Rialto to Pay $12 Mln for Early Rig Contract Termination
Rialto Energy Ltd. has entered into an agreement with Vantage Drilling Company regarding payment terms in relation to the early termination of the rig contract regarding the Vantage Sapphire Drilling Rig.
Under the terms of the settlement, Rialto will pay Vantage an amount equal to 75 days of operating rate, being US$12.375 million in aggregate. This is a significant reduction for the Company with the original contract value being for 105 days or US$17.325 million. The Company has already paid US$4.95 million under the terms of the rig contract leaving a final payment of US$7.425 million, which will be paid in two tranches; the first tranche of US$5.425 million being paid today and the second payment of US$2 million on the earlier of 90 days from today or 5 business days from the completion by Rialto of an equity capital raising. The second payment is subject to a promissory note that attracts interest at an annualised rate of 6% should the second payment not be made on the aforementioned dates.
After making the first tranche payment to Vantage, the Company’s cash balance is approximately US$9.4 million.
Commenting on today’s announcement, Rialto’s Managing Director, Rob Shepherd said:
“Whilst we are disappointed to have had to make the difficult decision to terminate the Rig contract, it was made to ensure that Rialto and Vitol had sufficient time to finalise matters around our recently announced deal and to work together on a robust technical programme in Block CI-202 [offshore Ivory Coast]. We are continuing to work with Vitol on finalising the transaction and are doing everything possible to bring this to a swift conclusion.”