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Charterers cancel their contracts on two Ocean Rig vessels

Two drilling vessels owned by Ocean Rig have had their contracts cancelled by their respective charterers, adding to the list of failed deals reported by Economou Group companies today.

Total E&P Congo has terminated its long-term charter of the ultra-deepwater drillship Ocean Rig Apollo, which is currently deployed in Congo and will be demobilised “in due course”.

Ocean Rig says it is entitled to a termination fee of between 50% to 95% of the undisclosed operating daily rate, which will be payable over the balance of the contract.

“The company has notified the agent under the respective loan agreement and is currently in discussions with its lenders about the consequences of such termination,” Ocean Rig said today.

The NASDAQ-listed company also confirmed Premier Oil has terminated its contract on the ultra-deepwater semi-submersible drilling rig Eirik Raude (pictured), which has been operating in the Falkland Islands.

Ocean Rig says it is entitled to a termination fee of up to $62.9m and will commence arbitration proceedings “without any further notice” if Premier Oil contests the payment. The Economou company received a notice of breach of material obligations from Premier Oil in early February, the reasons for which have not yet been made public. Premier Oil and Rockhopper Exploration cancelled their joint-venture contract with Ocean Rig UDW last week.

“It is really regrettable that two of our clients have decided to terminate drilling contracts for convenience. This is a reminder of the extremely challenging times facing the offshore drilling industry and oil companies taking unprecedented action to reduce their capital expenditure,” George Economou, Ocean Rig’s chairman and CEO, said in a statement.

“The prospects for the industry remain bleak and we currently see limited prospects of a recovery before 2018 at the earliest.”

In January, Eni terminated its contract for drillship Ocean Rig Olympia “due to the dramatic fall of the crude oil price and the volatile market context”.

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Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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