Ocean Rig finds work for one rig, in disputes over two

Deepwater drilling contractor Ocean Rig on Monday, March 7, 2016, signed a drilling contract for one of its semi-submersible drilling rigs, the Leiv Eiriksson, with Lundin Norway.

The drilling contract is for a minimum of 3 wells, for drilling offshore Norway, with an estimated backlog of approximately $23.6 million.

The 2001-built rig is scheduled to start this contract in the third quarter of 2016.

The Leiv Eiriksson completed the contract with Rig Management, and will undergo a yard stay in Norway before starting its contract with Lundin Norway during the third quarter of 2016.

Ocean Rig posted a net loss of $174.4 million for the fourth quarter of 2015 due to impairments charges, when compared to a profit of $87.5 million in the same period in 2014.

Ocean Rig in two rig disputes

The drilling contractor also on Monday started arbitration proceedings against Total E&P Angola for the termination of the contract with the drillship Ocean Rig Olympia, terminated in March 2015.

Further, on January 21, 2016, ENI Angola S.p.A terminated the drilling contract for the Ocean Rig Olympia operating offshore Angola. The company said it is currently in discussions to settle the amount due to it in an amicable fashion.

Ocean  Rig also started arbitration proceedings against Premier Oil for terminating the contract for the 2002-built semi-sub rig Eirik Raude in February 2016.

In addition, on February 11, 2016, Total E&P Congo sent a notice to terminate the drilling contract for the Ocean Rig Apollo drillship. As per the contract, Ocean Rig said it was entitled to a termination fee that varies from 50% to 95% of the operating rate that will be payable monthly until April 2018.

George Economou, Chairman and Chief Executive Officer of the company, commented: “Regrettably, however, during the first quarter of 2016, three of our clients have decided to terminate drilling contracts. The Eirik Raude, Ocean Rig Olympia and Ocean Rig Apollo are currently en route to their stacking locations and remain available for alternative employment.

“With regards to the termination of the contract of the Ocean Rig Apollo, the Company is still in discussions with the lenders of the respective loan agreement about the consequences of such termination, which may involve a significant prepayment of the loan.

“The above terminations act as a reminder of the extremely challenging times facing the offshore drilling industry.”

Offshore Energy Today Staff