ENSCO announced on Monday the receipt of a termination notice for their ultra-deepwater drillship DS-4 which is currently on contract to BP in the U.S. Gulf of Mexico.
The original contract for the 2010-built drillship was scheduled to last until July 2016, however BP has decided to cut that short by 12 months upon completion of their current well program.
Under the terms of the contract with respect to early termination for convenience, ENSCO says BP is on the hook for a lump sum payment of approximately $160 million.
The approximately $560,000 day rate will continue to apply through the termination date currently estimated to be July 2015, ENSCO says.
UPDATE: BP Exploration & Production has also sent a notice of termination to Seadrill for the early termination of its contract for the West Sirius semi-submersible drilling rig. At the same time, BP extended its contract for Seadrill’s West Capricorn rig. According to Reuters, West Sirius dayrate was decreased by $40,000 per day and the term was decreased by two years to expire in July 2017 while the dayrate for the West Capricorn was increased by $40,000 per day and the term was extended by two years to expire in July 2019.
Further reading: Advanced Drillships Become Burden for Owners as Business Dries Up