Houston-based Diamond Offshore Drilling on Thursday announced it has settled a longstanding dispute with Brazil’s state oil company Petrobras over the latter’s attempt to early-terminate a contract for the semi-submersible drilling rig Ocean Valor.
Petrobras attempted to terminate the deal, originally meant to run until October 2018, in August 2016 with no compensation to the deep-water drilling contractor.
That month Diamond Offshore lodged a suit in the 17th Lower Court of Rio de Janeiro Central District.
In September 2016 the presiding judge issued a preliminary injunction that suspended the contract cancellation and ordered that the contract remain in effect.
Now with Thursday’s announcement, Petrobras has agreed to settle the lawsuit and to amend the Ocean Valor contract.
Under the agreed amendments the rig will be in an extended standby period retroactive from July 2017 to the end of September 2018 at a day rate of around $190,000. And the rig will continue under contract after that until September 2020 at a dayrate of $289,000.
The original day rate on the deal (from July 2016 to October 2018) was $455,000.
So now Diamond Offshore gets a two-year extension and Petrobras gets a substantial discount.
Petrobras tried to terminate the contract as a cost-cutting measure while it tries to dig out from the effects of a massive corruption case and a slumping oil price.