Two of the major British players in Falkland Islands offshore oil development, Premier Oil and Rockhopper Exploration, on Thursday cancelled a joint venture contract with Ocean Rig UDW.
The contract, dating back to June 2014, related to the Erik Raude semi-submersible drilling rig, which the companies were using to drill at the Chatham well.
They cited a number of material operational issues with the Erik Raude as the reasons for the cancellation.
Premier said it is in discussions with the Falklands government about the possibility of drilling the Chatham prospect in future.
Falkland Islands offshore development has been a source of contention with nearby Argentina which maintains territorial claims over the islands even though they are widely recognized as British Overseas Territory.
In June last year an Argentinian judge ordered the seizure of $156m worth of assets belonging to foreign oil firms including both Rockhopper and Premier. That ruling has not been enforced.