violation of exhibit A, paragraph 4.4 

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of the Contract (indicating that a “Conventional drift indicator” “shall be 

provided at the well location at the expense of Contractor”); and failing to 

perform its obligations under the Contract in a good and workmanlike manner, 

in violation of an obligation to do so implied in the Contract by Louisiana law. 

Yet none of the provisions of the Contract cited by Zenergy speaks to the 

allocation of the risk of a deviated wellbore. See La. Civ. Code art. 2054 (“When 

the parties made no provision for a particular situation, it must be assumed 

that they intended to bind themselves not only to the express provisions of the 

contract, but also to whatever the law, equity, or usage regards as implied in a 

contract of that kind or necessary for the contract to achieve its purpose.”); La. 

Civ. Code art. 2045 (“Interpretation of a contract is the determination of the 

common intent of the parties.”).

The Contract does, however, begin by stating that Performance was to 

“furnish equipment, labor, and perform services . . . for a specified sum per day 

under the direction, supervision and control of [Zenergy].” Given this 

allocation of control over the drilling operation, the Contract states that 

Performance “assumes only the obligations and liabilities stated herein” and 

that “[e]xcept for such obligations and liabilities specifically assumed by 

[Performance], [Zenergy] shall be solely responsible and assumes liability for 

all consequences of operations by both parties while on a Daywork Basis, 

including results and all other risks or liabilities incurred in or incident to such 

operations.” Zenergy claims that it owes Performance no further payment 

under the Contract because, by breaching the above-referenced provisions of 

the Contract, Performance caused the wellbore to be drilled as a deviated well 

and not as a vertical well. But Zenergy’s argument would subvert the plain 

language of the Contract and the intent of the parties by morphing 

Performance’s obligation to “furnish equipment, labor, and perform services” 

into a guarantee of the final product of those services. Further, we are 

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unpersuaded that Performance would have been willing to accept the risk of 

liability for a deviated wellbore under the Contract given Zenergy’s ultimate 

control over the drilling process. That control is evidenced in this case by the 

fact that Zenergy—not Performance—selected the bottom hole assembly used 

to drill the well. It is also evidenced by the fact that it was Zenergy who called 

out Multi-Shot to perform the ill-fated first gyroscopic deviation survey. It is 

also the general commercial expectation in the drilling industry that it is the 

operator in a daywork contract who bears the risk of a deviated wellbore. See 

Anderson, supra, at 386 (“In a daywork contract, the drilling contractor may 

agree to exercise due diligence and care to maintain a straight hole; however, 

the risk and expense of maintaining a straight hole is on the operator.”); id. at 

386 n.148 (“In the IADC daywork form, the contractor makes no 

representations concerning the drilling of a straight hole.”); id. at 415 (“The 

drilling contractor agrees to drill a straight hole, unless a directional well is 

specified, and also agrees to make all deviation surveys specified in the 

contract. . . . However, under a typical daywork contract, the risk of a deviated 

hole is generally borne by the operator because the operator has more control 

over drilling operations.”); id. at 447–48 (“[T]he operator under a contract 

containing daywork provisions . . . may obtain insurance covering the risk of 

redrilling the well should problems arise. . . . Potential problems include 

deviation from the straight hole specifications . . . . Generally, the model 

drilling contract forms place all liability for the costs of redrilling on the 

operator if operations are being conducted on a daywork basis.”); American 

Petroleum Institute, Drilling Contract § 8.5 (“While operations are being 

performed on a daywork basis, Contractor agrees to exercise due diligence and 

care to maintain the straight hole specifications, if any, set forth in the Drilling 

Order, but all risk and expense of maintaining such specifications or restoring 

the hole to a condition suitable to Operator shall be assumed by Operator.”), 

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reprinted in Anderson, supra, 480 app. B. The parties’ intentions at the time 

of contracting are also clarified by looking to the other contracts that they had 

available to them had they wanted to allocate risk differently. The IADC 

footage contract expressly assigns the risk of the wellbore becoming deviated 

to the contractor. IADC, Drilling Bid Proposal & Footage Drilling Contract—

U.S. § 9.4 (“Should the hole at any depth during the time Contractor is 

performing work on a Footage Basis, have either a deviation from vertical or a 

change of inclination in excess of the limits prescribed in Exhibit ‘A’, 

Contractor agrees to restore the hole to a condition suitable to Operator either 

by conventional methods and procedures while drilling ahead or by cementing 

off and redrilling.”), reprinted in 7A West’s Texas Forms—Minerals, Oil & Gas 

§ 16:1 (4th ed. 2014). Tellingly, under the IADC footage contract, when the 

work is being performed on a daywork basis rather than on a footage basis, 

“Contractor agrees to exercise due diligence and care to maintain the straight 

hole specifications, if any, set forth in Paragraph 3 of Exhibit ‘A’ but all risk 

and expense of maintaining such specifications or restoring the hole to a 

condition suitable to Operator shall be assumed by Operator.” Id. The IADC 

turnkey contract also assigns the risk of a deviated wellbore to the Contractor. 

IADC, Model Turnkey Contract § 9.5 (“Should the hole, at any depth during 

the time Contractor is performing work on a Turnkey Basis, have either a 

deviation from vertical or a change in overall angle in excess of the limits 

prescribed in Exhibit ‘A’, Paragraph 4, Contractor agrees to restore the hole to 

a condition suitable to Operator either by conventional methods and 

procedures while drilling ahead or by cementing off and redrilling.”), reprinted 

in 7A West’s Texas Forms—Minerals, Oil & Gas § 16:3 (4th ed. 2014). As with 

the IADC footage contract, in the IADC turnkey contract, when the work is 

being performed on a daywork basis, “Contractor agrees to exercise due 

diligence and shall maintain the straight hole specifications, if any, set forth 

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in Paragraph 4 of Exhibit ‘A’ but all risk and expense of maintaining such 

specifications or restoring the hole to a condition suitable to Operator shall be 

assumed by Operator.” Id. Given the alternative contracts available to 

Zenergy and Performance—the daywork provisions in both of which assigned 

responsibility for a deviated wellbore to the operator—their selection of the 

daywork contract elucidates their intentions with respect to the allocation of 

this risk. Further evidence is provided by the testimony of Robert “Skip” 

Graham, the president of Zenergy’s engineering division, about Zenergy’s 

reasons for selecting a daywork contract for the well when they had used a 

turnkey contract for their earlier well on the same drilling unit. Graham 

testified:

[G]enerally, in a turnkey contract . . . there is . . . a 30 or 40 percent 

premium built into that so that the contractor can make a profit. 

There were no difficulties encountered in drilling that first well 

down to the depths that we were intending to drill the second well. 

And as a result, we decided to drill it on a daywork basis because 

you can do it, theoretically, cheaper that way. 

That thirty to forty percent premium is no doubt responsive, at least in part, 

to the greater risk allocated to the contractor in a turnkey contract as opposed 

to a daywork contract. Reallocating that risk after the fact—and without the 

thirty to forty percent premium—would give Zenergy more than it bargained 

for. We decline to hold Performance to the risk allocation of a turnkey contract 

without the attendant risk premium. As such, we conclude that the district 

court did not err in granting Performance’s motion for a directed verdict.8

8 Performance also argues that the deviation from straight hole specifications 

constitutes loss of or damage to the hole, a risk assigned to the operator under paragraph 

14.5 of the Contract. Paragraph 14.5 reads: “The Hole: In the event the hole should be lost 

or damaged, Operator shall be solely responsible for such damage to or loss of the hole, 

including the casing therein.” There was conflicting testimony at trial as to whether a 

deviated hole constitutes a lost or damaged hole. Given our conclusion that the risk of the 

deviated wellbore is borne by the operator, we need not resolve that conflict here.

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III.

Zenergy also contends that the district court erred in denying its motion 

to alter or amend the judgment to reduce the judgment by $9,000, which 

represents a $500 per day surcharge for the days during which the hole was 

bring drilled at an angle of greater than seven and a half degrees under 

sections 4.4 and 27.15 of the Contract. Section 27.15 states: “If directional or 

uncontrolled hole exceeds 7 1/2 degree deviation that will be an additional 

charge of $500.00 per day.” Section 4.4 states, inter alia, that “[d]irectional or 

uncontrolled deviated hole will be deemed to exist when deviation exceeds 7 

1/2 degrees or when the change of angle exceeds 2 1/2 degrees per one hundred 

feet.” We review a district court’s denial of a motion to alter or amend the 

judgment for abuse of discretion. Martinez v. Johnson, 104 F.3d 769, 771 (5th 

Cir. 1997); Jones v. Cent. Bank, 161 F.3d 311, 312 (5th Cir. 1998). “A district 

court abuses its discretion if it bases its decision on an erroneous view of the 

law or on a clearly erroneous assessment of the evidence.” Perez v. Stephens, 

745 F.3d 174, 177 (5th Cir. 2014). Zenergy’s first argument, that the district 

court erred because Zenergy never instructed Performance to drill a deviated 

wellbore, is waived for failure to raise it in the motion to alter or amend the 

judgment before the district court. See Crawford Prof’l Drugs, Inc. v. CVS 

Caremark Corp., 748 F.3d 249, 267 (5th Cir. 2014) (“The general rule of this 

court is that arguments not raised before the district court are waived and will 

not be considered on appeal” (internal quotation marks omitted)); Nasti v. 

CIBA Specialty Chem. Corp., 492 F.3d 589, 595 (5th Cir. 2007) (“If an argument 

is not raised to such a degree that the district court has an opportunity to rule 

on it, we will not address it on appeal.” (internal quotation marks omitted)). 

Zenergy’s second argument, that Performance is not entitled to the $500 per 

day surcharge because it never sent Zenergy an invoice, also fails. Paragraph 

5.1 of the Contract states that “[p]ayment for mobilization, drilling and other 

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work performed at applicable rates, and all other applicable charges shall be 

due, upon presentation of invoice therefor, upon completion of mobilization, 

demobilization, rig release or at the end of the month in which such work was 

performed or other charges are incurred, whichever shall first occur.” The 

district court denied Zenergy’s motion based on its finding that Performance 

“only discovered details surrounding the extent and duration of the deviation 

during discovery, since plaintiff elected not to share its deviation information 

with Performance in a method that would have timely allowed Performance to 

submit an invoice for the deviation charge.” That finding is supported by the 

testimony of David “Grumpy” Farmer, the president of Performance, that 

Performance did not receive the deviation information from the Multi-Shot 

survey that Zenergy ordered and therefore did not have information that 

showed that Perfomance had been drilling at an angle greater than seven and 

a half degrees. To the extent other evidence in the record undermines that 

testimony, we cannot say that the district court’s resolution of the conflict was 

a clearly erroneous assessment of the evidence. See United States v. Trujillo, 

502 F.3d 353, 356 (5th Cir. 2007) (“Giving due regard to the opportunity of the 

district court to judge the credibility of the witnesses, we will deem the district 

court’s factual findings clearly erroneous only if, based on the entire evidence, 

we are left with the definite and firm conviction that a mistake has been 

committed.” (internal quotation marks omitted)); In re Bradley, 501 F.3d 421, 

434 (5th Cir. 2007) (“However, his arguments simply boil down to questions of 

witness credibility and the bankruptcy court’s weighing of the evidence. We 

are particularly mindful of the opportunity of the bankruptcy court to judge 

the credibility of the witnesses.” (internal quotation marks omitted)). As such, 

we hold that the district court did not abuse its discretion in determining that 

paragraph 5.1 of the Contract does not preclude payment of an amount due 

under the Contract where the party’s ability to submit an invoice was inhibited

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by the other party to the Contract. Cf. Restatement (Second) of Contracts § 

271 (“Impracticability excuses the non-occurrence of a condition if the 

occurrence of the condition is not a material part of the agreed exchange and 

forfeiture would otherwise result.”); Restatement (Second) of Contracts § 271 

cmt. b; Restatement (Second) of Contracts § 205 illus. 7.

IV.

For the foregoing reasons, we AFFIRM the judgment of the district court.

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