Diamond Offshore to Lose Half-Dozen Rig Contracts

DiamondOffshoreLogoIn an SEC filing yesterday, Diamond Offshore says at least six of their rigs are likely to lose their contracts.

Diamond says a verbal notification came from Petrobras who said they do not intend to continue to use the Ocean Baroness which had recently signed a 3-year extension which would have kept it under contract until September 2018 at $310,000 per day.

On 12 February, Dana Petroleum gave their notice of contract termination for the Ocean Nomad, a $330,000 per day contract which was set to expire in August 2015. Diamond Offshore notes, “We do not believe that Dana had a valid basis for terminating the contract, and we intend to defend our rights under the contract.”

On 20 February, PEMEX gave verbal notification of their intention to exercise its contractual right to terminate its drilling contracts on the Ocean Ambassador, the Ocean Nugget and the Ocean Summit, and to cancel its drilling contract on the Ocean Lexington.

The Ocean Ambassador and Ocean Nugget contracts were due to expire in March and August 2016, respectively while the Ocean Summit and Ocean Lexington were due to expire in May 2015 and March 2018, respectively.

Diamond Offshore notes that as of 23 February, “we have not received written notice of termination or cancellation. We are in discussions with PEMEX regarding the rigs.”

In October 2014, Diamond Offshore announced plans to scrap six of their older rigs.

Shares of Diamond Offshore are down over 5 percent today on the NYSE.