Diamond Offshore Drilling juggles rig contracts with Petrobras

Houston-based deepwater drilling contractor Diamond Offshore Drilling announced on Monday that it has reached an agreement with Brazil’s state-run oil giant Petrobras on early termination of contracts for two rigs. But the contract for one other will be extended.

NYSE-listed Diamond Offshore agreed to cancel contracts for the semisubmersible rig Ocean Alliance and the drillship Ocean Clipper in return for an extension of contract for the semisubmersible rig Ocean Courage.

The additional term for Ocean Courage will be at a rate of $380,000 per day, representing revenue backlog of $333 million, and will extend the contract into mid-2020. The previous dayrate for Ocean Courage was $455,000.

After export from Brazil, Ocean Alliance, which was built in 1988, will be cold stacked. Ocean Clipper, built in 1997, will be scrapped.

The terminated portions of the contracts represent a loss to revenue backlog of approximately $91 million.

Petrobras has been cutting back costs, rebudgeting and rethinking its investments because of the oil price downturn and its own troubles resulting from overreach and the bribes-for-contracts corruption crisis.

Diamond Offshore also confirmed the Ocean Guardian was awarded a contract for a one-year term in the UK North Sea beginning in March of 2016 at a rate of $220,000 per day.

The company reported net income of $136 million, or $0.99 per share, in the third quarter of 2015, revenues of $610 million and a regular quarterly dividend of $0.125 per share, payable on December 1, 2015.

“I am pleased with our solid third quarter results, which demonstrate Diamond Offshore’s ability to execute on managing our costs and controlling downtime,” said President and CEO Marc Edwards.

Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.
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